Most standard purchase contract that real estate professional use include language that prevent the transfer of title until all lien a cleared. If you are planning to buy a home, you will be going through a process of called escrow. That is where the title company checks for possible liens on the home and works with the parties to clear the title. However, there are time that liens are missed. That is where good title insurance comes in.
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The contract states that the seller is obligated to provide a clean title. But to ensure that you wouldn't be liable for any clouds on title after closing (it happens) make sure you buy an owners title policy. If you're borrowing the money to buy the home, your lender will require you to buy a lenders policy. This policy won't cover your interests. So you will also need to buy an owners policy. And when you buy the lenders policy, the cost of the owners policy is just a little bit more (not double).
If you're paying cash, make sure you buy an owners policy. This will guarantee that any title issues that arise after closing won't be YOUR problem.
Properties purchased through a Realtor using our standard California Assoc. of Realtors purchase contract that specifies that the seller and buyer can buy title insurance. This is usually handled by the Escrow officer.