In a typical residential real estate transaction, a title policy is issued to the buyer at the close of escrow, insuring the buyer against loss or damage suffered because of defects in title to the property itself. In addition, if the buyer obtains a loan to acquire the property, a title policy is issued to the lender to provide assurances that the lenderâ€™s insured lien has priority over other liens and encumbrances on the property.
Customarily in San Mateo County, the buyer is responsible for the cost of both policies. In Santa Clara County, it is customary for the seller pay to pay for the buyerâ€™s title policy, with the lenderâ€™s policy paid for by the buyer.
Title policies are not required to be identical. The cost, extent of coverage and terms can be as unique as each parcel of real property, since no two parcels are exactly alike.
Generally, a title insurance policy insures the buyer against loss or damage arising out of:
a)Â Â Â title to the property being vested in someone other than the insured,
b)Â Â Â any defect in or recorded lien or encumbrance on the title,
c)Â Â Â un-marketability of title, or
d)Â Â Â Lack of right of access to and from the property.
Each of the covered items listed above typically is limited by specific or generic exceptions, exclusions or other conditions specified within the title policy.
Title insurance policies are complex legal documents, and readers who require specific advice should consult an attorney.