GLOSSARY — REAL ESTATE TERMS

Title Insurance

Title insurance is a policy that protects a buyer or lender against financial loss from defects in a property's ownership history -- such as undisclosed liens, forged documents, or competing ownership claims -- discovered after closing.

What title insurance actually covers

Before closing, a title company researches the property's ownership history to identify liens, easements, or claims that could affect the buyer's ownership. Title insurance then protects against issues that research didn't catch -- forged signatures in the chain of title, undisclosed heirs, or clerical errors in public records, for example.

Owner's policy vs. lender's policy

A lender's title policy is typically required by the mortgage lender and protects only the lender's financial interest in the property. An owner's title policy is optional but strongly recommended, since it protects the buyer's own equity and ownership interest for as long as they own the home.

What it typically costs

In California, an owner's title policy on a $900,000 home commonly runs $1,500 to $2,500 as a one-time premium, calculated using rates filed with the state -- separate from the lender's policy, which is priced based on the loan amount rather than the purchase price.

WHAT TO DO WITH YOUR PRELIMINARY TITLE REPORT

Request the preliminary title report early in escrow, not right before closing
Review it carefully for any unexpected liens, easements, or claims
Decide whether to purchase an owner's policy in addition to the lender's policy
Ask your title company to explain any exceptions listed on the report

Is title insurance required in California?

A lender's policy is effectively required by most mortgage lenders. An owner's policy is optional, though it's commonly purchased and sometimes covered by the seller as a customary closing cost, depending on the local market and negotiation.

How much does title insurance cost?

Cost is based on the purchase price and varies by title company and county; it's typically a one-time premium paid at closing, not a recurring cost.

Does title insurance cover future disputes over the property line?

Standard policies generally don't cover boundary or survey disputes unless an enhanced policy or specific endorsement is purchased -- worth discussing with your title company if boundary questions are a concern.