Frequently Asked Questions regarding Title Insurance

1. Title Insurance FAQ

2. 1. What is title insurance?
2. What is an owner’s policy?
3. What is a lender’s policy?
4. Do I have to pay a monthly premium for title insurance?
5. What’s covered by title insurance?
6. Who pays for title insurance?
7. What is a title search?
8. How are rates for title insurance determined?
9. How much does title insurance cost?
10.Are prices for title insurance that different?
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3. *Source: National Association of Realtors. Home Buyer/Seller Profile 2012
FAQ 1
What is title insurance?
A title insurance policy protects property owners and lenders from losses
that could result from disputes over ownership of a property’s
title. Basically, you want to make sure the seller truly has the right to sell
a piece of property, and that when the transaction closes, you actually
own it. Title insurance is important because it protects you from title
hazards that could threaten the financial investment you have made in
your home or other property. It also protects the lender’s investment.
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4. *Source: National Association of Realtors. Home Buyer/Seller Profile 2012
FAQ 2
What is an owner’s policy?
An owner’s title insurance policy guarantees that the buyer has the right
to the property. It usually covers the cost of any legal fees that arise if
you have to defend your claim. The cost is based on the price of the
property.
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5. *Source: National Association of Realtors. Home Buyer/Seller Profile 2012
FAQ 3
What is a lender’s policy?
A lender’s title insurance policy protects the bank or other lending
institution that issues your mortgage from any losses resulting from
disputes over who owns the property.
A policy covers the amount of the loan and the cost is based on the
amount of that loan. Most lenders require this coverage, which ends
when the mortgage is paid.
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6. *Source: National Association of Realtors. Home Buyer/Seller Profile 2012
FAQ 4
Do I have to pay a monthly premium for title insurance?
Title insurance is issued for a one-time fee usually due when you are
closing the real estate transaction. Insurance benefits are paid only to the
name that is on the policy. Coverage lasts as long as you hold title to the
property.
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7. *Source: National Association of Realtors. Home Buyer/Seller Profile 2012
FAQ 5
What’s covered by title insurance?
Owner’s title insurance protects you from:
• Fraud associated with the title ownership
• Liens existing against the property at the time the policy was
issued
• Mistakes in the public record that are not caught before the sale
• Inaccurate or conflicting wills and trusts related to the title
• Missing heirs who suddenly appear and claim to own the property
• Forged or misfiled deeds and other documents
• Errors or flaws in the title that are not discovered during the initial
title examination
• Lender’s title insurance covers the amount of the mortgage loan
and protects the lender’s interest in the property if any of the
above risks occur.
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8. *Source: National Association of Realtors. Home Buyer/Seller Profile 2012
FAQ 6
Who pays for title insurance?
Who pays for the owner’s policy depends on the state, and sometimes
the county, where the transaction is taking place. For example, in Los
Angeles County, the seller usually pays for the policy to ensure that the
buyer has legal title to the property. In Marin County, north of San
Francisco, the buyer usually pays this expense.
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9. *Source: National Association of Realtors. Home Buyer/Seller Profile 2012
FAQ 7
What is a title search?
It’s the process to make sure the seller is the legal owner of a
property, and that there isn’t outstanding claims against the property.
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10. *Source: National Association of Realtors. Home Buyer/Seller Profile 2012
FAQ 8
How are rates for title insurance determined?
Each state has its own rules for rates for title insurance.
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11. *Source: National Association of Realtors. Home Buyer/Seller Profile 2012
FAQ 9
How much does title insurance cost?
The cost of title insurance is based on the purchase price, and varies
enough to make it worthwhile to shop and compare policies and prices.
You have the right to choose your title insurance provider.
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12. Are prices for title insurance that different?
In California, prices vary among title companies within a given ZIP
code. You can and should compare the services provided by title
companies, and always ask about additional fees before you decide.
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FAQ 10
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