Real estate has traditionally been a family's most
valuable asset. It is a form of wealth that is
protected by many laws. These laws have been enacted
to protect one's ownership of real estate and the
improvements located on the land. The owner, the
owner's family, and the owner's heirs have extremely
b rights or claims in and to the property that you
are buying. Those who may have an interest in or
lien upon the property could be governmental bodies,
contractors, lenders, judgment creditors, the
Internal Revenue Service, or various other
individuals or corporations. The real estate may be
sold to you without the knowledge of the party
having a right or claim in and to the property. In
addition, you may purchase the real estate without
having any knowledge of these rights or claims. In
either event, these rights or claims remain attached
to the title to the property that you are buying
until they are extinguished.
The Past Can Determine Your Future
Generally, a person thinks of insurance in terms of
the payment of future loss due to the occurrence of
some future event. For instance, a party obtains
automobile insurance in order to pay for future loss
occasioned by a future "fender bender" or for the
future theft of the car.
Generally, a person thinks of insurance in terms of
the payment of future loss due to the occurrence of
some future event. For instance, a party obtains
automobile insurance in order to pay for future loss
occasioned by a future "fender bender" or for the
future theft of the car. Title insurance is a unique
form of insurance. It provides coverage for future
claims or future losses due to title defects which
are created by some past event (i.e., event prior to
the acquisition of the property.) These risks are
far less obvious than those protected against by
automobile insurance, but can be just as
devastating. The following information will answer
some commonly asked questions about title insurance.
Will You Get Clear Title?
It is of utmost importance that you receive clear
title to the property when you purchase real estate.
In order to do so, you must first be informed of any
existing rights or claims that may, in the future,
threaten your title and possession to the property.
Title insurance provides you with this twofold
protection.
How Do You Find Out What Claims Exist?
In order to determine the status of title, Chicago
Title conducts a diligent search of the public
records for those documents associated with the
property. Chicago Title then examines those recorded
documents in order to determine if there are any
rights or claims that may have an impact upon the
title to the property. The title search may reveal
the existence of recorded defects, liens or
encumbrances upon the title such as unpaid taxes,
unsatisfied mortgages, judgments and tax liens
against the current or past owners, easements,
restrictions and court actions. These recorded
defects, liens and encumbrances are reported to you
prior to your purchase of the property. Once
reported, these matters can be accepted, resolved or
extinguished prior to the closing of the
transaction. In addition, you are protected against
any recorded defects, liens or encumbrances upon the
title that are unreported to you and which are
within the coverage of the particular policy issued
in the transaction. This is the first benefit you
receive from title insurance.
What About Undiscovered Claims?
The title to the property that you have purchased
could be seriously threatened or lost completely by
hazards which are considered "hidden risks." "Hidden
Risks" are those matters, rights or claims that are
not shown by the public records and, therefore, are
not discoverable by a search and examination of
those public records. Matters such as forgery,
incompetency or incapacity of the parties,
fraudulent impersonation, and unknown errors in the
records are examples of "hidden risks" which could
provide a basis for a claim after you have purchased
the property. In order to protect you against this
possibility, Chicago Title provides insurance
coverage for such claims. This is the second benefit
you receive from title insurance.
How Does a Title Insurance Policy
Protect Against All These Claims?
If a claim is made against your insured title,
Chicago Title Insurance Company protects you by: (1)
Defending your title, in court if necessary, at no
cost to you, and (2) Bearing the cost of settling
the case, if it proves valid, in order to protect
your title and maintain your possession of your
property.
Title Insurance Protects Your Asset
Title insurance gives you the assurance that
possible clouds on title to the property you are
purchasing - which can be discovered from the public
records - have been called to your attention that
such defects can be corrected before you buy.
Additionally, it is insurance that if any
undiscovered claims covered by your policy arises
out of the past to threaten your ownership of real
estate, it will be disposed of, or you will be
reimbursed exactly as your title insurance policy
provides.
Only One Premium
Unlike other forms of insurance, the original
premium is your only cost as long as you or your
heirs own the property. There are no annual payments
to keep your Owner's Title Insurance Policy in
force.
Adobe PDF document of this information is available
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To protect possibly the most important investment
you'll ever make - the investment in your home.
With a title insurance policy, you as owner, have an
indemnity contract that will reimburse you for loss
in the event someone asserts a claim against your
property that is covered by the policy.
How can there be a title defect if the
title has been searched?
Title insurance is issued after a careful
examination of copies of the public records. But
even the most thorough search cannot absolutely
assure that no title hazards are present, despite
the knowledge and experience of professional title
examiners. In addition to matters shown by public
records, other title problems may exist that cannot
be disclosed in a search.
What title insurance protects against
Here are just a few of the most common hidden risks
that can cause a loss of title or create an
encumbrance on title:
False impersonation of the true owner of the
property
Forged deed, releases or wills, Instruments executed
under invalid or expired power of attorney;
Undisclosed or missing heirs; Mistakes in recording
legal documents
Misinterpretations of wills Deeds by persons of
unsound mind
Deeds by minors
Deeds by persons supposedly single, but in fact
married
Fraud
Liens for unpaid estate, inheritance, income or gift
taxes
What protection does title insurance
provide against defects and hidden risks?
Title insurance will pay for defending against any
lawsuit attacking your title as insured, and will
either clear up title problems or pay the insured's
losses. For a one-time premium, an owner's title
insurance policy remains in effect as long as you,
or your heirs, retain an interest in the property.
What this means to you
The peace of mind in knowing that the investment
you've made in your home is a safe one.
Call Chicago Title
If you have any questions concerning title insurance
coverage, please call a Chicago Title office, or any
of our policy issuing agents. We are here to assist
you.
Adobe PDF document of this information is available
here.
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Initial Request for Title Insurance
An order for title insurance is opened with a title
officer who produces the initial response promptly
within 24 to 48 hours. A preliminary report can be
issued with the minimum of information; without even
identifying the buyer or the terms of the sale. It
shows the record title as it presently exists and is
only an offer to provide insurance. To order a
preliminary report contact your local Chicago Title
representative or office.
On-Site Searching and Examining
Your title officer performs three searches:
Property, Name, and Tax searches. From that
information, a preliminary report is created. Our
on-site customer service center expedites the
process of obtaining hard copies of recorded
documents. Imaging helps to expedite searches with
the ability to obtain documents on-line.
Technical Review
The skill and expertise of our title officer is the
key to providing you with a useful, accurate title
report. Once the report is issued the review begins
by making a technical analysis of the documents of
record. An interpretive view of all recorded matters
is made to evaluate their impact on the title to the
property. Among the questions the examiner asks are:
Would any of the recorded matters prevent the buyer
from using the property for its intended purpose?
Can antiquated leases be eliminated from the policy
per a review of the current leases?
Inspection Analysis
In anticipation of ALTA coverage, a site inspection
is ordered. From the inspection report, the initial
title product is supplemented to show any
encroachments or other off-record matters which
would ultimately impact the title.
Co-Insurance, Re-Insurance, Other Details
If co-insurance or re-insurance is needed for a
transaction, we expedite the confirmation of
approval. You, the customer, are never bogged down
or delayed by the action on the part of our title
unit. To the contrary, as a resource and as a
facilitator of the transaction, we assume the
responsibility for as many details as possible and
are able to direct you to other resources where
necessary (such as for a lost instrument bond).
We Earn Your Respect with our Skills,
Service and Solutions
We try not to point out impediments to the close of
a transaction without also offering assistance and
solutions. By understanding the sometimes delicate
balance of the interests of the parties to a
transaction, and by professionally and courteously
handling issues as they arise, we can capably guide
a transaction to a successful conclusion.
Documents in the Title Process
* Preliminary Report
* Commitment - Shows the condition of title in the
way we are willing to issue it.
* Pro Forma - Specimen of what the requested policy,
as requested, will look like. Underwriting issues
not completed. Not binding upon the company.
* Policy - Final product. Contract of indemnity
between named insureds and the company.
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Sole Ownership | Co-Ownership | Comparison Chart
HOW YOU TAKE TITLE - ADVANTAGES AND
LIMITATIONS:
Title to real property in California may be held by
individuals, either in Sole Ownership or in
Co-Ownership. Co-Ownership of real property occurs
when title is held by two or more persons. There are
several variations as to how title may be held in
each type of ownership. The following brief
summaries reference seven of the more common
examples of Sole Ownership and Co-Ownership.
SOLE OWNERSHIP
1. A man or woman who is not married.
Example: John Doe, a single man.2. An Unmarried
Man/Woman:
A man or woman, who having been married, is legally
divorced.
Example: John Doe, an unmarried man. 3. A Married
Man/Woman, as His/Her Sole and Separate Property:
When a married man or woman wishes to acquire title
as their sole and separate property, the spouse must
consent and relinquish all right, title and interest
in the property by deed or other written agreement.
Example: John Doe, a married man, as his sole and
separate property.
CO-OWNERSHIP
* Community Property:
Property acquired by husband and wife, or either
during marriage, other than by gift, bequest,
devise, descent or as the separate property of
either is presumed community property.
Example: John Doe and Mary Doe, husband and wife, as
community property.
Example: John Doe and Mary Doe, husband and wife.
Example: John Doe, a married man * Joint Tenancy:
Joint and equal interests in land owned by two or
more individuals created under a single instrument
with right of survivorship.
Example: John Doe and Mary Doe, husband and wife, as
joint tenants. * Tenancy in Common:
Under tenancy in common, the co-owners own undivided
interests; but unlike joint tenancy, these interests
need not be equal in quantity and may arise at
different times. There is no right of survivorship;
each tenant owns an interest, which on his or her
death vests in his or her heirs or devisee.
Example: John Doe, a single man, as to an undivided
3?4 ths interest, and George Smith, a single man as
to an undivided 1/4th interest, as tenants in
common. * Trust:
Title to real property in California may be held in
trust. The trustee of the trust holds title pursuant
to the terms of the trust for the benefit of the
trustor/beneficiary.
The preceding summaries are a few of the more common
ways to take title to real property in California
and are provided for informational purposes only.
There are significant tax and legal consequences on
how you hold title. We bly suggest contacting an
attorney and/or CPA for specific advice on how you
should actually vest your title.
CONCURRENT CO-OWNERSHIP INTERESTS
The comparison below is provided for information
only, it should not be used to determine how you
hold title. We strongly recommend that you seek
professional counsel from an attorney and/or CPA to
determine the legal and tax consequences of how
title is vested.
COMMUNITY PROPERTY JOINT TENANCY TENANCY IN COMMON
TENANCY IN PARTNERSHIP TITLE HOLDING TRUST
PARTIES Only husband and wife Any number of persons
(can be husband and wife) Any number of persons (can
be husband and wife) Only partners (any number)
Individuals, groups of persons, partnerships or
corporations, a living trust
DIVISION Ownership and managerial interests are
equal except control of business is solely with
managing spouse Ownership interests must be equal
Ownership can be divided into any number of
interests equal or unequal Ownership interest is in
relation to interest in partnership Ownership is a
personal property interest and can be divided into
any number of interests
TITLE Title is in the "community." Each interest is
separate but management is unified Sale by joint
tenant severs joint tenancy Each co-owner has a
separate legal title to his/her undivided interest
Title is in the "partnership" Legal and equitable
title is held by the trustee
POSSESSION Both co-owners have equal management and
control Equal right of possession Equal right of
possession Equal right of possession, but only for
partnership purposes Right of possession as
specified in the trust provisions
CONVEYANCE Personal property (except "necessaries")
may be conveyed for valuable consideration without
consent of other spouse; real property requires
written consent of other spouse, and separate
interest cannot be conveyed except upon death
Conveyance by one co-owner without the others breaks
the joint tenancy Each co-owner's interest may be
conveyed separately by its owner Any authorized
partner may convey whole partnership property for
partnership purposes Designated parties within the
trust agreement authorize the trustee to convey
property. Also, a beneficiary's interest in the
trust may be transferred.
PURCHASER'S STATUS Purchaser can only acquire whole
title of community; cannot acquire a part of it
Purchaser will become a tenant in common with the
other co-owners in the property Purchaser will
become a tenant in common with the other co-owners
in the property Purchaser can only acquire the whole
title A purchaser may obtain a beneficiaries
interest by assignment or may obtain legal and
equitable title from the trust
DEATH On co-owner's death, 1?2 belongs to survivor
in severalty. 1?2 goes by will to descendants
devisee or by succession to survivor On co-owner's
death his/her interest ends and cannot be disposed
of by will. Survivor owns the property by
survivorship On co-owner's death his/her interest
passes by will to devisee or heirs. No survivorship
rights. On partner's death, his/her partnership
interest passes to the surviving partner pending
liquidation of the partnership. Share of deceased
partner then goes to his/her estate Successor
beneficiaries may be named in the trust agreement,
eliminating the need for probate.
SUCCESSOR'S STATUS If passing by will, tenancy in
common between devisee and survivor results. Last
survivor owns property Devisee or heirs become
tenants in common Heirs or devisee have rights in
partnership interest but not specific property
Defined by the trust agreement, generally the
successor becomes the beneficiary and the trust
continues
CREDITOR'S RIGHTS Property of community is liable
for debts of either spouse, which are made before or
after marriage. Whole property may be sold on
execution sale to satisfy creditor Co-owner's
interest may be sold on execution sale to satisfy
creditor. Joint tenancy is broken. Creditor becomes
a tenant in common Co-owner's interest may be sold
on execution sale to satisfy his/her creditor.
Creditor becomes a tenant in common Partner's
interest cannot be seized or sold separately by
his/her personal creditor but his/her share of
profits may be obtained by a personal creditor.
Whole property may be sold on execution sale to
satisfy partnership creditor Creditor may seek an
order for execution sale of the beneficial interest
or may seek an order that the trust estate be
liquidated and the proceeds distributed
PRESUMPTION Strong presumption that property
acquired by husband and wife is community Must be
expressly stated Favored in doubtful cases except
husband and wife case Arise only by virtue of
partnership status in property placed in partnership
A trust is expressly created by an executed trust
agreement
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Buying Property Is A Numbers Business
1. A fire destroys only the house and
improvements. The ground is left. A defective title
may take away not the only the house but also the
land on which it stands. Title insurance protects
you (as specified in the policy) against such loss.
2. A deed or mortgage in the chain of title may be a
forgery.
3. A deed or a mortgage may have been signed by a
person under age.
4. A deed or a mortgage may have been made by an
insane person or one otherwise incompetent.
5. A deed or a mortgage may have been made under a
power of attorney after its termination and would,
therefore, be void.
6. A deed or a mortgage may have been made by a
person other than the owner, but with the same name
as the owner.
7. The testator of a will might have had a child
born after the execution of the will, a fact that
would entitle the child to claim his or her share of
the property.
8. A deed or mortgage may have been procured by
fraud or duress.
9. Title transferred by an heir may be subject to a
federal estate tax lien.
10. An heir or other person presumed dead may appear
and recover the property or an interest therein.
11. A judgement or levy upon which the title is
dependent may be void or voidable on account of some
defect in the proceeding.
12. Title insurance covers attorneys' fees and court
costs.
13. Title insurance helps speed negotiations when
you're ready to sell or obtain a loan.
14. By insuring the title, you can eliminate delays
and technicalities when passing your title on to
someone else.
15. Title insurance reimburses you for the amount of
your covered losses.
16. A deed or mortgage may be voidable because it
was signed while the grantor was in bankruptcy.
17. Each title insurance policy we write is paid up,
in full, by the first premium for as long as you or
your heirs own the property.
18. There may be a defect in the recording of a
document upon which your title is dependent.
19. Claims constantly arise due to marital status
and validity of divorces. Only title insurance
protects against claims made by non-existent or
divorced "wives" or "husbands."
20. Many lawyers, in giving an opinion on a title,
protect their clients as well as themselves, by
procuring title insurance.
21. Over the last 24 years, claims have risen
dramatically.
We Hope You Never Have A Title Claim
Americans have the future in mind when they buy a
house, and they purchase homeowner's insurance to
help protect that future. But with home ownership
comes the need to protect the property against the
past, as well as the future.
Title insurance protects a policyholder against
challenges to rightful ownership of real property,
challenges that arise from circumstances of past
ownerships. Each successive owner brings the
possibility of title challenges to the property.
When you purchase real property, rely on Chicago
Title to protect your interests. You'll be insured
by a company backed by more than 150 years of
successful title operations.
Rely On Chicago Title To Protect Your
Investment
Every owner, purchaser and beneficiary, whether by a
deed or contract, should have an insured title.
The entire investment depends upon the quality of
title. If you are buying real estate mortgages, you
are paying for a good title and you should see that
you have one. If either fire insurance or title
insurance is omitted, your security is not complete.
Our title policy protects you against unforeseen
defects in title that an abstract or the public
records do not show and cannot show?nor any
attorney's opinion includes.
Whether this is your first or fiftieth real estate
investment, ask your real estate agent or broker to
specify Chicago Title during your transaction.
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