Title Company Q&A

What Does a Title Company Do?

A title company serves as the neutral third party that ensures a real estate transaction closes cleanly. Their primary responsibilities include searching the property's ownership history, identifying any liens or encumbrances, issuing title insurance, and facilitating the transfer of ownership from seller to buyer.

In California, the title company typically works alongside the escrow company (and in many cases, the same firm provides both services). Together, they manage the financial and legal mechanics of closing -- holding funds in escrow, preparing closing documents, recording the deed, and distributing proceeds.

What Is a Preliminary Title Report?

The preliminary title report (often called the "prelim") is one of the most important documents in any real estate transaction. Issued early in escrow, it details:

• Current ownership -- who legally holds title to the property
• Liens and encumbrances -- mortgages, tax liens, mechanic's liens, or judgments against the property
• Easements -- rights that third parties (utilities, neighbors, government) hold over the property
• CC&Rs -- covenants, conditions, and restrictions (common in HOA communities)
• Exceptions -- items that will not be covered by the title insurance policy

As your agent, I review every prelim in detail and flag any items that require attention. Common issues include outdated liens that need to be cleared, easements that affect your intended use of the property, or boundary discrepancies that require resolution before closing.

What Is Title Insurance?

Title insurance protects against losses arising from defects in title that were not discovered during the title search. Unlike other forms of insurance that protect against future events, title insurance protects against past events -- errors in public records, undisclosed heirs, forged documents, or recording mistakes that could challenge your ownership.

Owner's Policy

The owner's title insurance policy protects the buyer's equity in the property for as long as they (or their heirs) own it. In San Mateo County, the seller customarily pays for the owner's policy. In Santa Clara County, the buyer typically pays. These are customs, not laws -- the allocation is negotiable.

Lender's Policy

If the buyer is financing the purchase, their lender will require a separate lender's title insurance policy. This protects the lender's interest in the property. The buyer pays for the lender's policy.

How Much Does Title Insurance Cost?

Title insurance is a one-time premium paid at closing, based on the purchase price. For a $2.5M Peninsula home, the owner's policy typically costs $3,000 to $5,000 and the lender's policy $1,500 to $2,500. These are approximate figures -- exact pricing depends on the title company and the specifics of the transaction.

Common Title Issues in Silicon Valley

In my experience on the Peninsula, these are the title issues I encounter most frequently:

• Unpermitted construction -- additions or remodels done without permits that create discrepancies between the assessed square footage and the actual structure
• Boundary disputes -- particularly in older neighborhoods where fences, driveways, or landscaping have encroached over property lines over decades
• Solar panel liens -- PACE (Property Assessed Clean Energy) financing that attaches to the property rather than the borrower
• Outdated trust or estate documentation -- properties held in family trusts where the trustee documentation needs updating
• HOA assessment liens -- unpaid HOA dues or special assessments that must be cleared before transfer

Choosing a Title Company

In California, either party can suggest a title company, though the party paying for the owner's policy typically has the right to choose. I work with several reputable title companies across the Peninsula and recommend firms based on their responsiveness, accuracy, and experience with properties similar to yours.

A good title officer is worth their weight in gold. They catch issues early, communicate clearly, and keep the closing on track. This is not an area to economize.