Title Insurance in California: Owner's Policies, Preliminary Reports and Costs
Title insurance in California protects a buyer or a lender against covered losses from defects in title to the property, such as an old lien or a flaw in the chain of ownership, that existed when they bought or lent. The premium is paid once, at the close of escrow, and buyers usually get two policies: an owner’s policy for themselves and a lender’s policy for the mortgage lender. In Northern California the buyer customarily pays for the owner’s policy, but the contract decides.
The document that matters most before closing is the preliminary report, the title company’s statement of what it will and won’t insure. This guide explains the policy types, how to read a preliminary report, how rates are set and who pays, and the title questions that come up with rural land, trusts and LLCs. It is part of our home buying process guides.
What title insurance covers, and what it doesn’t
The California Department of Insurance describes title insurance as protection for you or your lender against losses from defects in title that may exist in the public records when you buy, plus certain other risks listed in the policy. It looks backward: it covers problems that already existed at closing, not new ones you create later.
Title insurance is not homeowners insurance. Homeowners insurance covers the house and contents against fire, theft and similar perils and renews every year. A title premium is a one-time cost, and California title insurers aren’t allowed to sell you homeowners insurance.
Every policy also has exceptions and exclusions, which are the matters it won’t cover. For a buyer, the exceptions listed for your property are the part to read most closely, because they are specific to the land you are buying.
Owner’s policy vs. lender’s policy
| Owner’s policy | Lender’s policy | |
|---|---|---|
| Who it protects | The buyer, for as long as they own the property | The lender’s security interest in the property |
| Amount | Usually the purchase price | The loan amount |
| Required? | Not by law, but nearly universal in California sales | Required by mortgage lenders |
| Who customarily pays | Set by county custom and the contract | The buyer, in almost every county |
The Department of Insurance is blunt on one point: a lender’s policy doesn’t protect you. If you are borrowing, you need your own owner’s policy to cover your equity. Buying both policies from the same insurer at the same time is often less expensive than buying them separately.
Standard, extended and homeowner’s coverage
Owner’s policies come in different levels of coverage, and the names can confuse buyers. CLTA and ALTA are the California Land Title Association and the American Land Title Association, trade groups whose forms title insurers use.
- Standard coverage insures against defects a search of the public records would reveal, plus a limited set of other risks. It doesn’t cover matters off the record, such as an unrecorded easement or a fence over the line.
- Extended coverage adds off-record risks, such as unrecorded easements, encroachments and boundary conflicts. The insurer will typically require a survey before it issues one.
- Homeowner’s policy. Title insurers in California issue a 2021 CLTA/ALTA Homeowner’s Policy, based on the American Land Title Association’s 2021 Homeowner’s Policy form, for one-to-four family residences that meet the insurer’s eligibility rules. It lists more covered risks than a standard policy, and some of them carry a deductible and a maximum dollar limit shown on Schedule A.
Which policy you can get depends on the property and the insurer. A vacant parcel, a vineyard or a building with several units may not qualify for a homeowner’s policy, and extended coverage on acreage may mean ordering a survey. Ask the title officer early which forms are available for your property and what each would cost.
How to read a preliminary report
Under Insurance Code section 12340.11, a preliminary report is an offer to issue a title policy subject to the exceptions it lists. The statute is explicit that it is not an abstract of title and not a representation about the condition of title. In plain terms, it tells you what the policy would cover, not everything that might be wrong.
Preliminary reports differ in layout by company, but most contain the same parts. Work through them in order:
- Vesting. Check that the current owner shown matches the seller on your contract. A trust, an estate or a different name is a signal to ask about signing authority.
- Legal description. Confirm it describes the parcel you think you are buying, including any separate parcels such as an access strip.
- Taxes and assessments. Look for special assessments, bonds or delinquent taxes that will be paid at closing or carried forward.
- Exceptions. Each numbered item is something the policy won’t cover: easements, recorded covenants, conditions and restrictions, rights of way, agreements and existing deeds of trust. Ask for copies of the recorded documents behind any item you don’t understand.
- Requirements. Items the title company needs before it will insure, such as loan payoffs, reconveyances, a trust certification or a statement of information.
Liens and old loans are usually cleared at closing from the seller’s proceeds. Easements and recorded restrictions usually stay with the land, so those are the exceptions that decide whether the property suits your plans.
Statement of information
Escrow will ask each buyer and seller to complete a confidential statement of information. Its purpose is to help the title company tell you apart from someone with a similar name who has a recorded judgment or lien. Fill it in fully and early so a name match doesn’t delay closing.
Rural, vineyard and estate parcels
Title problems on rural land in Sonoma, Napa, Marin and Mendocino are more often about access and use than about old liens. Read the exceptions with these questions in mind:
- Access. Is the road to the property a public road, a recorded easement or just a long-used path? An insured right of access depends on what is of record. Shared roads often need a road maintenance agreement.
- Agricultural contracts. A Williamson Act contract is recorded against the parcel and binds a buyer, and it limits what can be built or split.
- Conservation and open-space easements. These can permanently limit building and use; see our guide to buying land with a conservation easement.
- Boundaries and improvements. Fences, vineyard rows, roads and outbuildings that don’t follow the record lines need a survey and extended coverage to be insured.
- Water. Don’t assume a policy insures water rights or well access across a neighbor’s land. Ask the title officer what the policy says about them.
Our vineyard due diligence guide puts the title review alongside the water, permit and farming checks.
What title insurance costs, and who pays
Title premiums are based on the amount of coverage, so they rise with the price or loan amount. Insurance Code section 12401.1 requires title insurers, underwritten title companies and controlled escrow companies to file their rate schedules and regularly issued policy forms with the Insurance Commissioner, and a filing takes effect no sooner than 30 days after the Commissioner receives it. Section 12401.7 adds that a rate can’t be used until the filing has been publicly displayed for at least 30 days in the county where it applies.
Because insurers’ costs differ, so do their rates, and the Department of Insurance encourages buyers to contact more than one company. Ask about discounts such as a concurrent rate for buying the owner’s and lender’s policies together, or a short-term rate if the property sold recently. The Department of Insurance also notes that federal law, the Real Estate Settlement Procedures Act, bars a seller from requiring you to use a particular title company.
Who pays is a matter of local custom, not law. In Sonoma, Napa, Marin and most Bay Area counties the buyer customarily pays for the owner’s policy; Santa Clara and Sacramento customarily put it on the seller, and several counties split it. Our county table in who pays closing costs in California sets out the 2026 customs. The purchase contract controls in every case.
Diamond may refer you to partners we work with; you’re free to choose any provider.
Vesting: how you take title
The deed will name you and say how you hold title, which affects what happens on death, divorce or a sale. California law recognizes joint interests, partnership interests, interests in common and the community interest of spouses (Civil Code section 682). Common choices are:
- Sole ownership, in one person’s name.
- Joint tenancy, with a right of survivorship between the owners.
- Tenancy in common, where each owner’s share passes under their own estate plan.
- Community property, for spouses.
- Community property with right of survivorship, which Civil Code section 682.1 allows when the deed expressly says so and the spouses accept it in writing on the deed; on one spouse’s death the property passes to the survivor without administration.
- A trust or an entity, discussed below.
Vesting is a legal and tax decision, so make it with your attorney or tax adviser before escrow prepares the deed. Your escrow officer can explain the forms but can’t advise you which to choose.
Buying in a trust or an LLC
Many buyers take title in a revocable living trust. The title company will want to see that the trust exists and that the trustee can sign, usually through a certification of trust. The Department of Insurance notes that an endorsement can add a named insured such as your living trust, which matters if you move the property into a trust after closing.
For an LLC or other entity, expect requests for formation documents, proof the entity is in good standing and authority for the person signing. Conventional home lenders generally lend to individuals rather than entities, so ask your lender before you plan an entity purchase with a loan. Our guides to holding a rental in an LLC or your own name and buying a home privately cover the trade-offs. Bank-owned and foreclosure purchases raise their own title questions; see buying REOs and short sales.
This is general information, not legal or tax advice. Before you choose a vesting or accept an exception you don’t understand, talk to a California real estate attorney, and to your tax adviser about how title affects your estate plan.
Questions people ask
Is title insurance required in California?
A lender’s policy is required by mortgage lenders. An owner’s policy isn’t required by law, but it is standard in California purchases and is the only one that protects the buyer.
How much is title insurance in California?
It depends on the coverage amount, the policy type and the company, because each insurer files its own rates with the Insurance Commissioner. Ask more than one title company for a written quote on your price and loan amount.
Who pays for title insurance in Sonoma, Napa and Marin?
By custom the buyer pays for the owner’s policy and the lender’s policy. It is negotiable, and the purchase contract decides.
What is a preliminary title report?
An offer from the title company to issue a policy subject to the exceptions it lists. Under Insurance Code 12340.11 it is not a representation about the condition of title, so read the exceptions and ask about any you don’t understand.
What is the difference between standard and extended title coverage?
Standard coverage insures against defects found in the public records plus limited other risks. Extended coverage adds off-record matters such as unrecorded easements, encroachments and boundary conflicts, and usually requires a survey.
Can I choose my own title company?
The party paying for the policy usually chooses, and the choice is often written into the contract. Federal law also bars a seller from requiring you to use a particular title company.
Do I need a new title policy if I move my home into a trust?
Not usually a new policy, but ask your title company. An endorsement can add your living trust as a named insured, and the insurer can tell you how its policy treats the transfer.
If you’re reviewing a preliminary report on a home or parcel you’re buying, we can go through the exceptions with you before your contingency deadline. Contact us to set up a time.
Sources & notes
- California Department of Insurance: Title insurance (consumer guide, full text)
- California Department of Insurance: Title insurance guide
- California Public Law: Insurance Code section 12340.11 (preliminary reports)
- California Public Law: Insurance Code section 12401.1 (rate and form filings)
- California Public Law: Insurance Code section 12401.7 (effective date and public display of rates)
- American Land Title Association: Policy forms (2021 Homeowner’s Policy)
- Stewart Title Virtual Underwriter: California endorsement to the 2021 CLTA/ALTA Homeowner’s Policy
- California Public Law: Civil Code section 682 (forms of co-ownership)
- California Public Law: Civil Code section 682.1 (community property with right of survivorship)
Last reviewed October 2026 by Matthew Martinez.
