Title insurance policy covers you and in most of the cases your lender also. It protects against the title defects of your property. The type of title insurance coverage you buy determines the types of title defects that you will be covered.
- Owners and lenders coverage policy: There are two different parties have an interest in the title coverage policies. Those are the property owner the person who wants to ensure as he owns the property without any clouds and the property lender the person that wants to guarantee a legitimate title exists and it can foreclose when you do not pay the loan taken by you. The lender’s title insurance policy protects the lender’s interest by covering the amount up to the loan. The owner’s insurance policy protects the buyer when a title problem comes up. The lender’s policies are generally contains an extended level of coverage. The owner’s coverage comes in a extended or standard forms.
- Standard or CLTA policy: In California the standard coverage policy is often referred as California Land Title Association policy. The standard owner’s policy will cover the policyholder against matters which are on the public record, and against certain problems with execution by someone who was not competent, non delivery, including forgery and deeds. Which means if the seller is sold the property to you with a forged deed, the original or previous owner of the property returned and claim for ownership rights, your title insured company will protect you.
- Extended or ALTA policy: The extended policy also called as an ALTA policy. The ALTA is stands for American Land Title Association. This policy covers the insurer from many more risks. To get an ALTA extended insurance policy, you may need a professional surveyor come out and the purchased land’s map. Once the surveyor does that, you can get coverage against buildings or other parties which are encroaching on your land. You can also get protected against unrecorded tax liens, unrecorded mechanic’s liens from workmen and other imperfections in title.
- Exclusions: The extended polices cover you against many number of things theoretically. But they usually come with some exclusions. When you get the title policy, title insurer researches title for identify existing issues and excludes them. The predictable items will be exclude by the insurer on a clean property. Those are may be utility easements or the county’s authority to charge property taxes. When the exclusions from coverage are normal, others can be serious. You might want to work to cure them before closing on the property with attorney or title officer, or your real estate agent.
The general coverage exceptions are taxes or assessments, easements, encumbrances or claims or easement, interests or claims, and facts not shown in the public records. Encroachment or boundary disputes, water rights, exceptions in patents or reservations, no patented mining claims, mechanics liens or construction are the exceptions.