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Title Insurance is usually obtained
when real property is purchased. The policy of title insurance insures
the owner and/or the lender of ownership of the property. There are
various coverages afforded, but a basic policy insures that the buyer
is the owner and that any lender shown on the policy is an
"insured" lender. Many different types of extended coverages
are available; for example, an ALTA policy is quite often required by
institutional lender to afford them additional protection under the
title insurance policy. The title policy is written after an extensive
examination of the public record is made and the recording of the
required documents as called for in the escrow.
The title insurance policy fee is a
one-time fee, paid at the close of escrow. The determination of who
pays for the policy is not uniform from county to county in
California. In some counties, the buyer will pay while in others the
seller will pay. In other counties the seller will pay for the
lender’s title policy. But in almost every case, the question of who
pays closing costs is a matter of agreement between the parties.
Usually this agreement is based on the customary practice in your
county or area. In the case of some FHA or VA transactions, the escrow
officer must follow the guidelines as required by the lender and/or
government.
In Southern California, the common
practice is for the Seller to pay for the Title Insurance policy and
the Buyer to pay for lenders' ALTA policy.
What About Property
Taxes?
The terms of your transaction and the
resultant escrow instructions determine how the property taxes will be
handled. If there is no mention of the proration of taxes, your escrow
officer will not deal with any credits or charges for prorated taxes.
However, if your escrow calls for a proration of taxes, there will be
an item in your closing statement that will reflect either a credit or
charge to your account. If the taxes are not paid (even though there
has been a credit or charge against your account), the buyer is
obligated to obtain a tax bill and pay the taxes. If the buyer does
not have a tax bill with which to pay the taxes, you can request a
bill from the Tax Collector; send a photocopy of the deed.
Supplemental Property Taxes is another
concern of the buyer. Upon transfer of real property, a supplemental
tax bill is generated. This is accomplished in cooperation with the
County Assessor and the County Tax Collector.
Shortly after the close of an escrow
involving the conveyance of real property, the County Assessor will
request information about the property from the buyer. This
information assists the Assessor in determining the value of the
property for taxation purposes. The escrow holder may have previously
supplied some of the information at the time of the closing of the
escrow, via Preliminary Change of Ownership form that should accompany
each deed when it is recorded.
Prepared by the Escrow
Institute of California, P.O. Box 5792, Orange, CA 92613-5792
(The information presented here was taken from a pamphlet prepared by
the Escrow Institute of California to be handed out by escrow
companies to their clients.)
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