Title insurance is a contract of indemnity which guarantees that the title to the property is as reported. If it's not as reported, the title company will reimburse the buyers for actual loss or damage under the condition specified in the policy.

Title insurance assures owners that they are acquiring marketable title. Title insurance is designed to eliminate risk or loss caused by defects in title from the past. Title insurance provides coverage only for title problems which were already in existence at the time the policy was issued.


Title search
The title company works to eliminate risks by performing a search of the public records or through their own plant. The search consists of public records, laws and court decisions pertaining to the property to determine the current recorded ownership, and recorded liens or encumbrances or any other matters of record which could affect the title to the property. When a title search is complete, the title company issues a preliminary title report detailing the current status of title.

A preliminary report contains vital information which can affect the close of escrow: ownership of the subject property, how the current owners hold title, matters of record that specifically affect the subject property or the owners of the property, a legal description of the property and an informational plat map.


What does a title policy cover?
Not all risks can be determined by a title search, since certain things such as forgeries, identity of persons, in competency, failure to comply with the law, or incapacity cannot be disclosed by an examination of the public records.

The preliminary title report is an offer to ensure under certain situations, the title policy is a contract that gives coverage against such problems.

The California Land Title Association (CLTA) is the standard policy of title insurance in California.

  • A forged signature on the deed
  • Mistakes in the interpretation of wills or other legal documents
  • Deeds delivered without the consent of the grantor
  • Deeds and mortgages signed by persons not of sound mind, by minors or by someone listed as single but in fact, married
  • Impersonation of the real owner
  • Errors in copying or indexing
  • Falsification of records
  • Undisclosed or missing heirs
  • Recording mistakes
  • With regards to lenders coverage it covers
    • The priority of the insured mortgage
    • The invalidity or unenforceability of the insured assignment
    • The invalidity or unenforceability of the lien of the insured mortgage on the title