Why should I purchase owner's title insurance policy, am I required to buy one?


No, you are not required to buy an owner's title insurance policy but many homebuyers choose to.

There are two general types of title insurance - lender and owner title policies. The lender policy will be obligatory to buy; the owner title insurance coverage is optional.

Why pay for owner title insurance policy?

You may need title insurance to protect yourself from the so called hidden title defects that may not be discovered for months or years after you purchase the property:

  • Forged deed;
  • False release of mortgage note;
  • Clerical typos or errors;
  • True owner identity fraud;
  • Unpaid tax and property liens;
  • Undiscovered heirs;
  • and others.

Standard or ALTA owner's title insurance policy?

The standard owner's title insurance policies protect the homeownership interest of the homebuyer and their descendants, as long as they have interest in the property, from title issues that could arise from title defects existing prior to the purchase of the title policy. Also, the title insuring company will cover any legal costs associated with title challenges, and possibly cover the resulting loss.

The standard title policy offers protection from past title issues only.

The extended ALTA owner's title insurance policy provides additional protection to homeowners through endorsements. Also, ALTA title coverage may protect you from future title defects (identity fraud and forgery) - after the title policy was purchased.

Owner's title insurance policy is prepaid at escrow/closing. No monthly premiums are usually charged.

Homeowners Policy of Title Insurance coverage is recommended.

Owners and lenders are advised to purchase Homeowners Policy of Title Insurance - this is a specific title insurance policy, issued by ALTA and the California Land Title Association (CLTA).

You should know that even seasoned title abstractors and real estate attorneys cannot possibly guarantee that the title is fully defect-free.

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