About CAL LAND Title

The answer is simple:
The purchase of a home is most likely one of the most expensive and important purchases you will ever make. You, and your mortgage lender, want to make sure the property is indeed yours - lock, stock and barrel and that no individual or government entity has any right, lien, claim or encumbrance to your property.

Title insurance companies are in business to make sure your rights and interests to the property are clear, that transfer of title takes place efficiently and correctly and that your interests as a homebuyer are protected to the maximum degree.

Title insurance companies provide services to buyers, sellers, real estate developers, builders, mortgage lenders and others who have an interest in real estate transfer.

Title companies routinely issue two types of policies - "owner's," which covers you, the homebuyer; and "lender's," which covers the bank, savings and loan or other lending institution over the life of the loan. Both are issued at the time of purchase for a modest, one-time premium.

Before issuing a policy, however, the title company performs an extensive search of relevant public records to determine if anyone other than you has an interest in the property.

The search may be performed by title company personnel using either public records or more likely, information gathered, reorganized and indexed in the company's title "plant." With such a thorough examination of records, any title problems usually can be found and cleared up prior to your purchase of the property.

Once a title policy is issued, if for some reason any claim which is covered under your title policy is ever filed against your property, the title company will pay the legal fees involved in defense of your rights, as well as any covered loss arising from a valid claim.

That protection, which is in effect as long as you or your heirs own the property, is yours for a one-time premium paid at the time of purchase.

The fact that title companies work to eliminate risks before they develop makes title insurance decidedly different from other types of insurance you may have purchased. Most forms of insurance assume risks by providing financial protection through a pooling of risks for losses arising from an unforeseen event, say a fire, theft or accident.

The purpose of title insurance, on the other hand, is to eliminate risks and prevent losses caused by defects in title that happened in the past. Risks are examined and mitigated before property changes hands.

This risk elimination has benefits to both you, the homebuyer, and the title company: it minimizes the chances adverse claims might be raised, and by so doing reduces the number of claims that have to be defended or satisfied. This keeps costs down for the title company and keeps your title premiums low.

Buying a home is a big step - emotionally and financially. With title insurance you are assured that any valid claim against your property will be borne by the title company, and that the odds of a claim being filed are slim indeed.

Isn't sleeping well at night, knowing your home is yours, reason enough for title insurance?

Where does your dollar go?

Title insurance: as a homebuyer, the term is probably familiar - but is it understood? What is your dollar actually paying for when you purchase a title policy?

Title insurers, unlike property or casualty insurance companies, operate under the theory of risk elimination.

Title companies spend a high percentage of their operating income each year collecting, storing, maintaining and analyzing official records for information that affects title to real property.

Their technical experts are trained to identify the rights others may have in your property, such as recorded liens, legal actions, disputed interests, rights of way or other encumbrances on your title. Before closing your transaction, the title company will proceed to "clear" those encumbrances that you do not wish to assume.

This theory is different from that of most other insurance where, for example, rates and anticipated losses are based on actuarial studies and premiums are pooled on the assumption that a certain number of claims will be made.

The distinction is important: title insurance premiums are paid to identify and eliminate potential risks and claims before they happen.

Medical and casualty insurance premiums, for example, are paid to insure against an unpredictable future event, knowing that risks exist and claims will occur.

Furthermore, title insurance involves a one-time premium, paid when you close the real estate transaction, while property, casualty and medical insurance require regular renewal premiums.

The goal of title companies is to conduct such a thorough search and evaluation of public records that no claims will ever arise. Of course, this is impossible - we live in an imperfect world, where human error and changing legal interpretations make 100 percent risk elimination impossible. When claims arise, professional claims personnel are assigned to handle them according to the terms of the title insurance policy.

Title companies' rates are filed with the California Department of Insurance, and each company is required to publicly post its schedule of fees.

As in all competitive business environments, rates vary from company to company, so you should make comparisons before deciding on a particular title company.

Your real estate professional can help you do this. In addition, there are many helpful customer services provided by title companies that you and the real estate professional may find helpful to your transaction.

The issuance of a title insurance policy is highly labor-intensive. It is based upon the maintenance of a title "plant," or library of title records, in many cases dating back over a hundred years. Each day recorded documents affecting real property and property owners are posted to these title plants so that when a title search on a particular parcel is requested, the information is already organized for rapid and accurate retrieval. In California, most of the large counties have been converted to computer-based title plant systems which provide retrieval from remote locations, further speeding the process of delivering the title search to the customer.

This investment in skilled personnel and advanced data processing represents a major part of the title insurance premium dollar. Proper title plant maintenance, research, evaluation, and legal interpretation are the foundations upon which a title policy rests. That is where most of your dollar goes, and that is the source of your protection and peace of mind as a homeowner in California.