Title Insurance is provided by Title Insurance Companies either to protect a property owner from any adverse claim on their ownership title to the property, or to protect a lenders lien on the property for the amount of their mortgage. Policies for both owners and lenders are written according to guidelines established by either the California Land Title Insurance Association ("CLTA") or the American Land Title Association ("ALTA"), For Southern California, the standard is a CLTA Homeowner's Policy for buyers and an ALTA policy for lenders.
The CLTA Homeowner's Policy is a relatively new and enhanced policy, which in addition to insuring ownership of the property, that there is access to the property, that there are no forgeries in the chain of title, and that the insured has marketable title to the policy, also insures numerous other things including coverage for building permit violations incurred by a previous owner, protection against encroachments, and numerous other features. The ALTA policy only insures certain items important to protect the lenders lien on the property.
Title can be held in one of several ways. If the owner is single, the title may be held in the name of the individual, or a trust, if applicable. For multiple owners, title may be held as tenants-in-common, joint tenants, community property, or partnerships. For estate planning purposes, title may also be held in the name of the living trust. Each of these forms of title have both advantages and disadvantages for both legal and tax purposes, and should be carefully considered with expert tax and legal advice before taking title.
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