BUYER TIPS: TITLE INSURANCE
WHAT YOU PAY FOR AND WHAT YOU GET
Your purchase of a title insurance policy is required by your lending institution. Today's
nationwide mortgage practices have made title insurance a necessary part of the
residential closing and escrow process in most cases in California.
Basically, there are two types of title insurance policies: one to protect the lender and
one to protect the owner of the home. You are required to provide a policy that protects
the lender; you are encouraged to purchase an additional policy which will protect you.
WHAT DO THE POLICIES COVER?
The lender's policy insures the lender that
it has a valid first mortgage on your property.
The owner's policy insures you that you have good title to your own property.
If it is later found that there is "something wrong" with your title, the lender
is protected under its insurance policy. If you have not purchased a title insurance
policy of your own, you will have no protection and you may sustain a serious loss.
WHAT DO WE MEAN BY "SOMETHING
WRONG?"
"Something wrong" is usually taken to mean "title defects." The
examination of a land title and the real estate closing are complicated functions.
Unforeseeable problems may exist, and honest human error is always a possibility. These
problems can be "title defects." When you buy a house, you get more than a
building. You get title to a piece of Mother Earth - a piece that others have owned before
you. You want to know that you now own a clear title and you want to know if that title is
subject to anything, such as building restrictions or drainage easements. The owner's
title insurance policy is designed for that purpose.
The premiums for title insurance policies are enforced by the State of California
Department of Insurance and are competitive with all title insurance companies statewide.
This brochure has been written in non-technical language; language contained in title
insurance policies is controlling.
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