What is Title Insurance in California?
Title insurance is an important cost component within Closing Costs that always intrigues a first time home buyer. Title insurance in California protects buyers and lenders from financial liabilities that may arise due to a title defect or a hidden lien.
Have a look at our Title Insurance explainer video to see how title insurance can protect your lender and your ownership in case of a title defect.
There are two types of California title insurance policies: Lender’s Title Insurance Policy and Owner’s Title Insurance Policy.
Lenders in California often require borrowers to purchase a California Lender’s Title Insurance Policy which guarantees protection for California lenders against issues arising out of defects on the title of a California property. On the other hand, the California Owner's Title Insurance Policy protects the buyer against claims and liens.
Title insurance policy premiums in California show up as an itemized list of a closing cost worksheet for a buyer and seller such as a Closing Disclosure, Loan Estimate, HUD-1, or an ALTA Settlement Statement. If you're looking to get a preview of what these costs look like, use this free California title insurance calculator.
How much does Title Insurance Cost in California?
Overall a property of 1,000,000, would cost you $750 for the owner's title policy and $110 for lender's policy, provided they are issued simultaneously.
Here are a few more use cases:
- For a purchase price of a $500,000 property in California with a 20% down payment ($100,000), the cost of title insurance policy and lender's policy are $350 and $110 respectively.
- For a purchase price of a $500,000 property in California bought with full cash, the cost of the title insurance owner's policy is $350.
- For a purchase price of a $1,000,000 property in California with a 20% down payment ($200,000), the cost of the title insurance owner's policy and lender's policy are $750 and $110 respectively.
- For a purchase price of a $1,000,000 property in California bought with full cash, the cost of the title insurance owner's policy is $750.
- For a purchase price of a $10,000,000 property in California with a 20% downpayment ($2,000,000), the cost of the title insurance owner's policy and lender's policy are $7,500 and $110 respectively.
- For a purchase price of a $10,000,000 property in California bought with full cash, the cost of the title insurance owner's policy is $7,500
How is Title Insurance Calculated in California?
California has 4 pricing slabs for both owner’s and lender’s policy to help you calculate the net amount. These are:
| Property Rate | ALTA Cost of Owner’s Policy (per $1000) |
| $0 - $10,000,000 | $ 0.75 |
| $10,000,000 - $20,000,000 | $ 0.65 |
| $20,000,000 - $50,000,000 | $ 0.60 |
| Above $50,000,000 | $0.55 |
Simultaneous issue of lender’s policy with the ALTA Owner’s policy that comes with western regional exceptions come at for $110.
Say you want to calculate the cost of the owner's title policy for a $500,000 property. The total cost will be:
What is the Owner's Title policy in California?
The owner's policy is a legal document that shields the owners from unknown defects such as missing heirs, incorrect documentation, unjust court proceedings, and protects their ownership. The owner’s policy contributes to the majority of the costs that go into purchasing the title insurance.
What is Lender’s Title policy in California?
The lender’s policy is often purchased along with the owner’s policy. It protects the lender from title defects such as a pending construction lien on the property, errors in the title, and other issues that may arise after the title has been transferred to the buyer.
What is not covered in Title Insurance in California?
Title insurance may not cover the following:
- Losses due to infestation
- Financial losses due to repair and maintenance of items that were not revealed during the property inspection.
- Damages due to natural calamities such as thunderstorms.
- Damage due to a fire
How long is the title policy valid in California?
The title policy remains valid till the time you remain the owner of the property. Only when you decide to sell, a new policy must be made in the name of the buyer.
Who regulates Title Insurance in California?
The California Insurance Commissioner is responsible for the title insurance landscape in California. However, policy prices across the state vary from one title company to another.
Who pays for Title Insurance in California?
Title insurance fees can be paid by either of the parties. However, as a custom, the seller pays for the title insurance in the southern part of the state while the buyers generally pay in the northern counties of the state.
Is Title insurance required in California?
Title insurance is required for all real estate transactions that have a mortgage, although it is not mandated by the law. Most transactions happen with both parties purchasing their respective policies.
Should you shop for title insurance in California?
You can definitely shop for title insurance in the state of California by approaching any reputable title company. However, if you are skeptical, you can ask your agent or lender to help you out with the process.
Is there any discount on Title Insurance Policy in California?
Technically there is no discount on title insurance in California. But what you can do is go for simultaneous issuing of both Owner’s Policy and Lender’s Policy at the same time. This way you only pay a fixed amount of $100 for the Lender’s Policy.