Who Chooses the Title Company in California?

Who Chooses the Title Company in California?

  • Consumer's Title Company
  • 12/2/23

If you are embarking on your home-buying journey and wondering about choosing a California title company, you have come to the right place. When contemplating a property purchase, the property must possess a marketable title — meaning that it is free from any liens, judgments, defects, or encumbrances. Title insurance is specifically crafted to shield property owners and mortgage lenders from potential losses arising from imperfections or omissions in the property's title. Read on to learn more.

In a Nutshell: What is Title Insurance?

Purchasing real estate involves obtaining a title, which is a legal document that serves as evidence of ownership and grants the right to use and resell the property in question. Holding a property title in your name signifies legal ownership of the property. When a property undergoes a transfer, it is imperative that the property is free from any debts or liens, and all individuals with a stake in the property must consent to the transfer.

Title insurance is a policy that serves as a contractual safeguard, offering protection against losses that may arise when the title to a property is not free and clear of defects, such as liens, encumbrances, and defects unknown at the time of policy issuance.

Title companies act as neutral third parties and issue policies for various real and personal properties, with the most common types being a lender's policy and an owner's policy for real property.  Before the completion of the escrow process, the title company undertakes a comprehensive assessment of all documents detailing the chain of title. This involves a meticulous review of records sourced from the county recorder's office and various tax agencies, providing both the property owner and lender with assurance that a thorough search has been conducted across all public records pertaining to the property.

In the event of a title-related problem or claim, the title insurance company will provide compensation to the lender or owner experiencing the financial loss. Should the claim proceed to a court of law, the title insurance company will also offer assistance in defending ownership.

Distinguishing Title Insurance from Homeowner’s Insurance

When you purchase a property, it’s essential to differentiate between title insurance and homeowner’s insurance. Unlike homeowner's insurance, which primarily covers your residence and its contents, title insurance is specifically designed to protect against losses due to title defects.

Before issuing a title insurance policy, title companies conduct thorough searches and examinations of title plants or public records to identify any liens, claims, or encumbrances on the property, providing you with awareness of potential title defects. The premium cost for title insurance is a one-time fee payable at the time of escrow closing.

On the other hand, homeowner's insurance provides coverage for losses resulting from various events, such as fire or lightning, theft, vandalism, and personal liability claims against you, the policyholder. Homeowner's insurance premiums are typically billed monthly, quarterly, or annually, often with installment payment options. It's important to note that title insurers in California are not authorized to offer homeowner’s insurance plans.

In essence, while homeowner's insurance safeguards your property and belongings against specific perils, title insurance focuses on ensuring a clear and unencumbered title, protecting you from financial losses related to title defects. Understanding the distinctions between these two types of insurance is crucial for homeowners and property buyers to make informed decisions about their insurance needs.

So, Who Chooses the Title Company?

In California, the decision of which title insurer to choose rests with the individual footing the policy cost. In compliance with federal law, specifically the Real Estate Settlement Procedures Act (RESPA) of 1974 (Public Law 93-533), sellers are prohibited from mandating the purchase of title insurance from a specific title company.

In other words, sellers are not allowed to compel you to choose a specific title insurance company. Buyers have the liberty to select the California title company that aligns with their preferences, financial considerations, and trusted recommendations from professional real estate agents or lenders. This autonomy allows them to prioritize various factors, such as the company's reputation, cost-effectiveness, and efficiency.

If you have any concerns or questions about obtaining title insurance in California, contact Consumer’s Title Company for expert guidance along your real estate journey. With a license in all 58 counties in the state, this trusted team provides an extensive range of real estate products and services to help you achieve your goals, such as title insurance and underwriting for corporate and residential properties. With expert insight, extensive industry knowledge, and a commitment to your success, they can help streamline your transaction. Connect with them today to get started!

Disclaimer: Please note that this content is for general informational purposes only and does not constitute legal advice.

Ready to Work With Us

We are passionate about what we do. Consumer's Title Company delivers superior service for you and your client, and extended coverage for your Buyer or Seller at the most competitive title and escrow rate in the industry.