Title insurance is one of those closing costs that many buyers and sellers overlook until they are reviewing the settlement statement. Yet in Silicon Valley, where property values are measured in the millions, title insurance provides critical protection against risks that can jeopardize your ownership for years after closing.
What Title Insurance Protects Against
Title insurance covers defects in the ownership history of a property. These can include undisclosed liens, errors in public records, fraudulent signatures on prior deeds, boundary disputes, and claims from unknown heirs. On the Peninsula, where properties may have changed hands dozens of times over the past century, the title chain can be complex.
A title search examines public records to identify potential issues before closing. But no search is perfect. Title insurance provides a financial backstop if something is missed, covering legal defense costs and potential losses up to the policy amount.
Two Types of Policies
- Owner's policy. This protects the buyer and lasts as long as the buyer or their heirs have an interest in the property. In San Mateo County, it is customary for the seller to pay for the owner's policy, though this is negotiable.
- Lender's policy. Required by virtually every mortgage lender, this protects the lender's interest in the property. The buyer typically pays for this policy. The coverage amount decreases as the loan is paid down and expires when the mortgage is fully paid.
What It Costs in Silicon Valley
Title insurance premiums in California are regulated and based on the property's sale price. For a $2 million Peninsula home, expect to pay approximately $2,500 to $3,500 for the owner's policy and $1,000 to $1,500 for the lender's policy. These are one-time costs paid at closing, not recurring premiums.
While these amounts may seem significant, they are modest relative to the value being protected. A single title dispute on a $2 million property could easily cost tens of thousands in legal fees without coverage.
Common Title Issues on the Peninsula
In my experience working across San Mateo and Santa Clara counties, the most common title issues include:
- Old liens. Contractor liens, tax liens, or judgment liens from previous owners that were never properly released.
- Boundary encroachments. Fences, walls, or structures that cross property lines, particularly common in older neighborhoods like downtown San Mateo or Redwood City.
- Easement disputes. Shared driveway or utility easements that were informally agreed upon decades ago but never properly recorded.
- Trust and estate complications. Properties inherited or held in trusts where the chain of authority is unclear, especially relevant as longtime Peninsula homeowners pass properties to the next generation.
Choosing a Title Company
Not all title companies offer the same level of service. I work with title officers who specialize in Peninsula transactions and understand the unique complexities of our local market. A proactive title officer identifies potential issues early, works to clear them before closing, and ensures the transaction proceeds smoothly.
If you have questions about title insurance or any other aspect of the closing process, I am always available to help.