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Palm Desert

Title Insurance

"Your Guide to Title Insurance."

What is Title Insurance?

A title insurance policy protects real estate owners and lenders from any loss or damage caused by liens, encumbrances, or defects in the property title. This vital protection ensures that any hidden risks found in public records or past ownership do not affect your rights as the new owner.

Protecting You Against Hidden Risks

Not all risks can be discovered by simply reviewing public records. Title insurance provides essential protection from claims and hidden dangers that could threaten your ownership.

VictoriaFalls

How Title Insurance Differs from Casualty Insurance

Unlike casualty insurance (car, life, health), which protects against future risks, title insurance covers historical issues related to the property’s ownership. With a one-time premium, title insurance ensures that any defects in the past ownership will not affect your right to the property.

Defending Your Title

"If a claim is made against your title, title companies will defend your ownership rights, even in court."

How Title Insurance Protects You

Peace of Mind

"With title insurance, you have peace of mind knowing that any hidden defects won't compromise your ownership."

Cost of Settling a Claim

"If the claim is valid, title insurance will cover the cost of resolving the issue, keeping you in possession of your property."

Types of Title Insurance Policies

There are several types of title insurance policies, each providing varying levels of protection.

  • Definition: The CLTA (California Land Title Association) Owner’s Policy is the standard form of title insurance designed to protect the buyer of a residential property. It provides coverage against several potential issues that could arise with the title, such as defects, liens, or encumbrances that were not discovered during the initial title search.

    Coverage Includes:

    • Protection against losses due to unknown defects in the title at the time of purchase.

    • Coverage against errors in the public records.

    • Protection from claims by undisclosed heirs or former owners.

    • Ensures that the buyer has clear ownership and the right to sell or mortgage the property.

    Best For:

    • Homebuyers who want basic protection against the most common title issues.

    CLTA Owner’s Policy

    A single-family home with a large shield icon in front of it

  • Definition: The ALTA (American Land Title Association) Lender’s Policy is designed to protect the lender’s interest in the property. This policy is typically required by the mortgage lender as a condition of granting a loan, and it ensures that the lender’s lien on the property is valid and enforceable.

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    Coverage Includes:

    • Protection against loss due to defects, liens, or encumbrances that affect the lender’s security interest.

    • Coverage for potential issues such as fraud or forgery in the chain of title.

    • Ensures the priority of the lender's lien over other claims or liens.

    Best For:

    • Lenders providing mortgages, to protect their financial investment in the property.

    ALTA Lender’s Policy

    A house with a bank building icon

  • Coverage Includes:

    • All the standard coverages provided by the CLTA Owner’s Policy.

    • Protection against issues such as encroachments, easements, and certain boundary disputes not covered by the standard CLTA policy.

    • Coverage against claims arising from building permit violations or subdivision map act violations.

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    Best For:

    • Homeowners of 1-4 unit residential properties who want more comprehensive protection against potential title issues.

    ALTA-R (Residential) Policy

    A small cluster of houses (1-4 units), each with a small lock icon above

  • Definition: The ALTA Homeowner’s Policy is a comprehensive form of title insurance specifically for owners of 1-4 unit residential properties. It provides the most extensive protection available, covering a broad range of potential title issues that could arise before or after the homeowner acquires the property.

    Coverage Includes:

    • All the coverages of the ALTA-R policy.

    • Protection against additional risks like zoning violations, post-policy forgery, encroachments occurring after the policy date, and structural damage from prior owners’ construction without proper permits.

    • Expanded coverage for a wide range of 29 specific risks, including issues that may arise in the future.

    Best For:

    • Homebuyers who want the highest level of protection against potential title issues, including future risks and unrecorded easements.

    ALTA Homeowner’s Policy

    A single-family home with a large umbrella covering it.

  • Definition: These are optional additions to standard title insurance policies that offer extra protection or coverage for specific scenarios or unique needs. They are often used in commercial transactions but can also be applied to residential properties in certain situations.

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    Coverage Includes:

    • Binders: Temporary or preliminary coverage, often used when a property is being refinanced or sold multiple times in a short period.

    • Guarantees: Provide assurances about specific aspects of the title, such as the absence of liens or the legal access to the property.

    • Endorsements: Customizable coverage that can be added to the base policy to cover additional risks like mechanic’s liens, environmental issues, or restrictions on property use.

    Best For:

    • Buyers, sellers, or lenders who need additional assurances or are dealing with unique property situations that require customized protection.

    Special Binders, Guarantees, and Endorsements

    A house surrounded by multiple document icons with a plus sign

How Is a Title Policy
Created?

Once escrow is opened, title companies begin a detailed search of public records. After the search is complete, a preliminary report is provided to the customer for review, and the title policy is issued once all conditions are met.

  1. Escrow opens.
  2. Title search begins.
  3. Preliminary report issued.
  4. Closing documents recorded.
  5. Title policy issued.
Pay Only Once, for Lifetime Protection

Why Title Insurance Is Important

Title insurance ensures that you are protected against potential defects in the property’s title, including hidden risks such as forgery, marital claims, or unresolved estate issues.

  • Forgery Protection: Protects against forged deeds or mortgages.
  • Marital Status Issues: Covers claims arising from invalid divorces.
  • Heir Claims: Ensures protection from claims made by previously unknown heirs.
  • Undisclosed Liens: Covers hidden liens or unpaid taxes.
  • Fraud or Duress: Protects against title defects due to fraudulent activity.
  • Legal Defense: Covers court costs and legal fees if your title is challenged.
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