Real Estate Title Insurance
........Boon or Bust?

Very simply what it does is provide you and your Lender insurance that you have a clear title to your real estate.

The Title Company researches the "chain of title" as far back as it can to make sure nobody else has any claim to the ownership of the property.

If there are any liens against the property, they have to be removed before the Title Insurance takes effect.

Title Companies have "Plants" where they store information about all of the real estate in their areas of operation.

They also research Public Records at the local and County courts.
When they are satisfied, they will then issue a Policy of Title Insurance.

By the way, most smaller Title Insurance Companies have their policies underwritten by one of the few large ones!

This might seem a little like "double dipping" but there is actually a valid reason for this.

Your policy is actually the main one, insuring the clear title to the property after they have checked all the records.
This policy is typically paid for by the seller of the property as they are normally expected to give "clear title" to the real estate they are conveying.
It is called an ALTA policy and is also the more expensive of the two.

The Lender's policy (in California it's called a CLTA policy) is to protect your lender from anything in your past that might "cloud the title".

When you purchase real estate, one of the things you have to fill out is a Statement of Information for the title insurer.

If you are married, it does NOT MATTER if only one of you are purchasing the real estate in their name only, you both have to fill out the S.I. if you have applied for a mortgage on the property.

Any Liens and Judgments will have to be satisfied before the Title Company will issue the Lender's policy.

This is because some liens against an individual may be able to become "attached" to the property after closing.

The same goes for the spouse, especially in "community property" States like California.

Title Insurance costs will vary depending on the value of the property.
If you have only owned the property for a short time, usually less than five years, then the Title Company should give you a short term rate discount of around 20%.
Be sure to ask for this!

Now that we are through this boring section, we will look at the TITLE itself.

I am going to give you the nickel tour but, REMEMBER the warning above.
I am NOT a lawyer or an accountant!

Joint Tenancy: This is the most common way of holding title for a married couple.
Some States require you to have the words "Joint tenancy, with the right of survivorship (JTWROS)" for this to be fully effective.
JTWROS means that when one owner dies, the property becomes vested automatically in the remaining survivor(s).
This way there is no probate necessary on the real estate portion of the estate.
In a joint tenancy, a person's interest in the property cannot be willed, it must pass to the surviving joint tenants.

Joint tenancy requires what is commonly referred to as the Four Unities. Unity of:

Time: The real estate must be acquired by each owner at the same time.

Title: All joint tenants must hold the same and equal title to the real estate.

Interest: All interest held in the real estate must be of an equal share.

Possession: All tenants must have the right to occupy all of the real estate without being excluded from any part of it.

If ANY of the four unities are not present, or broken, the Title reverts to Tenancy in Common!

Tenants may hold unequal interests, and their interest may be willed and passed on to their heirs or to whomever they designate.

It requires the four unities AND a fifth one! Marriage.
Tenancy by the Entirety will revert to Tenancy in Common as the result of a divorce.

That's it for Title. If you want more information, consult a Title Insurance Company like Land America, one of the largest, or your real estate attorney.