It just can’t be emphasized enough how important it is to obtain a Policy of Title Insurance for every type of real estate transaction.
When a Buyer enters into a Contract to purchase Real Estate from a Seller, the last thing any new Property Owner wants to have happen is for someone to later show up after the close of escrow and further say……………that’s Not your property…………..….it’s mine!!!!!
Title Insurance protects Buyers/New Owners from the possibility that a Seller earlier sold the property to someone else, before he later sold it to the unsuspecting New Buyer.
When a Buyer obtains a Policy of Title Insurance when they purchase a property, if anyone ever does shows up later and claims ownership to the property, the New Owner simply turns the matter over to the Title Insurance Company.
Further is a Buyer ever purchases real estate directly from a Seller, without obtaining a Policy of Title Insurance, where the Seller simply Deeds the property over to the Buyer/New Owner, any recorded Deeds of Trust, Tax Liens or Judgments passes with the property over to the Buyer/New Owner.
A Buyer/ New Owner might think they are buying real estate with only an existing 1st Trust Deed Loan, but in realty many undisclosed liens might come with property.
Title Insurance protects against any such matters ever happening to an unsuspecting Buyer/New Owner.
In California it’s customary that the Seller pays for the Policy of Insurance, insuring the Buyer/New Owner that everything that was “Agreed To” and nothing more passes over to the New Owner.
When a Buyer/New Owner is purchasing a property, the Seller pays for a CLTA Homeowner’s Policy of Title of Insurance, and if the Buyer/New Owner is obtaining Financing from a Lender/Investor then the Buyer/New Owner will need to pay for a Concurrent ALTA Lender’s Policy of Title Insurance.
Whenever a Buyer/New Owner needs to obtain a Concurrent ALTA Lender’s Policy of Title Insurance the costs are much lower due to the Seller concurrently paying for the CLTA Homeowner’s Policy of Title Insurance.
If later the now property owner wants to refinance, then they would pay a “Refinancing Rate” when obtaining an ALTA Lender’s Policy of Title Insurance insuring the new Lender/Investor.
When a Lender/Investor agrees to fund a loan to an owner of real estate, the Lender/Investor also needs Insurance to insure that if the Lender/Investor funds a 1st Trust Deed Loan that it’s insured as a 1st Trust Deed Loan, and doesn’t end up being a 2nd or 3rd Trust Deed Loan.
Any prior Policy of Title Insurance the now Property Owner received when they first purchased the property was only effective up to the date the Buyer/New Owner took title to the property and does NOT insure “Anything” after the date of purchase.
Subsequent to the date of purchase the now Property Owner could have obtained additional Loans, or became subject to Tax Liens or Judgments, which would have priority to any new loan the Borrower is looking to obtain.
If there’s ever a dispute regarding a claim against the Homeowner or a claim by a Lender/Investor to a property, the Title Company who provided Title Insurance will be responsible to defend any possible claims in court or be required to payoff in full any Lien that was “Missed” by the Title Insurance Company when they did their investigation prior to issuing a policy of Title Insurance.
In the real estate world there’s an age old adage relating to recorded documents…………….”First in Time, First in Line”
A Policy of Title Insurance will protect the Interests of both Buyers and Lenders.
Whenever our company arranges real estate financing, we “Always” make sure that both our Clients/Borrowers and our company’s Investors are properly insured.