ALTA Owners' and Lenders' PoliciesReal Estate Influence
July 9, 2012 — 1,060 views
The American Land Title Association (ALTA) is the national trade association for the title insurance industry. Title insurance is essential for any homeowner or lender because it proves there are no problems with the home's title and that the seller really owns the property. Furthermore, without title insurance, a homeowner might be limited in what he or she can do with the property and may even experience a financial loss.
When an owner purchases a property, it is typically called Owner's Title Insurance or an Owner's Policy. This insurance is usually purchased for a one-time fee when the property is bought and then is good for as long as the buyer owns the property. This protects the owner if any hidden title problems arise down the road such as errors, forgery and undisclosed heirs.
It is imperative that anyone who is buying a property receives a clear title to the property when purchasing real estate. For this reason, the Homeowner's Policy was adopted by the ALTA in 1998 and the Expanded Coverage Residential Loan Policy was adopted in 2001. Both the Homeowners' and the Lender’s Expanded Coverage policies provide coverage for many problems.
The ALTA explains some of the problems these title insurance policies cover include post-policy forgery or impersonation, neighbors building encroaching structures onto your land, pre-existing violations of CC&Rs which someone is trying to force you to correct, building permit violations of previous owners, zoning law or regulation violations of previous owners and subdivision law violations of previous owners.
Consumers are free to shop for title insurance in most states, meaning a homeowner or lender can select any title company, settlement company or attorney of his or her choosing to conduct the closing. In most cases, a real estate agent will recommend a title company but a consumer is not required to use the recommendation.
The Loan Policy, which protects the lender's investment, and the Owner's Policy, which protects the buyer's interests, can sometimes be purchased together but are sold separately in some areas. Homeowners who need a loan to pay for the house will often be required to purchase the Loan Policy, but in some areas, the seller is required to purchase the Owner's Policy for the buyer.