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The purchase of a home is probably the single largest
investment you'll make in your lifetime. It is only
prudent that you want to safeguard your rights and
investment. Title insurance assures that your rights
and interests to the property are as expected, that
the transfer of ownership is smoothly completed and
that you receive protection from future claims against
the property. It is the most effective, most accepted
and least expensive way to protect your ownership
rights.
Because land endures
over generations, many people may develop rights and
claims to a particular property. The current owner's
rights - which often involve family and heirs - may be
obscure. There may be other parties (such as
government agencies, public utilities, lenders or
private contractors) who also have 'rights' to the
property. These interests limit the 'title' of any
buyer.
Before your real
estate transaction closes, the title company performs
an extensive search of all recorded documents related
to the property. These records are then examined by
experienced title officers to determine their effect
on the current status of ownership and a report is
issued to you or your agents for review. This through
examination generally allows any pending title
problems to be identified and cleared prior to your
purchase of the property.
If title insurance
companies work to eliminate risks and prevent losses
caused by defects in the title before the closings,
why do you need a title insurance policy?
Because even after
the most careful research, some title flaws may go
undetected. Among the more common flaws to title which
are not of record are forgery, invalid court
proceedings, mistaken legal interpretations, defective
deeds, confusion due to similarity of names,
previously unrecognized rights of spouses and
undisclosed heirs. These problems may surface at any
time in the future.
Protection against
these flaws and other claims is provided by the title
insurance policy which is issued after your
transaction is complete. Two types of policies are
routinely issued at this time: an 'owners policy'
which covers you, the homebuyer for the full amount
you paid for the property; and a lender's policy which
covers the lending institution over the life of the
loan. When purchased at the same time, you can obtain
a substantial discount in the combined cost of an
owner's and a lender's policy. Unlike other forms of
insurance, your title insurance policy requires only
one moderate premium for a policy to protect you and
your heirs for as long as you own the property. There
are no renewal premiums or expiration date.
Each policy is a
contract of 'indemnity'. It agrees to assume the
responsibility for legal defense of your title for any
defect covered under the policy's terms and to
reimburse you for actual financial losses up to the
policy limits.
This insurance
protection is an important follow-through of the
service you receive from California Title Company and
its title insurance subsidiaries.
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