What is Title Insurance?
I was talking to Jill Green of California Title Company yesterday. She came in to talk to a couple of the agents at our Prudential California Real Estate La Costa office. Usually seeing a title rep would be of little interest to you……….unless you’re buying or selling a home. Then, these title insurance representatives really earn their way, and help you in ways I think most of you are unaware of.
Title Insurance is Insurance
When you buy a home, you take ownership through a deed, grant or what is commonly called a title. This document is at the very heart of your ownership in the property. Is the property actually yours to sell? Has the property been encumbered? When you purchase the property, can you rest assured that no one will come calling to say “this property belongs to me…so move out!”
Title Insurance is just what it says. It is insurance you purchase, both when selling and buying, that assures you and the other party that the home or land that you are negiotating are in fact free and clear, able to be sold or bought, and that you can sleep at night if someone claims future ownership or liens against the property.
Seller’s Title Insurance
The seller of a property will have to obtain title insurance to assure the buyer, and the buyer’s lender, that there are no liens, encumbrances, claims, taxes, defaults or other proceedings against the property that leave it anything but free and clear. It is possible that at some time there were loans taken out against the property that may not have been recorded. It is possible that old defaults may have slipped through the cracks of the County Recorder. (Any of you ever have a governmental agency “goof?” ) If there are errors, even if you did not know about them, you may not actually have full ownership of the property you are going to sell. So, in order to make sure you do have all those rights, you buy insurance, title insurance, to make sure you can sell.
Buyer’s Title Insurance
When you buy a piece of land or a home, the lender will want you to purchase title insurance. This insurance will guarantee the lender specifically that the loan they are about to give you is a loan for a home that is not encumbered. The bank is making you buy insurance, title insurance, to protect them, the bank. Sorry, no getting around this.
Title Insurance Costs
During a typical transaction the buyers and sellers will each purchase an insurance policy (title insurance). The seller will buy title insurance, and pay for it, to prove to the buyer that the home is free of any claims. The buyer will buy title insurance, and pay for it, to prove to the lender that the home is free from any claims. The costs for title insurance are fairly similar across title insurance companies. You can browse rates and comparisons at www.clta.org and of course on www.Caltitle.com. Remember when pricing that if you have refinanced, sold or purchased within the past five years, you may qualify for a short term rate for title insurance, and that may save you a lot of money depending on the value of your home or land.
Title Insurance – A Summary
Title insurance is insurance both the seller and buyer provide at any real estate transaction. The title insurance protects all the parties to the transaction, seller, buyer and lender. Don’t think for one minute that buying title insurance is not important. It’s the glue that holds together the chain of title to, and the ownership of, the home or land you are about to sell or buy.