What's the purpose of title insurance and why should I have to pay for it?
A recent question from one of my many first time home buyers....
When you buy a home, you're really buying "title" to the property--the right to occupy and use the space. And "title" can be limited by the rights and claims of others, which can infringe or even nullify your rights. Such hazards include:
- Deeds, trusts, or will with incorrect wording or names
- Incorrect notary acknowledgements
- Outstanding judgements, liens, or loans against the property
- Pending legal action against the property impacting the buyer
- Forged deeds
- Invalid instruments executed under an expired or bogus power of attorney
- Unknown heir of a previous owner claiming ownership
- Mistakes in public record
What protects you from these types of title hazards? Title insurance. The "owner's policy" is a one-time fee that protects you and your heirs. Good News: In southern California, this fee is traditionally paid by the seller.
The "lender's policy" is a protection that all lenders require to make a loan against your property. That much lower fee is traditionally paid by the buyer.