title insurance faq

Title Insurance FAQ

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?

Copyright 2013, LessThan6Percent

Table of Contents

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*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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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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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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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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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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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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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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FAQ 8

How are rates for title insurance determined?

Each state has its own rules for rates for title insurance.


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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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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.


FAQ 10

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title insurance faq

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