In California is Title Insurance 100% necessary?

Today we have the legend with us, Mr. John Perez. John has been in the title industry for 35 years. He’s an expert in his field. We invited John so he could explain Title Insurance to us.

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John answers some of our common questions. Dan and I asked him: What the heck is Title Insurance? And why do we need it? And why do I have to pay for it?

“Those are all great questions and typically the seller usually pays for the Title Insurance for the buyer. The buyer buying the property wants to be ensured that they’re protected, and protected from what? Protected from any type of liens that may encumber or burden the property.

The buyer will want to be sure that the seller is actually the seller of the property. And that the property that they’re buying is described in the preliminary title report that we issue. For the buyer they get a Title Insurance Policy, that is going to show them all of the burdens that affect their property. And they can make a conscious decision as to what they’re going to accept when they purchase that property, and then take it up with their real estate agent. To say, you know, hey this looks dangerous to me. What do I do about it?”

Dan then asked: And out of curiosity, if there’s a cloud on the title per se as the title industry states. What is it, and does the seller have to pay for it or does the buyer have to pay for it? Or who’s responsible for any type of issues or clouds?

“Typically, the sellers going to have to make his property sellable Dan. So in order for the buyer to want to buy it, they’re going to have to take care of whatever issues come up on that preliminary title report. Issues such as maybe encroachment easements, you know a lot of times you get a wall that’s off on the sidelines and it encroaches the neighbors put up a wall, and it encroaches on the property. Or there could be IRS tax liens and state tax liens, and than that seller has against them and are going tp come up on that report. And obviously the buyer doesn’t want to be responsible for those.”

In California, is title insurance 100% necessary? Dan asks

“No, it is not necessary but you can not get a loan from a lender if you do not have title insurance. A lender will not loan you money to buy that home.”

That’s good to know.

“Just because the personal interest between the lender as well as the loan would be placed in the property, correct?” Dan asks.

“Correct, correct. There is a lot of complicated title questions out there that I’m sure you may have, whether it’s probate, whether you’re thinking about putting your property in a trust. Here to answer all of your needs. Feel free to call me for title insurance questions, I’m available all the time. My number is 951-223-1306, be happy to answer them.” John responds.