Title Companies and Policies explained

Realtor® Legal Tip – Do you check the Commitment for Title Insurance to make sure the correct insurance policy is being provided for your transaction?

Do you know the difference between an ALTA Homeowner’s Policy of Title Insurance vs. an ALTA Owners (i.e., Standard coverage) Policy of Title Insurance?

Section 6.2 of the REPC specifies that, if available, the Seller will cause to be issued in favor of the Buyer an ALTA Homeowner’s Policy of Title Insurance. Prior to 2008, the REPC only required an ALTA Owner’s (standard coverage) policy. There is a big difference.

These two policies are very different. The ALTA Homeowner’s Policy takes the new owners protection to a higher level by providing title coverage for many additional risks. The ALTA Owners (standard coverage) policy does not cover those additional risks.

Bottom line is if your client is under contract be sure to check and make sure the correct title policy is noted in the Title Commitment (i.e., see section 6.2 and 7(c) of the REPC). This will protect your client and reduce your liability. For questions about what these different title insurance policies cover, please consult your trusted title officer.

Side note:  In a Cash transaction, Both parties must use the same Title Co.  This is because there is only one Title policy issued, not two.  Usually the Seller will dictate the Title Company they want to use.  A Buyer can request to use a different Title Co. but this would need to be addressed by addendum.  Buyer may be required to pay for their own policy.  This can be negotiated.

Courtesy Curtis Bullock

CEO Salt Lake Board of Realtors