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Is it necessary to have title insurance?

  • April 15 2014 - Oswego
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Answers (10)

In California, it is common practice in a purchase transaction that the seller pay for the larger portion of the policy, called the CLTA, when the lender requires the purchase of the ALTA policy for lender endorsements. If it is a cash purchase, there is typically no purchase of the ALTA endorsements.

If you have a loan involved, title insurance is required, but a smart buyer will request the minimum CLTA policy even in a cash transaction.  Some liens flow with the land.  Mechanic's liens are a perfect example of a lien that remains on the property after transfer.  

If you don't have a loan, you are not required, nor do most people pay for title insurance when making simple transfers into a trust.  The instrument used to transfer title, say between divorcing spouses, will typically not require title.  Many people use poor instruments that title companies don't like, like quit claim deeds, to transfer title.  This will cause problems down the line when you go to transfer title in a sale.  I have had to track down ex-spouses to execute current quit claim deeds in order to satisfy title prior to closing a sale.  

Bottom line, the lender won't fund the loan without clear title, and clear title may have some hoops involved prior to issuance of the policy. Title companies pay only 7% of all claims, at least here in California.  It does seem rigged in the favor of the companies, but it certainly makes all parties do their due diligence prior to close. 
  • April 28
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Profile picture for cclt
This is just another way for the insurance companies to get into your pocket.  They like to scare you with the old story, "a woman shows up on your door...?"  Really?  Not hardly.  Has a woman ever showed up on yours saying she owns your home?  Save yourself thousands.  Insurance companies rake in billions and give very little back to the user consumer.  Yet we just "go along" with this adage that we must have it to safeguard the fact that someone in the chain will come knocking.  Quit being a dummy about this.

An attorney in Austin, Texas
  • April 28
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I would recommend it ONLY because someday you will want to sell it and you will have to able to give the next buyer a " Clear and Marketable"  title   It would be a heck of a time to discover that some group of nuns has owned the property for the past 138 years and they received it from a government grant and the government got it from the Indians by a right of conquest (I actually had this happen on a property I had listed up north many years ago) and it was all in the abstract.
  • April 16 2014
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What kind of deed are you getting, Jan?

  • April 15 2014
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For a transfer ? No, you can get a quit-claim deed...

Just to OWN real estate ? No, it is not 'required' for simple ownership, though some type of deed IS required...

Real Estate 101.... I think that question was on my real estate exam.......




  • April 15 2014
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Profile picture for BillyMcCoy6
I would highly recommend title insurance. That way, you are guaranteed quality of your title for generations to come. Not having title insurance is a big gamble in my opinion.
  • April 15 2014
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You might not be required to have it unless you are getting a mortgage, but it is well worth the cost. Don't be cheap about that one.
  • April 15 2014
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Yes! This insures that your are getting the property free and clear of liens. Might not seem like a big deal in the present, but when you go to sell later you have to make sure those liens are satisfied... "paid".

The Brown Team
  • April 15 2014
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Yes, at least in California!  I have seen title companies payout, correct property line disputes, for both buyer/seller for errors after the fact.  They make sure that any and all clouds on title are corrected prior to close of escrow.

Respectfully Your,
Sako Hamparsomian
Dilbeck Broker Associate
  • April 15 2014
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YES!  It protects you and the lender against old liens on property before your deed is recorded.  If you have a specific question or situation and need additional information, please email me and I will try to help.

Best regards,

Patty Harrison
Smart Mortgage
  • April 15 2014
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