Page 6 - CTT-CA Real Estate Foreign Buyer & Seller Guide_English

What is a Title Search?
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Frequently Asked Questions
Before issuing a policy of title insurance, the title company conducts a search of the public records concerning the property being sold or financed. The purpose of this title search is to identify all recorded items which affect the property so the buyer can investigate and determine if the property meets their expectations and planned use
This helps the buyer and lender determine if there are any rights or claims that may have an impact upon the title such as unpaid taxes, unsatisfied mortgages, judgments, tax liens against the current or past owners, easements, restrictions and court actions. These recorded defects, liens, and encumbrances are report- ed in a “preliminary title report” which is delivered to all applicable parties for review. Once reported, these matters can be accepted, resolved or extinguished prior to the closing of the transaction. In addition, the buyer is protected against any recorded defects, liens or encumbrances upon the title that are unreported and which are within the coverage of the particular policy.
What Types of Policies Are There?
Two types of policies are routinely issued: an “owner’s title policy” which cov- ers the home buyer for the full amount paid for the property; and a “lender’s title policy”. When these policies are purchased at the same time, a substantial discount is given in the combined cost of the two policies. Unlike other forms of insurance, the title insurance policy requires only one moderate premium for a policy to protect you and your heirs for as long as you own the property. There are no renewal premiums or an expiration date.
How is Title Insurance Different than Other Types of Insurance?
Risk insurance such as auto, home, health, and life, are issued based on the pos- sibility of a future loss due to the occurrence of some future event. For instance, a party obtains automobile insurance in order to pay for future loss occasioned by a future “fender bender” or theft of the car. Title insurance is a unique form of insurance which provides coverage for future claims or losses due to title defects which are created by some past event.
Another significance difference between risk insurance and title insurance is risk insurance charges ongoing fees (premiums) for continued coverage. With title insurance, the original premium is the only cost as long as the owner or heirs own the property.
How Does a Title Insurance Policy Protect the Insured?
An owner’s title insurance is a policy of insurance that protects an insured owner against loss incurred due to a defect in title not disclosed in the policy.
The title insurance company will pay the costs, attorneys’fees and expenses in- curred in defense of the title as insured, buy only as to the extent provided in the Conditions and Stipulations.