Welcome to another episode of Escrow Out Loud, our San Francisco Real Estate podcast. Join us again this week for the second half of our discussion about title insurance when buying a home in San Francisco. We introduce title and escrow insurance in episode 53, Question That Answer.
[00:21] Picking up where we left off in Episode 53 with items that are found on a title report, Britton begins with another example of a defect in title insurance: a mechanic's lien. Britton introduces the idea of a mechanic's lien and gives a theoretical example of how this might come about. A preliminary title report is designed and supposed to show everything that is recorded in the legal public record against the property. Things that may be recorded in the public record are items like a mechanic's lien, existing owner's tax bill and/or mortgages, unpaid utility bills for utilities like garbage or water, CC&Rs for a condo, to give a few examples. These things are typically called exceptions - think of them like pre-existing conditions for health insurance.
[03:37] After the title company removes the "defects" and you are delivered "clean" title, title insurance policies are designed to protect you from things like an unknown mechanic's lien. One way that title insurance is different than most insurance policies is that you pay for it once and the policy lasts for as long as you own the home and/or mortgage.
[05:45] But... is everything about title insurance policies quite as magical as it seems? The flip side of title insurance companies is that they are, in fact, still insurance companies and act as you’d expect an insurance company to behave. Profit is made when revenue exceeds claims...
[08:32] Which leads to a question we get, do you really need title insurance? Lots of people have different feelings about this one, but unless you are a cash buyer your lender will answer the question for you: you will be getting title insurance.
[12:02] Finally, in residential real estate who traditionally pays for title insurance in San Francisco and how much does it cost?
Thank you for joining us. We hope you enjoyed tuning in and join us again next week for another episode!
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