Why Is La Home Title Insurance Required?
Properties have gone though many ownership changes, along with the land they stand on. Somewhere along the line, there may be a link broken that could cause some problems during escrow. There also may be real estate taxes that have not been paid or forgeries involving transferring of title. Liens may have been placed on the property. Title Insurance is there to cover the insured party against any of these claims or legal fees arising from these problems. In Los Angeles county, it is particularly important to obtain this insurance due to the rapid exchange of properties. The average time a homeowner owns their home in Los Angeles county is estimated to be five years.
Title Insurance is typically required on all houses bought in the Los Angeles area. Recording deed transfers and plotting land parcels are done by people, thus mistakes can and will occur. Title insurance protects you from human error and defects and is a necessity in the process of buying a home. Title insurance is often confusing to the home buyer, due to not much explanation that takes place on this subject between all parties involved. In the past, title insurance was a harder process to perform as records were not stored on computers. Nowadays, it's a lot easier to compare and obtain records but still necessary none-the-less.
The basic process involves title searches. This starts with a title search of the most recent deed, which includes searching the grantee's name (person holding title) backwards in time. This is continued until the deed is found where the grantee acquired the property. Once found, the grantor's name is searched backwards in time to figure out when the grantor became the grantee for acquiring the title. The process continues as the property description involves bigger and bigger parcels of land. Finally, the searcher locates the U.S. Patent.
Title searchers look for various items that affect title to the property, including reconveyances (making sure encumbrances have been paid off), rights-of-way, easements, CC&Rs and more. The chain-of-title that are established by the Deeds can also be broken. Various records are searched to piece the title chain together, including tax sales, death certificates and marriage certificates.
Once the title company is ready to provide coverage, the buyer has many options to choose from for coverage. Common choices are Lender's, Owners and Extended Coverage. This is an important selection process to go through, as your property is at stake depending on what decision is made. Typically the buyer chooses a Basic Owner's Title Policy. This provides clear title to the property, in case of incorrect signatures on documents, forgery, fraud, defective recordation, restrictive covenants and encumbrances or judgments.
A Basic Lender's Title Policy Coverage includes coverage against mechanic's liens and unrecorded liens, unrecorded easements and access rights along with defects and other unrecorded documents. The Extended Owner's Coverage includes Living Trusts, Covenant violations caused by previous owners, subdivision maps, structure damage caused by mineral extractions, building permit violations from previous owners and other forgeries after the title insurance has been issued to the buyer.
Title Insurance is a negotiated item within the purchase contract. Typically in Los Angeles, the buyer purchases the lender's coverage. Different counties go by different customs. Often the sellers and buyers split the price for the owner's policy. The policy is paid for only once and is binding forever. If the house planned to be sold within two years, it might be wise to ask the title company about a binder coverage. This may cost about 10% more, but the insurance will last for two years and can be extended beyond that time if needed. The beauty is that the new buyer's fee will only be based on the difference for what the current buyer bought the property for and the price at which it has now sold. Something definitely to look into.
Title Insurance mainly protects against losses from claims that occurred prior to the date of the current policy. This coverage extends backward for an indefinite time period. Title insurance is necessary and a great insurance to have.
Title Insurance is typically required on all houses bought in the Los Angeles area. Recording deed transfers and plotting land parcels are done by people, thus mistakes can and will occur. Title insurance protects you from human error and defects and is a necessity in the process of buying a home. Title insurance is often confusing to the home buyer, due to not much explanation that takes place on this subject between all parties involved. In the past, title insurance was a harder process to perform as records were not stored on computers. Nowadays, it's a lot easier to compare and obtain records but still necessary none-the-less.
The basic process involves title searches. This starts with a title search of the most recent deed, which includes searching the grantee's name (person holding title) backwards in time. This is continued until the deed is found where the grantee acquired the property. Once found, the grantor's name is searched backwards in time to figure out when the grantor became the grantee for acquiring the title. The process continues as the property description involves bigger and bigger parcels of land. Finally, the searcher locates the U.S. Patent.
Title searchers look for various items that affect title to the property, including reconveyances (making sure encumbrances have been paid off), rights-of-way, easements, CC&Rs and more. The chain-of-title that are established by the Deeds can also be broken. Various records are searched to piece the title chain together, including tax sales, death certificates and marriage certificates.
Once the title company is ready to provide coverage, the buyer has many options to choose from for coverage. Common choices are Lender's, Owners and Extended Coverage. This is an important selection process to go through, as your property is at stake depending on what decision is made. Typically the buyer chooses a Basic Owner's Title Policy. This provides clear title to the property, in case of incorrect signatures on documents, forgery, fraud, defective recordation, restrictive covenants and encumbrances or judgments.
A Basic Lender's Title Policy Coverage includes coverage against mechanic's liens and unrecorded liens, unrecorded easements and access rights along with defects and other unrecorded documents. The Extended Owner's Coverage includes Living Trusts, Covenant violations caused by previous owners, subdivision maps, structure damage caused by mineral extractions, building permit violations from previous owners and other forgeries after the title insurance has been issued to the buyer.
Title Insurance is a negotiated item within the purchase contract. Typically in Los Angeles, the buyer purchases the lender's coverage. Different counties go by different customs. Often the sellers and buyers split the price for the owner's policy. The policy is paid for only once and is binding forever. If the house planned to be sold within two years, it might be wise to ask the title company about a binder coverage. This may cost about 10% more, but the insurance will last for two years and can be extended beyond that time if needed. The beauty is that the new buyer's fee will only be based on the difference for what the current buyer bought the property for and the price at which it has now sold. Something definitely to look into.
Title Insurance mainly protects against losses from claims that occurred prior to the date of the current policy. This coverage extends backward for an indefinite time period. Title insurance is necessary and a great insurance to have.
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