What Is Title Insurance and Do San Diego Buyers Need It?

What Is Title Insurance?

Title insurance protects the insured party against financial losses arising from defects in the property's title — prior claims, liens, ownership disputes, recording errors, or other issues that could affect clear ownership rights. Unlike other insurance that protects against future events, title insurance protects against past events that may surface in the future.

Two Types of Title Insurance for Buyers

• Lender's policy (ALTA): Required by virtually all mortgage lenders — protects the lender's interest in the property for the life of the loan. The buyer typically pays for this policy as part of closing costs.
• Owner's policy (CLTA or ALTA Enhanced): Protects the buyer's ownership interest — covers financial losses from covered title defects that existed before the purchase. This policy is optional for buyers but strongly recommended.

What Title Insurance Covers

• Prior ownership disputes or fraudulent transfers in the chain of title
• Forged documents in prior deed transfers
• Undisclosed or missing heirs claiming ownership
• Errors in recorded documents that affect ownership
• Unpaid mortgages or liens from previous owners that were not discovered in the title search
• Mechanic's liens for work done before your purchase but not yet recorded when title was searched

What Title Insurance Does Not Cover

Title insurance does not cover defects you create after purchase, zoning or building code violations, environmental contamination, or physical encroachments that could have been discovered by a survey. Enhanced owner's title policies (ALTA Enhanced) provide broader coverage than standard CLTA policies — including some encroachment coverage and post-policy construction liens.

The Cost of an Owner's Title Policy in San Diego

In San Diego, by convention the seller typically pays for the buyer's standard CLTA owner's title policy — so buyers often receive this protection at no direct cost. On an $800,000 purchase, the CLTA policy might cost $1,500 to $2,500. Confirm who is paying for your title insurance early in the transaction. Rieder Homes Group ensures our buyer clients understand their title insurance coverage before closing.

Related Reading on RiederHomes.com:

→ Blog #78: Title Search Explained

→ Blog #163: Escrow Process

→ Blog #6: Buyer Closing Costs

→ Blog #86: Making an Offer

— Mance Rieder, Broker Associate | Rieder Homes Group | REAL Broker | riederhomes.com | 858-295-0556