CALIFORNIA TITLE COMPANY HAS A VESTED INTEREST IN THE CONSUMERS OF THE STATE OF CALIFORNIA.

California Consumer REPORT APRIL 2016 ISSUE

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WHAT EVERY REALTOR® SHOULD KNOW ABOUT

OWNER’S TITLE INSURANCEMAKE SURE ALL OF YOUR CLIENTS ARE PROTECTEDYou’re a Realtor®, so you know that buying a home can be overwhelming for your clients. Homebuyers can feel confused and frustrated by the mounds of paperwork they have to sign. Plus, the fees associated with closing can sometimes be overwhelming even to an experienced buyer. Owner’s title insurance is one of those items often misunderstood by homebuyers at closing, yet its value is tremendous. As an important advisor to your clients, you are in a position to help homebuyers understand the value of owner’s title in-surance and the dangers that can be incurred without it.

WHAT IS TITLE INSURANCE?Owner’s title insurance is a policy that protects homebuyers’ property rights. For the same reasons the bank requires a lender’s insurance policy, the homebuyer obtains owner’s title insurance to protect their legal claims to the property. For more information about title insur-ance, or to find an ALTA member that can issue an owner’s policy, please direct your clients to homeclosing101.org

HOW IT PROTECTSSay, for example, your client recently purchased a new home from a builder, but the builder failed to pay the roofer. Wanting to be paid, the roofer filed a lien against the property. Without owner’s title insurance, your client would be responsible for paying this existing debt. This is just one example of how owner’s title insurance protects home-buyers from various significant risks.

ENDURING VALUEThe good news is that owner’s title insurance protects home-buyers legally and financially, as long as they own their home. For a low, one-time fee, homebuyers can rest assured, knowing they are protected against existing debts or claims to their property.

An independent policy-issuing agent of First American Title Insurance Company.

“I’m already paying for title insurance.”This charge is for a lender’s policy of title insurance, which pro-tects your lender. This coverage is required, but does not offer protection for your investment. Only an Owner’s Policy helps pro-tect your interests. In fact, your bank’s loan policy only covers the amount of the mortgage and only lasts until that debt is settled. An Owner’s Policy offers you protection for as long as you or your heirs have an interest in the property.

“This is a brand new home.”There are several title issues that could exist even with newly con-structed homes. While the structure might be new, the property on which it sits is not, and there could be title issues that exist with the land. Not to mention that mechanics’ liens could exist resulting from unpaid construction debts. Other potential issues include legal rights of access, easements, restrictions, covenants, HOA liens or other issues that may affect your ownership and en-joyment of the property.

“This is a foreclosure.”If you’re buying a foreclosure, the only attorney to review the property’s back title and validity of the foreclosure is the attorney who performed the bank’s foreclosure work. There could still be clouds on the title or outstanding liens or debts that may surface after the transaction is complete.

“The sellers have lived there for decades.”The amount of time the sellers owned the property does not trans-late to a worry-free transaction. There could still be unsettled is-sues that affect the property title, including problems stemming from life estates, home equity lines, refinances, divorce settle-ments, unpaid taxes, assessments and municipal utility bills.

“I’m not going to own it for long” or“I’m planning to flip it.”When you sell the property, the buyer’s title agent will be able to do more efficient work if an Owner’s Policy is already in place. Not to mention that, as the owner, you will be responsible for resolving issues that affect the insurability of the property. Title defects may drastically affect your ability to resell the property when they are discovered during the settlement process.

“This is just an investment property” or“This is just a vacation home.”Regardless of how you’ll use the home, it’s still an investment – and an asset. Title issues may arise regardless of how the home was or will be used.

“I’ve been told that title insurance isn’t worth it.”Considering that you only pay the premium for an Owner’s Policy of title insurance once and it offers you protection for as long as you or your heirs hold an interest in the property, title insurance is a valuable investment. This is especially clear when you compare the cost of the premium with the cost of defending and/or settling a title claim.

“I can’t afford another fee.”It’s likely that this home is your largest investment. Your Owner’s Policy is actually a one-time premium; once you’ve paid for it, you’re covered for as long as you own the home. Even heirs to the property are covered under your policy. Plus, there may be a discount available when purchasing the Owner’s Policy alongside a loan policy, which is already required.

“I don’t see the value.”While it may not be required by law, the issuance of an Owner’s Policy is considered the standard of care within the real estate industry. In fact, many real estate contracts automatically include a requirement for an Owner’s Policy to protect the buyer. Addition-ally, if we consider the fact that a lender requires their own policy to protect their interest you can see that your own interest in the property should also be protected.

“I looked at the title commitment / preliminary report and I don’t see anything that will be a problem.”There may be hidden issues in the title chain that won’t surface until later. For instance, if fraud or forgery occurred somewhere in the past, an owner’s title policy may protect you when the fraudu-lent activity is discovered.

“I’m only buying land.”There can be many title issues affecting vacant land. These in-clude unclear property boundaries, unrecorded deeds or the dis-covery of prior interests due to omissions in wills and estate plan-ning, divorce settlements and real estate taxation.

OWNER’S POLICY OBJECTIONS

OVERCOMING

WHO DO I NEED TO COMMUNICATE WITH?Nobody knows more about the value of owner’s title insurance than ALTA members. That’s why it’s best for you to communi-cate directly with homebuyers. In the journey of purchasing a home, homebuyers are confronted with overwhelming amounts of detail and new, complex processes. Keep it simple when ex-plaining the value of title insurance. Remember, you sweat the details, so your homebuyers don’t have to.

WHERE CAN I FIND THE TOOLSI NEED?ALTA is providing you with all the tools you need to help you ef-fectively communicate the value of title insurance to your cus-tomers—from Realtors® to homebuyers. Make sure you take advantage of all of the ALTA Homebuyer Guide tools, so you can continue to provide homebuyers with peace of mind.

WHAT DO I NEED TO SAY?“As long as you own your home, owner’s title insurance protects your property rights. Now that’s peace of mind every homebuyer deserves. Getting owner’s title insurance is one of the smartest and easiest decisions you’ll make as a homeowner. It’s a one-time purchase that protects your property rights for as long as you or your heirs own your home.”

WHY IS THIS IMPORTANT?Homebuyers, Realtors®, builders, real estate attorneys and lenders are all looking to you for the most effective and accurate information about owner’s title insurance. Educating homebuy-ers early in the home buying process has a quantifiable posi-tive impact on their understanding, favorability and purchase of owner’s title insurance.

WHEN SHOULD I REACH OUT?ALTA research shows that homebuyers want information about the title search process and title insurance as soon as they be-gin the process of buying a home. In a recent ALTA study, the majority of homebuyers said they would prefer to receive this information when they start working with a lender.

TIPS FOR“TALKING TITLE”

WITH HOMEBUYERS

Chuck Bishop, Sr. Title OfficerQ: Your office issued the Title Policy when we purchased our home. We now want to add our son and daugh-ter-in-law to the title to the property. What are the documents we need, and can you prepare them for us?A: A: Except for limited circumstances when acting as an escrow holder, a title company cannot prepare deeds and other real estate documents. Further, we are not qualified to offer legal advice or make other suggestions related to changes in real estate ownership. That duty falls to law professionals, tax professionals and other quali-fied advisors. To answer the question above, there may be a variety of ways to add your son and daughter-in-law to the title to your home. Only one of these may have the tax and estate planning benefits that best suit your circumstances. One of my favorite sayings is “Title people are like taxi drivers. We know how to get you from point

A to Point B, we just don’t know if you should go there”. So before you get in the “taxi,” contact appropriate legal and/or other profes-sionals. Have them recommend the best way to get you to your Real Estate destination.

www.sandiego.govwww.sandiego.orgwww.sdchamber.orgwww.511sd.comwww.sdfarmbureau.org

www.sandiegoreader.comwww.visitsandiego.comwww.sdar.comwww.sandiegofamily.com

www.sdbj.comwww.sdarcc.comwww.sdtreastax.comwww.inman.com

www.clta.orgwww.greatschools.netwww.realtytimes.comwww.reisource.com

CUSTOMER SERVICE/FARMINGPH 619.516.5240 | FX 619.516.5249 | custserv@caltitle.comDebbie Gandy & Jesse Aquiningoc

TITLE DEPARTMENTPH 619.516.5227 | FX 619.516.5241

Dave Turner, Title Officer, ext. 111CELL 858.877.0348 | titlesd@caltitle.com

Kurt Streeter, Title Assistant, ext. 102 titlesd@caltitle.comKaren Ludden, Title Assistant, ext. 115 titlesd@caltitle.com

Chuck Bishop, Vice President & Title ManagerPH 619.516.5227 | FX 619.516.5242

CELL 619.843.2264 | chuckb@caltitle.com

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