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Real estate has always been considered one's most valuable possession. It is so basic a form of wealth that many special laws have been enacted to protect ownership of land and the buildings which stand on the Land. You should realize whenever you buy property that the owner who is selling it to you has extremely strong rights, as do his family and heirs. Also there may be others, in addition to the owner, who have "rights" in the property you are going to buy; perhaps governmental bodies, or contractors, for example. Some of the things a title search uncovers are any unpaid taxes or mortgages, judgments against previous owners, easements, and many other court actions or recorded documents which can affect title to real estate.
The title to the home which you have paid for - and to which you have received a deed could be threatened or lost by such circumstances as a forgery, or error in recorded documents. These contingencies will be covered in your policy of title insurance, under its terms.
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How does title insurance differ from casualty insurance?
Casualty insurers (car, life, health, etc.) assume risk for future events, collecting monthly or annual premiums. A title policy insures the past of the real property and the people who owned and own it, for a one-time premium paid at close of escrow.
Who needs it?
Purchasers and lenders need title insurance to know that the property they are involved with is insured against various possible title defects. Whether it’s a sale, refinance, construction loan . . . the seller, buyer and lender all benefit.
What does title insurance cover?
Title insurance protects against claims from various defects such as another person claiming an ownership interest, improperly recorded documents, fraud, forgery, liens, encroachments, easements and other items that are specified in the actual policy.
How is a title policy created?
After the escrow officer or lender opens the title order, First American Title begins a search of the public records, with the County Recorder’s Office. A Preliminary Report is issued to the customer(s) for review and approval. All closing documents are recorded pursuant to escrow’s instructions. When recording has been confirmed, demands are paid, funds are disbursed and the actual title policy is typed and sent to the insured.
What types of policies are available?
A standard CLTA “Owner’s” Policy insures the new owners of vacant or commercial property. The ALTA “Lender’s” Policy insures the priority of the lender’s security interest. First American Title offers the EAGLE ALTA/CLTA Homeowner’s Policy to owners of residential 1-4 unit properties. First American Title issues this extended coverage automatically on all residential properties. Special Binders, Guarantees, and Endorsements are also available.
The EAGLE Policy is the coverage requested in the California Association of Realtors’ (C.A.R.) new purchase contract for residential property.
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