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What is title insurance in california

Video What is title insurance in california

index

  • introduction
  • what is title insurance?
  • How is title insurance different from property insurance?
  • save money by comparing rates
  • discounts
  • Who does title insurance protect?
  • choice of title insurer
  • what does title insurance cover?
  • backup options
  • Who should buy title insurance?
  • How much title insurance will I need?
  • Who pays the premium for the title policy?
  • How is the premium determined and when is it paid?
  • what is the security deposit?
  • important tips
  • refunds and kickbacks
  • terms for title insurance
  • frequently asked questions
  • government resources
  • talk to us
  • intro

    The decision to buy a home (or other real estate) or refinance is probably the biggest and most important financial decision you’ll ever make. You and your lender will want to make sure that the title to the property is actually yours and that, unknown to you, no one else has any liens, claims, or liens on your property. Title insurance insures you or your lender against loss from any title defect that may exist in the public records at the time you purchase that property, and certain other risks described in the title insurance policy.

    Possible title flaws include:

    • public record errors
    • unknown liens
    • illegal searches
    • missing heirs
    • forgeries
    • undiscovered liens
    • unknown easements
    • limits/survey dispute
    • undiscovered wills
    • false identity theft
    • Before issuing a title insurance policy, title companies check your title for defects by examining plants of title (a database of property information) or public records, including deeds, mortgages, wills , divorce decrees, court orders, tax records, liens, encumbrances, bonds and maps. The title search determines who owns the property, what outstanding debts are against you, and the condition of the title. You should receive the results of this search, which describes the title of the property you are buying or refinancing and includes a preliminary title report or commitment.

      Title companies also handle property closings and hold the money in an escrow account until the purchase is complete.

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      what is title insurance?

      Title insurance is a contractual obligation that protects against losses that occur when the title to a property is not free from defects (for example, liens, encumbrances, and defects that were unknown when the title policy was issued). title insurance also guarantees the priority of the loan. The terms of the policy define what risks are covered and what risks are excluded from coverage. The title insurer will reimburse you or your lender for covered losses, up to the face amount of the policy, and any related legal expenses. This protection is effective from the date the policy is issued and covers defects that arise before your property. Title companies write policies on all kinds of real and personal property. Two types of real property title insurance policies are most common: a lender’s policy and an owner’s policy.

      How is title insurance different from property insurance?

      Title insurance protects against losses due to defects in title. Before issuing a title insurance policy, title companies search and examine title plants or public records to identify any liens, claims, or liens on the property and alert you to potential defects in the title. the cost of the premium is a one-time fee payable at the time of escrow closing. By contrast, homeowners insurance insures your home and its contents and can provide coverage for losses due to fire or lightning, theft, vandalism, and personal liability claims brought against you. , the policyholder. Homeowners’ premiums are often billed monthly, quarterly, or annually, and installment payment options are often available. Title insurers in California are not authorized to provide you with homeowners insurance.

      save money by comparing rates

      Under California law, each title insurer, underwriting title company (agent for one or more title insurance companies), and controlled escrow company must file its rate schedule, forms, and rate modifications with the commissioner of insurance. Since each company’s loss experience and expenses differ, the rates will also be different, so you can save money by comparing rates.

      Competing title insurers and underwriting title companies may offer different costs or services for required title insurance. you can choose one company for escrow services and another for title insurance.

      The person paying for the policy selects the title insurance company. Make sure any title company you select meets your standards and those of your lender. Ultimately, the choice of which title insurance company to select is yours. You may want to contact more than one title insurer or underwritten title company to compare costs and services. You can visit our website at www.insurance.ca.gov for a list of California Department of Insurance licensed title insurers and subscribed title companies.

      discounts

      Title insurance companies may offer title insurance and escrow discounts, such as:

      • for first time buyers,
      • a “short-term rate” for a property that has been resold within the last five years,
      • concurrent rate if the company provides both the owner’s and lender’s title insurance policies in the transaction,
      • a lump sum subdivision fee for homes that are purchased in a new subdivision,
      • refinance discounts, and
      • short-term financing rates and other discounts that may be available.
      • availability of discounts, amount of discounts, and applicability of discounts may vary by carrier. be sure to ask the company or their title marketing representative what discounts are available.

        In the event of a refinance, if you have an existing title insurance policy, you may be entitled to a reissue or refinance discount. In addition, if the previous owner of the home can provide proof of an owner’s policy, the new owner may be eligible for a reissue discount on an owner’s and lender’s policy (from naic and entitledirect.com).

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        who does title insurance protect?

        Title insurance protects you and your lender if someone disputes the title to your property. This may be in the form of an alleged title defect, which was unknown to you at the time you purchased the property, but came to light at a future date during your ownership of the property. A title insurance policy contains provisions for payment of losses resulting from a covered claim. The title insurance policy also covers legal fees in defense of a claim against your property. the coverage may benefit the homeowner or the bank or mortgage company (lender).

        choice of title insurer

        The choice of which title insurer to use rests with the person paying for the policy. Federal law, the Real Estate Settlement Procedures (RESPA) Act of 1974 (Public Law 93-533), prohibits a seller from asking you to purchase title insurance from any particular company. Visit the Consumer Financial Protection Bureau website at www.cfpb .gov for additional information on respa and title insurance.

        what does title insurance cover?

        There are two basic types of title insurance policies available to owners of real property in California: (1) a standard coverage policy and (2) an extended coverage policy.

        A standard policy insures primarily against title defects that may be discovered through examination of the public record. this includes defects in the title or recorded liens or liens, such as unpaid taxes or assessments, and defects due to lack of access to an open street. A standard policy also covers an additional, limited number of risks that cannot be discovered through a search of the title plant or public records.

        The extended policy provides more coverage than the standard policy. Generally, the extended policy provides the same coverage as the standard policy, but also insures against defects, encumbrances, encumbrances, easements, and encroachments and boundary conflicts that are not reflected in public records. Since an extended policy covers many “unrecorded” title defects, the insurer will usually require an inspection of the property to be insured.

        Because your lender requires title insurance, the lender must specify the type of lender’s policy required.

        backup options

        You can also purchase, at an additional cost, optional endorsements to cover risks not included in standard or extended coverage title insurance policies. Endorsements are available to provide coverage against environmental protection liens, covenant enforcement, conditions and restrictions, damage due to water and mineral development, boundary precision and other potential risks. Endorsements can also add additional named insureds, such as your inter vivos trust (which some call a “living trust”). be sure to discuss the optional endorsements available with your title company or title marketing representative. certain endorsements are required by the lender and will be automatically ordered by the title or escrow company.

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        Who should buy title insurance?

        There are two types of title insurance policy holders and the policies differ accordingly: (1) an owner’s policy (standard and extended) and (2) a lender’s policy. lenders will require your own title insurance as a condition of your loan. A lender’s policy ensures that the lender’s security interest in the property takes precedence over claims others may have on your property. a lender’s policy does not protect you. similarly, the previous owner’s policy does not protect you either. If you want to protect yourself from the claims of others against your new home, you will need a homeowners policy. An owner’s policy insures the buyer for as long as he owns the property. this protection is limited to the value of the property at the time of the claim. It is generally less expensive to purchase a lender’s policy and an owner’s policy at the same time from the same title insurer. contact your title insurer for additional information.

        How much title insurance will I need?

        the home buyer must insure the full purchase price of the property; The lender only requires title insurance to cover the amount of your loan.

        who pays the title policy premium?

        In California, settlement practices vary from locality to locality.

        The party that pays the title premium is a matter of local custom and practice and is not established by law. Depending on the region, the premium for a title insurance policy may be paid by the buyer or seller or divided between the two parties. In Southern California, the title insurance premium is usually paid by the seller.

        It has been the practice in Northern California for the buyer to pay the title insurance premium, or sometimes the premium is split between the buyer and seller. In almost all counties, the buyer pays the lender’s policy premium. the parties are free to negotiate a different allocation of fees. your title company or escrow company can advise you on who normally pays the premium in your area.

        How is the premium determined and when is it paid?

        Title insurance premiums are based on the dollar amount of coverage provided. All title insurance companies must submit their fee schedule and forms to the insurance commissioner.

        premiums are paid only once, at the closing of the escrow. there are no ongoing premiums like other types of insurance.

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        what is the guarantee deposit?

        Escrow is a closing service that handles the funds and documents involved in the property transaction. Escrow allows the buyer and seller to transact business with each other through a neutral party. The “escrow holder” generally receives purchase funds from the buyer to deposit in an escrow account, prepares the deed or other documents, prorates taxes, interest, and insurance according to escrow instructions, insures the releases any contingencies imposed on escrow, files deeds as instructed, requests issuance of title insurance policy, prepares final financial statements for the parties, disburses funds as authorized by escrow instructions escrow and closes escrow when all buyer and seller escrow instructions have been carried out. Historically, the escrow process is handled differently in Northern and Southern California. In Northern California, title insurance companies tend to handle all title and escrow services in the same transaction. In Southern California, title and escrow transactions are separate, with banks, escrow companies, or title companies providing the escrow. practices and prices will vary from county to county, so make sure you understand your individual transaction.

        important tips

        • be sure to verify that the title policy amount is correct. the amount of the owner’s policy must be the purchase price of the property. the lender’s policy amount must be for the amount of the loan.
        • verify that the effective date stated in the policy matches the actual closing date of the escrow.
        • verify that the policy describes all the property and all the interests that are acquired.
        • Discounts may be available for first-time buyers and others with special circumstances. always ask your title company or title marketing representative about available discounts.
        • Concurrent rates may be available if the insurer provides a title insurance policy for both the owner and the lender in the same transaction.
        • refunds and kickbacks

          An illegal repayment occurs when a lender, real estate broker, or homebuilder receives free or discounted services, property, or money in exchange for directing business to a title company. such rebates act to inflate title insurance premium rates for all consumers. It is also illegal if a title insurer, underwritten title company, or controlled escrow company offers you a rate or charge that is less than the currently applicable schedule for rates and charges filed with the California Department of Insurance (CDI). ). the archived program is used as a basis for comparison between companies. If a title insurer offers a refund of scheduled fees and charges, it is a discriminatory practice, which is unfair to all consumers.

          Like reimbursement, it is illegal to pay a commission directly or indirectly to anyone as a means of generating an actual title insurance referral or placement. If any of these activities involve a real estate broker, you may report this activity to the Real Estate Bureau of Consumer Affairs and any other appropriate government agency.

          If you suspect a title insurance company, escrow company, or title insurer is offering refunds or kickbacks, you can report this suspicious activity to the California Department of Insurance.

          If you have any questions, problems, or disputes with a title insurance company, please contact the cdi for assistance.

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          terms for title insurance

          additional charges

          these fees may not be included in the services listed above:

          • wire
          • courier
          • carrier
          • notary
          • government taxes
          • reverse mortgage
          • short sale
          • ownership of real estate (inmate)
          • external signature service
          • Visit the Consumer Financial Protection Bureau website at www.cfpb.gov for additional information on the Real Estate Settlement Procedures Act (RESPA) and disclosure requirements regarding these ancillary fees. .

            guaranteed loan fee

            the fee linked to the loan fee for the sale or purchase of a home. Some escrow companies require this fee. for a refinance, it is the fee paid for the escrow of a refinance transaction.

            escrow sales fee

            the fee paid for the escrow process related to the purchase of a home. it is not applicable to the refinancing of a home.

            foreclosure

            If a homeowner cannot afford the house, they may decide to relinquish ownership and turn the house over to the bank that holds the mortgage

            lender policy

            When you refinance your home or take out a new mortgage, the lender seeks investment protection by requiring the purchase of a lender’s title insurance policy to protect against losses resulting from claims made by others against your new home.

            owner’s policy

            A homeowner’s policy provides assurance that the title insurance company will back the homeowner if a covered title issue arises after the home is purchased. It is issued for the amount of the purchase of the property.

            reverse mortgage

            a special type of home loan that allows you to convert a portion of the equity in your home into cash. (source hud.gov)

            short sale

            a home that sells for less than the mortgage, and the lender agrees to take the lesser amount to pay off the loan.

            title insurer

            title insurer means any company that issues title policies as an insurer, guarantor or indemnifier. A title insurer must have a certificate of authority from the CDI to issue title insurance policies in California.

            title lender policy fee

            the fee charged for a lender’s title insurance policy that protects the lender’s security interest in the property.

            title marketing representative

            a person employed by a title insurer, underwritten title company, or controlled escrow company whose primary duty is to market, offer, solicit, negotiate, or sell title insurance. title marketing representatives must be registered with the cdi.

            title owner policy rate

            the fee paid for the owner’s title insurance policy that protects the homebuyer; not applicable in a refinancing.

            title plant

            a database of organized data files of land and enhanced real property information collected and used by title insurance companies to conduct title searches.

            underwritten title company

            Any corporation engaged in the business of preparing title searches, title examinations, title reports, title certificates or summaries on the basis of which a title insurer writes title policies. An underwritten title company must be licensed by the cdi.

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            frequently asked questions

            The Home Equity Conversion Mortgage (HECM) is FHA’s reverse mortgage program that allows you to withdraw some of the equity in your home. HECM is a secure plan that can provide older Americans with greater financial security. many seniors use it to supplement social security, cover unexpected medical expenses, make home improvements, and more. You can get additional free information about reverse mortgages in general by contacting the National Council on Aging at (800) 510-0301. It’s smart to learn more about reverse mortgages and decide if one is right for you.

            1. What is a reverse mortgage?

            A reverse mortgage is a special type of home loan that allows you to convert a portion of the equity in your home into cash. You can be paid back the equity you built up over the years by making mortgage payments. However, unlike a traditional home equity loan or a second mortgage, HECM borrowers do not have to repay the HECM loan until the Borrowers no longer use the home as their primary residence or fail to meet the obligations of the home. mortgage. You can also use a HECM to purchase a primary residence if you can use available cash to pay the difference between the HECM’s income and the sales price plus closing costs of the property you’re purchasing.

            2. can i qualify for the fha hecm reverse mortgage?

            To be eligible for an FHA HECM, FHA requires that you be a homeowner who is 62 years of age or older, owns your home outright, or has a low mortgage balance that can be paid at closing. With the proceeds from the reverse loan, you have the financial resources to pay ongoing property charges, including taxes and insurance, and you must live in the home. You are also required to receive free or low-cost information from a HECM counselor before you take out the loan. You can find a HECM counselor online or by calling (800) 569-4287.

            3. can i apply for a hecm even if i didn’t buy my current home with fha mortgage insurance?

            yes. You can apply for a HECM regardless of whether or not you purchased your home with an FHA-insured mortgage.

            4. What types of homes are eligible?

            To be eligible for the FHA HECM, your home must be a single-family home or a 2-4 unit home with one unit occupied by the borrower. hud approved condominiums and manufactured homes that meet fha requirements are also eligible.

            5. what are the differences between a reverse mortgage and a home equity loan? With a second mortgage or home equity line of credit, borrowers must make monthly principal and interest payments. A reverse mortgage is different, because it pays you: there are no monthly principal and interest payments. With a reverse mortgage, you must pay property taxes, utilities, and flood and hazard insurance premiums.

            6. Will we have a heritage that we can leave to the heirs?

            When the home is sold or is no longer used as a primary residence, HECM cash, interest, and other finance charges must be repaid. all income beyond the amount owed belongs to your spouse or estate. this means that any remaining capital can be transferred to the heirs. no debt is transferred to the estate or to the heirs.

            7. How much money can I take out of my house?

            amount varies by borrower and depends on:

            • age of youngest borrower or eligible non-borrowing spouse
            • current interest rate; and
            • lesser of appraised value or hecm fha mortgage limit of $625,500 or sale price
            • If there is more than one borrower and no eligible non-borrowing spouses, the age of the youngest borrower is used to determine the amount that can be borrowed.

              8. Should I use an estate planning service to find a reverse mortgage lender?

              fha does not recommend using any service that charges a fee to refer a borrower to an fha-approved lender. You can locate an FHA-approved lender by searching online at www.hud.gov or by contacting a HECM counselor for a list. Services provided by HECM counselors are free or low cost. To locate a HECM counselor, search online or call toll-free (800) 569-4287 for the name and location of a Hud-approved housing counseling agency near you.

              9. What if I change my mind and no longer want the loan after I go to closing? how I do this? By law, you have three calendar days to change your mind and pay off the loan. this is called a three-day right of rescission. the loan cancellation process should be explained at the loan closing. Be sure to ask the lender for instructions on this process. Mortgage lenders differ in the process of paying off a loan. You should ask for the appropriate people’s names, phone numbers, fax numbers, addresses, or written instructions on any processes the business has. In most cases, the right of withdrawal will not apply to hecm for purchase transactions.

              10. How do I receive my payments?

              For adjustable rate mortgages, you can select one of the following payment plans:

              • Tenancy: Equal monthly payments as long as at least one borrower lives and continues to occupy the property as their primary residence.
              • term: equal monthly payments over a fixed period of selected months.
              • credit line: non-scheduled payments or in installments, at the time and in the amount you choose until the credit line is exhausted.
              • Modified Tenancy: Combination of line of credit and scheduled monthly payments for as long as you remain in the home.
              • modified term: combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.
              • For fixed rate mortgages, you will receive the lump sum payment plan.

                lump sum lump sum: a lump sum lump sum payment at mortgage closing.

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                government resources:

                1651 exhibition blvd. Sacramento, CA 95815 877-373-4542

                verify license & information line 877-373-4542

                website: www.dre.ca.gov

                contact about complaints against real estate agents

                California Department of Business Oversight

                1515 K Street, Suite 200, Sacramento, CA 95814-4052 916-327-7585 866-275-2677

                website: www.dbo.ca.gov

                contact regarding complaints against escrow companies only

                california state contractor licensing board

                9821 business park drive sacramento, ca 95827 800-321-2752

                website: www.cslb.ca.gov

                contact for complaints against builders/contractors

                office of consumer financial protection

                p.o. box 4503 iowa city, iowa 52244 855-411-2372

                website: www.cfpb.gov

                contact for claims on consumer products provided by financial entities.

                control of the currency

                customer support group 400 7th street sw, suite 3e-218 washington, d.c. 20219 800-613-6743

                website: www.occ.gov

                contact for consumer complaints about national banks

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                american title association

                1800 m street, nw, suite 300 s washington, dc 20036-5828 (800) 787-alta (2582)

                website: www.alta.org

                a trade association of the national title industry. contact for consumer information on title and various real estate topics

                California Land Title Association

                1215 k street, suite 1816 sacramento, ca 95184 916-444-2647

                website: www.clta.org

                a trade association of the state’s title industry. contact for consumer information on title and various real estate topics

                talk to the insurance department

                We are the state agency that regulates the insurance industry. we also work to protect the rights of insurance consumers. contact the california department of insurance (cdi):

                if you feel you have been treated unfairly by a title insurer or title company, or

                • if you have questions or concerns about insurance.
                • if you want to order cdi brochures.
                • if you wish to file a request for assistance against your title company or insurance company.
                • if you are having difficulty filing a claim with your insurance company.
                • check the license of an insurance agent, broker or company
                • call:

                  Consumer Hotline at 1-800-927-4357

                  phone 1-800-482-4833

                  write:

                  california department of insurance

                  la3 branch rate regulation

                  300 south spring st., south tower floor 12

                  los angeles, ca 90013

                  Visit us in person:

                  300 south spring st., south tower, 9th floor

                  los angeles, ca 90013

                  8:00 am to 5:00 pm, Monday through Friday, except holidays

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