Uh Oh - Did You Miss Their Property Liens? (Read This for 2023 | 2024)
I received a concerned email from a past client today - about a horror story they heard regarding someone buying a house for cash, getting title insurance, and then later finding out there were liens against the property.
But, it wasn't in the title insurance policy and wasn't covered.
Ouch.
There's actually 3 forms of title insurance offered in California:
- The CLTA Policy (Standard)
- The ALTA-R Policy (ALTA Residential)
- The ALTA Homeowners Policy
The distinction is that the CLTA policy only offers very limited protection against defects such as liens and encumbrances (these items are NOT part of the public record).
The ALTA-R policy provides greater coverage against several (but not all) off record matters.
Numerous title companies will only issue the CLTA policy on REO and Short Sale transactions. This coverage is NOT enough to protect you against most title claims.
So, what do you ask for?
Ask for the CLTA/ALTA Homeowner's Policy
It's also vitally important the policy is issued "without Western Regional Exceptions."
Beware to these exceptions to coverage - as they include some of the most common issues that later become title claims.
"Western Regional Exceptions" exclude coverage in the policy from matters such as easements not shown in the public record, certain tax liens which should be cleared before closing, boundary line discrepancies, and other matters.
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Some title companies will issue the CLTA/ALTA Homeowner's policy - but then include these as exceptions later in the report.
A great idea is to write in the contract "without western regional exceptions - especially when the property is located in San Diego.
So, what do you think?
I would love to hear your thoughts.
I would love to help assist you with your home purchase, home sale, or home loan - please feel free to give me a call, text, or use the form below.
Your Title Insurance Insider,
Scott
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