You may want to make sure that your title insurance policy truly covers you. Some tips from different title insurance representatives in recent months...
1. Ensure that you get the CLTA/ALTA Homeowner's Policy (not the "Owner's Policy").
The two principal forms of title policies are the California Land Title Association (CLTA) policy and the American Land Title Association (ALTA) policy. The basic difference is that the CLTA policy only provides very limited insurance against defects, liens and encumbrances which are not part of the public record, while the ALTA policy includes greater coverage against several (but not all) off-record matters. With all the foreclosures and distressed properties in this marketplace, some title companies are only issuing the standard CLTA policy -especially on bank-owned foreclosures (REOs). I have been told that this coverage is simply insufficient.
2. Be certain that your policy is issued "Without Western Regional Exceptions."
As a San Diego home buyer, you should be aware of certain exceptions to your title insurance coverage. I have been told that the "Western Regional Exceptions" include some of the most common issues that manifest into claims. Look for the following verbiage in Schedule B of your preliminary title report. These "Western Regional Exceptions" exclude:
Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records.
Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry ofpersons in possession thereof.
Easements, claims of easement or encumbrances which are not shown by the public records.
Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records.
Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof," water rights, claims or tit/e to water.
Any lien, or right to a lien, for services, labor or material heretofore or hereafter furnished, imposed by law and not shown by the public records.
- which eliminates the most important coverage. I have been told by several title representatives that a it's a good idea (when your property is located in San Diego County) to write "without western regional exceptions" where title services are selected on the purchase contract. Then, be sure to review your preliminary title report to make sure that the title company is issuing you the correct policy.
Also Read: How to Read and Understand Your Preliminary Title Report