Alta vs. CLTA: Which Title Insurance Policy is Right for California Buyers?

Title insurance isn't the flashiest part of a real estate transaction—but it's undeniably one of the most important. Particularly in California, where escalating real estate values often soar well into the millions, understanding the difference between your title insurance options can offer peace of mind and protection. If you're buying a home, especially in high-stakes markets such as Los Angeles or San Diego, the type of title insurance you choose can significantly affect your long-term financial security.

Below, we break down the two primary policy options—American Land Title Association (ALTA) and California Land Title Association (CLTA)—detailing what they cover, how they differ, and which one might be the right fit for your situation.

Before breaking down the specific differences between ALTA and CLTA, let's first examine the basics of title insurance. Such policies protect both the homeowner (you) and your mortgage lender against unforeseen issues related to the property's title—such as undisclosed heirs, unpaid taxes, boundary disputes, or forged documents. Though it's a one-time premium paid at closing, the protections provided by title insurance extend for as long as you own the property.

There are two types of title insurance:

• Lender's policy: Covers the lender up to the loan amount, and is usually required by your mortgage company.
• Owner's policy: Optional but highly recommended. It protects your personal investment in the property.

While most buyers understand the need for title insurance, not everyone realizes there are different levels of coverage—namely, CLTA vs. ALTA. And in California, that choice matters.

The CLTA policy is California's standard title insurance. The default policy offered to homebuyers, CLTA, is prevalent in Southern California deals where the seller pays for the owner's policy.

This policy covers:

• Ownership of the property
• Right of access (ingress and egress)
• Marketability of the title
• Recorded liens or encumbrances
• Any public-record title defects that impact your ability to occupy, use, or transfer the property

Though a standard offering, CLTA policies come with two significant drawbacks. First, they only cover recorded matters. If there's an issue that isn't in the public record—like an unrecorded easement or boundary dispute—the policy won't protect you.

Second, CLTA policies come with pre-printed exclusions, known as standard exceptions. These include:

• Unrecorded taxes or assessments
• Claims from parties in possession not shown in public records
• Unrecorded easements or encroachments
• Discrepancies that a physical survey would have revealed

Because of these built-in exclusions, CLTA policies are generally less expensive—but also less comprehensive.

The ALTA Owner's Policy is a more comprehensive and robust option. It includes everything covered in a CLTA policy, plus protection against off-record matters—those that a title search would miss, such as:

• Unrecorded liens or encroachments
• Easements not documented in public records
• Claims from occupants or tenants unknown to the buyer
• Survey discrepancies
• Rights of parties in possession

To issue an ALTA policy, title companies typically require a property survey and may also request interviews or estoppel certificates from current occupants. That extra due diligence comes at a cost—but it also delivers far stronger protection.

ALTA policies do not include the pre-printed standard exceptions that limit CLTA coverage. Instead, exclusions are tailored and typed based on what the title company actually finds, giving you more clarity—and potentially fewer surprises.

Should a title issue arise after closing, both CLTA and ALTA policies follow a similar process:

• You submit a written claim to the title insurer.
• The insurer has 15 days to respond and start investigating.
• You must provide a proof-of-loss statement within 90 days.
• The insurer then has 40 days to accept or deny the claim.

If accepted, the insurer may:

• Pay out the loss (up to the policy limit)
• Defend the title in court
• Negotiate a resolution
• Clear the defect from the title directly

For homeowners, the insurer will cover either the full policy amount or the decline in property value due to the defect—whichever is less.

For lenders, it may be the loan balance or a reduced valuation of the security interest.

However, remember that if the title company can resolve the issue without a payout—such as by clearing a lien—it's not required to cut a check.

If you're purchasing a home in California—especially a high-value property—it's worth inquiring whether an ALTA policy is available and whether it makes sense for your specific transaction. Here's a quick recap of what to consider when choosing between CLTA- or ALTA-based policy:

• Go with CLTA if you're buying in a low-risk area, or if you're confident the title is clean and you're comfortable with public-record-only protection.
  
  
• Choose ALTA if you're buying in a densely developed neighborhood, an older home with unclear boundaries, or if you want greater peace of mind.

Many lenders will require ALTA coverage for their own policy. That's a strong endorsement. And for buyers purchasing multimillion-dollar homes, it's often a small price to pay for broader protection.

Title insurance might seem like a formality, but when issues arise—as they sometimes do in the high-stakes world of California real estate transactions—it becomes your first and best defense. Understanding the nuances between CLTA and ALTA policies enables you to make smarter, more informed real estate decisions.

Looking for more California real estate guidance? Whether you're navigating a luxury transaction or want to understand the fine print behind the paperwork, contact Consumer's Title Company today. Our team's extensive experience and range of services across all 58 counties in California promise the support and guidance necessary to help you protect your most vital asset.