What is title insurance?
Title insurance protects homeowners and lenders against losses from problems with a property's ownership history that weren't discovered before the purchase.
Unlike other insurance that protects against future events, title insurance protects against issues from the past. You pay a one-time premium at closing, and coverage lasts as long as you or your heirs own the property.
Two types of policies
- Owner's policy: protects your equity in the home.
- Lender's policy: protects the lender's interest and is typically required for a mortgage.
Reasons for title insurance
Even with a careful title search, some issues are hidden from public records. Title insurance can protect you from risks like:
- Forged deeds, releases, or wills
- Undisclosed or missing heirs
- Errors in public records or legal descriptions
- Deeds signed by someone without legal capacity (a minor, for example)
- Unknown liens, such as unpaid taxes, contractor liens, or judgments
- Fraud or impersonation of the true owner
- Boundary or survey disputes
- Easements and claims not shown in the public record
In California, who pays for the owner's and lender's policies can vary by county and is negotiable. I'll walk you through it when we write your offer.
The preliminary title report
Early in escrow you'll receive a "prelim." It shows the current owner, the legal description, liens, easements, and any conditions that must be resolved before closing. I'll review it with you and flag anything worth a closer look.