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By Samia Cullen | Home Buyer in Palo Alto, CA

Title insurance - why is it important?

A title insurance policy is a contract issued by a title insurance company, insuring or indemnifying owners, holders of liens or encumbrances, or others with a title interest in real property, against loss or damage to the property title.

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 lender’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 buyer’s title policy, with the lender’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)    title to the property being vested in someone other than the insured,

b)    any defect in or recorded lien or encumbrance on the title,

c)    un-marketability of title, or

d)    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.


By Connie Fitzgerald,  Fri Jan 25 2013, 08:15
Title insurance is crucial if a buyer doesn't want any upsets that will affect his/her ownership of the property! Title Companies make mistakes too! Great share Samia :)
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