## Title insurance in California **Title insurance** is a one-time-premium insurance product that protects you against financial loss from title defects existing BEFORE the policy date. Different from most insurance: it covers PAST events that may surface later. ## Two types of title insurance **1. Owner's policy.** Protects the BUYER: - Covers full purchase price (often plus inflation rider) - Lasts as long as you or your heirs own the property - One-time premium paid at closing (~0.5%-1% of purchase price) - OPTIONAL in most states (but strongly recommended) **2. Lender's / mortgagee's policy.** Protects the LENDER: - Covers loan amount only - Decreases as loan is paid down - REQUIRED for almost every mortgage - New policy needed when refinancing - One-time premium ## What title insurance covers **Standard coverage typically includes:** - Forged deeds in the chain of title - Undisclosed heirs claiming the property - Fraudulent transactions - Errors in public records / surveys / indexing - Liens not discovered in title search - Tax liens - Unrecorded mechanic's liens - Easements / rights-of-way not disclosed - Boundary disputes - Defective execution of prior deeds - Mistakes in recording - Spousal claims (community property states) - Notice / service defects in foreclosures - Improper handling of probate transfers ## Standard exclusions Title insurance does NOT typically cover: - Environmental issues (asbestos, lead, contamination) - Zoning / land-use violations - Eminent domain (unless filed before policy) - Issues you knew about but didn't disclose - Issues created after policy date - Mineral rights (varies) - Riparian rights - Fence / boundary disputes (without survey endorsement) - Government surveys / Indian land claims ## Endorsements (additional coverage) Common endorsements that broaden coverage: - **Survey endorsement** — covers boundary issues - **Zoning endorsement** — limited zoning coverage - **Restrictive covenant violations** - **Mineral rights** - **Solar panels / improvements** - **PUD / condominium coverage** - **Inflation protection** (auto-increases policy limit) - **Future advance** (for lenders with HELOCs) - **Environmental** (limited) Endorsements add to the premium. ## Cost Title insurance premiums vary by state: - **Promulgated rates** in some states (FL, NM, TX) — same rate from any insurer - **Filed rates** elsewhere — insurers compete - Typical owner's policy: 0.5%-1% of purchase price - Lender's policy: $250-$500 + ~0.05%-0.1% - One-time premium Some states allow **simultaneous-issue** discounts when buying both owner's + lender's at same time. ## How claims work When a title defect surfaces: 1. **Notify the title insurer** immediately 2. **Insurer investigates** 3. **Insurer decides:** - Defend the title (legal action against claimant) - Cure the defect (pay off lien, quiet title, etc.) - Pay the loss - Combination 4. **Insured cooperates** with investigation Insurer pays for legal defense AND any covered losses. ## When title insurance pays off Real-world examples: - Forged deed in chain shows up; insurer pays purchase price - Old mortgage never released; insurer pays to clear - Surveyor error reveals boundary problems; insurer covers diminution in value - Disinherited heir surfaces; insurer pays settlement - Mechanic's lien from prior owner's contractor; insurer pays it - Identity-theft real-estate fraud; insurer covers loss - Old easement allowing utility to run pipes through property; insurer covers loss in value ## Title search vs title insurance **Title search** — examination of public records by attorney or title company before closing. Finds known defects. **Title insurance** — protects against UNKNOWN defects that title search missed. Most defects ARE caught in title search. Title insurance is for the unknowables. ## Title commitment Before closing, you receive a **title commitment** showing: - Schedule A — basics (legal description, parties, premium) - Schedule B-I — requirements (what must be done before policy issues) - Schedule B-II — exceptions (what's NOT covered) **Read Schedule B-II carefully.** Standard exceptions might include things you'd want covered (encroachments, easements). Negotiate to have them removed if possible. ## Who pays — buyer or seller Varies by state custom: - **Buyer pays** in most states (CA, AZ, FL, MO, others) - **Seller pays** in NM, TX (typically), parts of OH, parts of NY - **Negotiable** — counties have customs but anything is negotiable Lender's policy is almost always paid by buyer (rolled into closing costs). ## Title insurance fraud Some title insurance "alternatives" or schemes are scams: - "Discount" policies that don't have proper underwriting - "Self-insurance" warranties from realtors - One-time "warranty" with no actual claims process Use ALTA-member insurers (American Land Title Association) — established companies with real claims-paying ability. ## What you should do When buying California real estate: get a full title search + an owner's title insurance policy. Don't skip the owner's policy — even though it's optional, the cost is small relative to the protection. Read the title commitment carefully, especially the Schedule B-II exceptions. Most California real-estate attorneys can review title issues for a flat fee. --- *This guide is general information about California law as of early 2026 and is not legal advice. Title insurance is technical. Talk to a licensed California real-estate attorney about your specific situation.*