When buying a home in Los Angeles you will be faced with the term “Title Insurance”. So what is title insurance?
Title insurance protects against any kind of problems affecting the title to a piece of property. Some of those problems could be:
- Questions about the legal ownership of the property
- Any errors in the public records that were not found before the sale
- Liens against the property
- Problems with wills and trusts affecting the property
- Fraudulent documents affecting the property
- Any other items that affect clear title to the property
There are two kinds of title insurance, Owner’s and Lender’s. The Owner’s Title Policy, California Land Title Association (CLTA) covers the new owner’s personal interest in the property and the Lender’s Title Policy covers the property for the Lender.
Who pays for Title Insurance?
Generally, when buying a home in Los Angeles the Seller pays for the Owner’s Policy, and the Buyer pays for the Lender’s Policy. Both are one-time fees. The latter is required when a loan is involved.
How Long Does Title Insurance Coverage Last?
The Owner’s lasts for as long as the property is owned by the insured or his or her heirs, but understand that it only covers losses and claims from defects that arose prior to the policy date and extends backwards from that time indefinitely. It does not cover any future problems. You will be required to remove anything that affects the transfer of clear title before you can sell the home. If it is not cleared and a search did not discover it before the time of the next sale, the title policy that the next buyer receives will cover it.
Claims could be made by disgruntled contractors who were not paid by the previous owner. You may have to correct a zoning infraction by the previous owner. A neighbor may build on your land and adversely possess it. To cover against occurrences like these there is an extended policy you can take out , the American Land Title Association (ALTA).
The Lender’s policy stays in effect for the life of the loan. If you refinance your loan then you will have to buy another Lender’s title insurance policy.
Having an Owner’s Title Insurance Policy provides peace of mind that you have clear title to the property and if problems and is there to protect your equity should problems arise.
More Frequently Asked Questions
What Can I Afford?
What are the Closing Costs?
How to Read an MLS Listing
What are the Different Listing Statuses?
Understanding the Purchase Agreement
What is Title Insurance?
How to Take Title
Should I Buy a House or a Condo?
What is Escrow?
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