Home Buying in 92084>Question Details

Jose Bono, Home Buyer in La Jolla, CA

what is title insurance?

Asked by Jose Bono, La Jolla, CA Wed Jul 2, 2008

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An owner’s title insurance policy protects the buyer against any potential disputes that may arise from insufficient or inaccurate title disputes. The title insurance company issues a policy after a comprehensive title search has been conducted, typically offering coverage in the amount of the purchase price paid. Many times, the title insurance company is chosen “by default” by a mortgage broker or realtor, and many buyers don’t realize that there are other options out there. While the premium for title insurance is usually paid only once, at closing, the differences in costs from one insurer to the next can be significant. As with any insurance purchase, its advisable to consider all your options and choose the title insurance policy that best suits your needs.
Contact title insurance companies in your area, http://www.FreeTitleQuote.com
0 votes Thank Flag Link Sun Jul 13, 2008
Hi there Jose. You can find the answers here along with much more relevant Home ownership information.
http://www.westernresourcestitle.com/buyers-reference.html

If you need any help please let me know. There are some really great buys in La Jolla right now. We have several pocket listings that you might be interested in.

Kind Regards
Michael Barron
Realtor/MBA
First Team Real Estate
(714) 552-6817
michael-barron@sbcglobal.net
0 votes Thank Flag Link Wed Jul 2, 2008
A title to a house must be free and clear of clouds in order to transfer to a new owner. A cloud on the title could be something as simple as two peoples names being on it who have divorced since purchasing the home but never filed the change in title with the county recorder's office after dividing their property in the divorce settlement. It could be something more compicated. Title insurance is provided by the title company. When the title company gives assurance that the title is good to transfer, they are offering a guarantee that there are no clouds on the title that would preclude the sale of the property. If, after you purchase a property, a problem is found with the title, the title company will clear it up so that you can hold legal title. Without the insurance, your recourse would be to try to clear the title yourself and/or hire an attorney to do so. All of my sales include title insurance; it is in both parties best interests.
0 votes Thank Flag Link Wed Jul 2, 2008
Title insurance protects you against defects in the title.

Before closing on a house you will want to know that no other individual or entity has a right, lien or claim to the property. Determining that your rights and interests to the property are clear is the business of a title insurance company. For a one-time title insurance premium, you will receive continuous title insurance protection in an amount equal to the purchase price of the property or its current market value. This premium typically includes your "owners" policy as well as the "lenders" policy.

Title insurance is usually required by the lender to protect against loss resulting from claims by others against your new home. One of the advantages of title insurance is that prior to a policy being issued, the title insurance company completes extensive research into relevant public records, maps and documents to trace ownership of the property and determine if anyone other than you has an interest in the property. Through its research, the title insurance company can usually identify any title problems that may arise and have these problems cleared-up prior to closing.

Your title insurance owner's policy will describe the property and outline any recorded limitations on your ownership. It will also set forth the title insurance company's responsibilities should any claim covered by the policy terms arise.

If I can be of any assistance please do not hesitate to call 760-822-2114
Web Reference: http://www.AlvinPavao.com
0 votes Thank Flag Link Wed Jul 2, 2008
Hi Jose,

If there is a loan, normally two title insurances are present when purchasing a property: one paid by the seller, sometimes called a "homeowner's policy", and the second is a lenders policy paid for by the buyer. Who pays for the title insurance is a negotiable item in the purchase contract.

While I have never encountered a title insurance claim, here's a description of title insurance:

For the property owner, it is a guarantee that they own the property free and clear of any liens other than the
ones they agreed to when they purchased the property. The most important aspect is that the party who sold the property did, in fact, own all the interest and no one else can claim that they have an interest. This protection, or promise, lasts as long as the insured party owns the property.
For the lender, it is a guarantee that it has a valid and enforceable lien (loan or deed of trust) secured by the property, that no one else other than those listed on the policy has a prior claim (or loan, etc.) and that the party to who they are making the loan does own the property being used as security for the loan. This protection remains in effect as long as the loan remains unpaid.
The existence of a lenders title policy encourages lenders such as banks, savings and loan associations, commercial banks, life insurance companies, etc., to loan money. Because they are lending other people’s money (savings or policy holder’s funds) they must be concerned with safety should the borrower not make their payments.
The title company insures that the title to the property is marketable in the event of foreclosure and the
guarantee is backed by the integrity and solvency of the title company. Of course, this benefits everyone—from the single family homeowner to the owner of a high rise building.
Before issuing a policy of title insurance, the title company must review the numerous public records concerning the property being sold or financed. This information is available to anyone who has the time and patience to spend at the county recorder’s office going through the hundreds of thousands of recorded documents. This review, or title search, will determine who owns the property, if any property taxes need to be paid, how many outstanding loans were taken out on the property, what utility companies, if any, have a right to use a portion of the property for phone, gas, electrical or water lines (known as easements), what a homeowner is and is not allowed to do with their property by reason of certain Conditions, Covenants and Restrictions (CC & R’s), and if anyone else has a possible interest in the property.
The purpose of this title search is to clear up all problems before the new owner takes title or the lender
loans money. This is known as RISK ELIMINATION versus RISK ASSUMPTION (taking on liability based on what happens in the future). Examples of the latter are car, health and life insurance. Each of these types of insurance charge on-going fees for coverage and base their coverage on what may happen in the future. Title insurance, on the other hand, takes on coverage based on what has already happened and charges a one-time fee at the time the property is purchased or refinanced. While some may feel this is just another “garbage fee”, it is pretty reasonable considering one’s policy could last a lifetime. Once a policy of title insurance is issued, the title company will pay for the costs and legal expenses associated with any valid claim presented to the company. Without the policy, the homeowner or lender or builder—whoever would have benefited by having a policy of title insurance—would have to cover all costs on their own.
Title insurance isn’t just for a homeowner. Subdividers need it when they are planning a new tract of homes or a commercial strip center. Attorneys use it for clients who are investing in shopping centers, hotels, high rise office structures, hospitals, and countless other projects. Builders need it in order to obtain construction loans from their lender. Everyone wants to have peace of mind when making a large investment of their hard earned money. Title insurance companies help protect this important investment, no matter how large or small, with its own reputation and financial strength.
0 votes Thank Flag Link Wed Jul 2, 2008
Good Morning Jose. . . In a nutshell, title insurance insures against unknown claims, liens or easements which effect title to a particular property.
Web Reference: http://www.YvonneBaker.com
0 votes Thank Flag Link Wed Jul 2, 2008
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