What is a Title Insurance Policy for Real Estate?
Title insurance provides coverage for certain losses in the title prior to your ownership. It protects against claims resulting from various defects such as prior fraud or forgery that might go undetected until after closing…and may possibly hurt your ownership or investment.
Q.) What protection am I obtaining with a title policy?
A.) A title insurance policy contains provisions for the payment of the legal fees in defense of a claim against your property, which is covered under your policy. It also contains provisions for indemnification against losses, which result from a covered claim. A premium is paid at the close of a transaction. There are no continuing premiums due, as there are with other types of insurance.
Q.) How much does it cost?
A.) Your title insurance policy is based upon the purchase or sales price of your property. It is usually less than 1% of the purchase price. It is a one-time premium which is paid at the close of escrow. The important thing to remember is that you only pay once, then the coverage continues in effect for so long as you own the covered property.
Q.) Who will pay for Title Insurance charges, the buyer or the seller?
A.) That depends…it is a negotiable item in the purchase contract.
Q.) Why does a Lender require Title Insurance?
A.) The lender’s policy covers only the amount of its loan, which is usually not the full property value. In the event of an adverse claim, the lender would ordinarily not be concerned unless its loan became non-performing and the claim threatened the lender’s ability to foreclose and recover its principal and interest.
Q.) Who is the best title insurance company?
There are 30 different title insurance companies in California. Here is a list of some of them:
- Title 365
- Chicago Title
- Fidelity National Title
- North American Title Company
- Arista National Tile
- Old Republic Title Insurance
- Stewart Title Insurance
- Ticor Title Company
Check with your Realtor® as to who they recommend for title insurance.