Q: Why is a property title search so important?

Posted April 18, 2013 by The Argonaut in Real Estate
A: A title search (preliminary report) is important because it reveals if there are any defects in the title to the property. The title search includes any property when a preliminary report is requested. With the preliminary report it will show the legal description of the property, the current owner’s name, all underlying encumbrances, liens, judgments, deeds, and any other underlying matters, such as easements, Covenants, Conditions and Restrictions (CC&Rs) and agreements which affect and run with the land.
Some common agreements which run with the land include: view easement or covenants; height restrictions; building limitations; encroachment issues such as fence lines, gardens, and even swimming pools crossing property lines; water well sharing; parking, road maintenance; shared driveway; solar panels; and noise.
There are several types of title policies.  Standard Coverage Owner’s Title Policy (CLT Standard) that covers clear title, incorrect signatures, fraud, forgery, defects in recordation, restrictive covenants, encumbrances and judgments. Home Owners Extended Coverage Residential Owner’s title Policy (ALTA/CLTA HOP) that covers building permit violations from previous owners, covenant violations from previous owners, subdivision maps, living trusts, structure damages from mineral extractions, encroachments and forgeries after title is issued. Lender’s Title Policy (ALTA Concurrent) that covers mechanic’s liens and unrecorded liens, unrecorded easement and access rights and defects, and other unrecorded documents.
Benefits of Progressive Title insurance includes an ALTA/CLTA HOP Policy that affords the buyer and his or her heirs protection against any serious financial loss due to a defect in the title of the property and protects the seller from breach of warranties. Title insurance covers claims arising out of problems that could not have been discovered in a public records search.
Title insurance is required by all lenders. A lender’s title insurance policy (ALTA Concurrent) provides coverage for the lender against the loss of security as a result of a title problem. The lender’s protection remains in effect until the mortgage is paid and satisfied. Typically, owners title insurance is a single, one-time premium. In some areas, the seller pays for the owner’s policy. In other areas, it is the buyer. However, it is customary that the buyer purchase the lender’s policy. Refinance of the lender’s policy will usually require a new policy.
This week’s article is courtesy of Progressive Title Company, Barbra Stover, Rodeo Realty, (310) 902-7122.


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