Chapter 7 - Title Insurance

Title insurance is quite different from other types of insurance. Why? Because unlike other forms of insurance that provide coverage for unpredictable occurrences that could possibly happen in the future (such as life, health or casualty insurance), title insurance protects the party insured from loss that results due to events that happen before the effective date of the title insurance policy.

Another important difference is that title insurance is a single premium product. This means that the buyer pays a one-time only premium for the lenders benefit on the day the policy is issued. The amount of the title policy premium is based on the amount of money that is being insured by the loan. A trust deed investor always needs a title insurance policy.






How to obtain title insurance policy

A title company will open a standard insured loan transaction, and will research the property. When it comes to researching the property, the title company will begin from the time the government conveyed the property, and then move on to the original private owner, and continue on until the title company reaches the most recent record within its database.

Once the title company has finished its examination of the property, the title agent will then share the results of the research with the investor, revealing the title condition. The report that is conducted by the title company is known as a preliminary report or a prelim. The prelim is created from an itemized list of exceptions (title facts).

When it comes to preliminary reports, the most common exceptions include:

? Casements for a variety of purposes
? Real property taxes
? Any mineral uncertainties or the right to examine for them
? Covenants
? Any encumbrances or liens that presently affect the property
? Restrictions and conditions better known as CCRs.

Policy Types

Although there are different title insurance policies, the most common ones that are used today are:

1. American Land Title Association (ALTA) This policy is generally issued to a lender who holds a deed of trust in first position.

2. California Land Title Association (CLTA) - This policy is generally issued to a lender in second position, or to the purchaser of a property.


What is insured by policies?

Although it may appear that each title insurance policy listed above appear similar, that ALTA policy is recognized as being far superior to the CLTA policy. The reason is because ALTA provides a broader range of coverage compared to CLTA. However, despite their differences, each policy works to insure some the following (Note: The list below is only a small sample of the insurance provided by these two policies):


The deed of trust that is insured is recognized as a valid an enforceable lien.

No defects, encumbrances, or recorded liens appear on the title. All that appears is what is displayed within the policy.

The right of access to and from the property

The title to the property is made marketable

Any assignment of the trust deed that is displayed in the policy is valid and enforceable.


Even though each policy works in the best interest of the investor, ALTA is still considered to be the best choice among the two, and is something you should keep in mind when selecting a policy.

Endorsements

While some properties may look similar, you need to understand that no two pieces of land are the same. Different factors associated with each lot of land such as casements, CCRs, and location, make one piece of property different from the next. And depending on the results of these factors, they can determine if there is an unpleasant effect on title clarity and even on value. Due to the fact that there are so many diverse varieties of factors, additional forms of coverage have been continuously developed in forms of endorsement.

Endorsements are very similar to the riders found in a variety of other types of insurance, and they provide coverage for precise issues that are not covered in the pre-printed title insurance policy.

Title insurance, and the process that is associated with the creation of a title insurance policy, provides the investor with an in depth examination of the property title and everything that affects it. Ultimately, title insurance gives the investor reassurance that they are involved with a safe investment.

California Trust Deed Investments

However, if problems do arise, the borrower is encouraged to set them right should they wish to protect their equity in the project.

This book has been designed to give you a good idea of the many golden opportunities that await you should you choose to invest in deeds of trust. To be on the safe side, it is always in your best interest to ask whether or not a construction control company is used. The following is a list of notes: The Promissory Note - This is a common note, and as the name suggests, it is the borrowers written promise that they will pay a specified amount of money, installments of money, or money on demand to a named person, in the future, at any given time. Those that use unilateral escrow instructions generally sign at the end of the escrow term, while those that use bilateral escrow instructions usually draw up and sign in the initial opening of escrow. Typically, a lender should want to conduct business with a borrower who has a decent record.

Borrowers know that when they receive a fast response from the third party in regards to their lack of payment, that the loan servicing department has zero tolerance for such behavior.
Thus, this will ensure that the investor has the escrow number, the name of the escrow company, as well as the name of the individual responsible for the documentation. Infrastructure Construction Loan - The proceeds for this loan are used to give the borrower the chance to develop and complete the infrastructures of the property, prior to the start of ground-up construction. Through reviewing and maintaining plans, as well as specifications that are relevant to jobs. When beginning the non-judicial foreclosure process, there are certain documents that the investor will be required to give the foreclosing officer. This includes the square footage of the land, the description of the building(s) or improvements, operating statements, rent rolls and income property.

Remember, only through asking questions will you learn all the facts of purchasing a trust deed.
_ The value of a deed of trust is fixed and is always stable. _ Every stock investor is charged a fee from their stock broker. The instructions provided by escrow determine the conditions that need to be met or waived before the escrow officer can take action and disburse your money to either the note holder or the borrower. Prior to the hiring of a control company, its disbursement policies must be looked into.