Selling a Home in California.

What is Title Insurance?

The purchase of a home is often the single largest investment people make in a lifetime; title insurance is protection that assures the rights and interests to the property are as expected, that the transfer of ownership is smoothly completed, and that the new owner receives protection from future claims against the property. It is the most effective, most accepted, and least expensive way to protect property ownership rights.

Because land endures over generations, many people may develop rights and claims to a particular property. The current owner’s rights — which often involve family and heirs — may be obscure. There may be other parties (such as government agencies, public utilities, lenders, or private contractors) who also have “rights” to the property. These interests limit the “title” of any buyer.

Why Do You Need a Title Insurance Policy?

The title to the property could be seriously threatened or lost completely by hazards which are considered hidden risks — “those matters, rights or claims that are not shown by the public records and, therefore, are not discoverable by a search and examination of those public records.” Matters such as forgery, incompetency or incapacity of the parties, fraudulent impersonation, and unknown errors in the records are examples of “hidden risks” which could provide a basis for a claim after the property has been purchased.

Why Does the Lender Need a Policy on My Property?

For the lender, a title policy is a guarantee that it has a valid and enforceable lien (loan or deed of trust) secured by the property, that no one else other than those listed on the policy has a prior claim, and that the party to whom they are making the loan does own the property being used as security for the loan. This protection remains in effect as long as the loan remains unpaid.

What is a Title Search?

Before issuing a policy of title insurance, the title company must review the numerous public records concerning the property being sold or financed. The purpose is to identify and clear all problems before the new owner takes title or the lender loans money. These recorded defects, liens, and encumbrances are reported in a “preliminary report” to applicable parties.

What Types of Policies Are There?

Two types of policies are routinely issued: an “owner’s policy” which covers the home buyer for the full amount paid for the property, and a “lender’s policy” which covers the lending institution over the life of the loan. When purchased at the same time, a substantial discount is given. Unlike other forms of insurance, the title insurance policy requires only one moderate premium for a policy to protect you or your heirs for as long as you own the property.

How Is Title Insurance Different Than Other Types of Insurance?

With other types of casualty insurance (auto, home, health, life), a person thinks of insurance in terms of future loss due to some future event. Title insurance is unique — it provides coverage for future claims or losses due to title defects which are created by some past event (i.e. events prior to the acquisition of the property). Most other types of insurance charge ongoing premiums for continued coverage. With title insurance, the original premium is the only cost as long as the owner or heirs own the property.

How Does a Title Insurance Policy Protect Against Claims?

If a claim is made against the owner or lender, the title insurance company protects the insured by: (1) defending the title in court if necessary, at no cost to owner/lender, and (2) bearing the cost of settling the case if it proves valid, in order to protect your title and maintain possession of the property.

The Preliminary Report is an offer to issue a policy of title insurance covering a particular estate or interest in land, subject to stated exceptions. Since these exceptions may point to potential problems with an intended purchase, it is important for all parties to review the report once it is received.

The report contains a list of matters which will be shown as exceptions to coverage in a designated policy of title insurance. After a title order has been placed, matters relative to the title policy coverage on the subject property are assembled in a title search package and examined by skilled technicians. The Preliminary Report is then prepared and sent to the customer so that the parties to the transaction will become aware of matters which will not be insured against by the title company.

What is a Statement of Information?

A Statement of Information is a form routinely requested from the buyer, seller, and borrower in a transaction where title insurance is sought. The completed form provides the title company with information needed to adequately examine documents so as to disregard matters which do not affect the property to be insured, matters which actually apply to some other person.

What Does a Statement of Information Do?

Every day documents affecting real property — liens, court decrees, bankruptcies — are recorded. Whenever a title company uncovers a recorded document in which the name is the same or similar to that of the buyer, seller, or borrower in a title transaction, the title company must ask, “Does this document affect the parties we are insuring?”

A properly completed Statement of Information will allow the title company to differentiate between parties with the same or similar names when searching documents recorded by name. This protects all parties involved and allows the title company to competently carry out its duties without unnecessary delay.

This chart is for reference purposes only. How title is vested has important legal consequences. Consult an attorney to determine the most advantageous form of ownership for your situation.

What is an Escrow?

Buyers and sellers establish terms and conditions for the transfer of ownership. These terms are given to a third party known as the escrow holder. The escrow holder has the responsibility of seeing that terms of the escrow are carried out. The escrow is an independent neutral account and the vehicle by which the mutual instructions of all parties to the transaction are complied with.

Why is Escrow Needed?

Whether you are the buyer or the seller, you want assurance that no funds or property will change hands until all instructions have been followed. With the increasing complexity of business, law, and tax structures, it takes a trained professional to supervise the transaction.

How Long is an Escrow?

The length of an escrow is determined by the terms of the purchase agreement and can range from a few days to several months. (In California, 30 days is typical for cash deals; 30–45 days for financed deals.)

Who Chooses the Escrow?

The selection of the escrow holder is normally done by agreement between the principals. If a real estate agent is involved, they may recommend an escrow holder.

The escrow is a depository for all monies, instructions, and documents necessary for the purchase of your home, including your funds for down payment and your lender’s funds and documents for the new loan. Generally, the buyer deposits a down payment with the escrow holder and the seller deposits the deed and any other necessary documents. Prior to the close of escrow the buyer deposits the balance of the funds required and agreed upon by the parties with the escrow holder.

The buyer instructs the escrow holder to deliver the monies to the seller when the escrow holder:

• Forwards the deed to the title company for recording
• Is notified by the title company that a policy of title insurance can be issued showing title to the property is vested in the name of the buyer

Escrow Officer’s Duties Include:

1. 01Receive signed Purchase Agreement; prepare escrow instructions
2. 02Receive and deposit buyer's earnest money into an escrow account
3. 03Serve as the neutral agent and liaison/communication link to all parties
4. 04Order Preliminary Report to determine status of title
5. 05Request beneficiary's statement or pay-off demand related to existing financing
6. 06Comply with lender's requirements as specified in closing instructions
7. 07Secure releases of all escrow contingencies or other conditions
8. 08Prorate taxes, interest, insurance, and rents
9. 09Prepare or secure the transfer deed or other documents
10. 10Arrange appointments for buyer/seller to sign documents
11. 11Request and receive purchase funds from buyer and loan funds from new lender
12. 12Close escrow per instructions
13. 13Arrange for recording of deeds and any other documents
14. 14Request issuance of title insurance policies
15. 15Disburse funds as authorized
16. 16Disposition of all funds held in escrow
17. 17Prepare final accounting statements

The selection of the escrow holder is normally done by agreement between the parties. Typically, the escrow is opened by the real estate agent. Which agent (the “seller side” or the “buyer side”) will open the escrow is generally determined by local practice.

The escrow officer will need some basic information to open and proceed:

• Correct street address, and parcel number if available
• Sales price
• Full names of all parties involved and marital status
• Contact information for all parties
• Existing lender name, loan number, contact information, and approximate unpaid balance
• HOA (Homeowner's Association) information, address, and dues
• HOA management company information (if any)
• Commission amount and additional conditions

In general, the first item to enter the escrow is the buyer’s initial deposit. The escrow file will grow, item by item, until all of the conditions have been met and the escrow is ready to close.

A “red flag” is a signal to pay attention. Below are items which may cause delays or other problems within a transaction and must be addressed well before closing:

• Bankruptcies
• Business trusts
• Clearing liens and judgments, including child or spousal support liens
• Encroachment or off-record easements
• Establishing fact of death — joint tenancy / Family trusts
• Foreclosures
• Physical inspection results — encroachment, off-record easements
• Probates
• Power of Attorney — use of, proper execution
• Proper execution of documents
• Proper jurats, notary seals
• Recent construction
• Transfers or loans involving corporations or partnerships
• Last-minute change in buyers
• Last-minute change in type of title insurance coverage

Red Flag Examples

• Taxes: Unpaid property taxes, supplemental taxes, or special assessments due at close.
• CC&Rs: Recorded covenants, conditions and restrictions that may limit use, alterations, or rental.
• Easements: Recorded or prescriptive rights for utilities, neighbors, or shared access.
• Agreements: Recorded use, road maintenance, party-wall, or boundary-line agreements affecting the property.
• Trust Deeds: Existing or unknown deeds of trust securing loans against the property.
• Encroachments: Improvements crossing a property line — fences, sheds, decks.
• Notice of Violation: Recorded municipal code or zoning violations requiring cure.
• Court Orders / Judgments: Money judgments or family-law orders attaching to the seller.
• Bankruptcy: Pending or recent bankruptcies of the seller — can require court approval.
• Notice of Pending Action (lis pendens): Litigation affecting title.
• Statement of Information: Required to differentiate parties with the same/similar names.

In addition to the buyer, seller, lender, and real estate agent(s), escrow may involve several other parties. For example: Appraisal, Home Warranty, Home Inspection, Termite/Pest Inspection, and Disclosure Report.

Appraisal

If the buyer is securing a new loan, an appraisal will be required by the lender. An appraiser will: research the subject property, compare data of recent sales in the subject’s neighborhood (typically within a 1-mile radius — at least three comparable properties), and conduct field inspection in two parts (subject property + exterior of comps). The subject property inspection includes photos of the front and rear, photos of the street scene, and an interior inspection for features and conditions which may detract from or add to the value. A floor plan is drawn during the inspection.

Home Warranty

Home warranties offer advantages to both buyer and seller. The policy protects the buyer by paying for certain repairs and costs of major mechanical systems and major appliances in the home (heating, A/C, etc.). Most home warranty plans can be paid for at the close of escrow.

• Benefits to the seller: Home may sell faster and at a higher price; optional coverage during listing period; protection from legal disputes after the sale.
• Benefits to the buyer: Warranty coverage for major systems and built-in appliances; protects cash flow; network of qualified service technicians; low deductible.

Home Inspections

A physical examination to identify material defects in systems, structure, and components — foundations, basements, under-floor areas, exteriors, roof coverings, attic areas and roof framing, plumbing, electrical, heating and cooling systems, fireplaces, chimneys, and building exteriors.

How the Seller Should Prepare

Have the property fully accessible, including elimination of stored objects that may prevent the inspector from accessing key components. Areas of special concern: attics, crawlspaces, electric panels, closets, garages, gates/yards, furnaces, water heaters. All utilities should be on with functioning pilots lit.

Inspector’s Responsibility

Respect the property. Leave the property as found. Answer questions about the report after the inspection is completed. Provide a copy of the report on site.

Termite / Pest Inspection

Conducted by a State Certified Inspector as evidence of the existence or absence of wood destroying organisms or pests visible and accessible on the date of inspection. Looks for subterranean termites and signs of activity from other wood organisms (carpenter ants, carpenter bees, wood destroying fungus, dry wood termites). California uses Section 1 (active infestation, requires correction) and Section 2 (conditions likely to lead to infestation).

These are traditional distributions of expenses. Many items can be negotiated by both parties at the time of the offer.

Real estate is the #1 target for wire fraud in the US. Hundreds of millions of dollars are lost each year. Most losses are unrecoverable.

The scam (typical pattern)

1. 01Cybercriminals monitor escrow email threads — often by hacking a low-security party (a pest inspector, an HOA manager, a free email account)
2. 02They learn the closing date and your wire amount
3. 03The day before wiring, they email you fake "updated wire instructions" that look exactly like your escrow officer’s
4. 04You wire to the wrong account. Money is gone within hours.

How to protect yourself

• ALWAYS call your escrow officer at the phone number on their official website (NOT a number from any email) to verbally confirm wire instructions before sending any money
• NEVER trust wire instructions sent via email, even if they appear to come from your escrow officer
• Do not wire on the day a sender requests “urgent” rerouting — that’s a red flag
• Use bank-provided wire forms, not email-attached PDFs
• Confirm the recipient bank name, account number, AND the recipient name match exactly what your escrow officer told you on the phone
• After wiring, call escrow within 1 hour to confirm receipt

Because of stricter disclosure laws and higher expectations, sellers have more responsibility to disclose any fact that could affect the sale.

California requires multiple specific disclosures

1. 01Transfer Disclosure Statement (TDS) — Required for almost all residential sales (1–4 units). Discloses known property defects.
2. 02Seller Property Questionnaire (SPQ) — Companion to the TDS, asks more detailed questions about the property’s history.
3. 03Natural Hazard Disclosure (NHD) — Required if the property is in any of: flood hazard zone, very-high-fire-hazard severity zone, earthquake fault zone, seismic hazard zone, special flood hazard area. Most CA properties need this — usually ordered as a third-party report.
4. 04Megan’s Law Disclosure — Reference to the public registered sex offender database (boilerplate; required language).
5. 05Smoke Detector + Carbon Monoxide Compliance — Sellers must disclose and certify compliance with current code (smoke detectors in every bedroom and on every floor; CO detectors outside sleeping areas in homes with gas appliances or attached garage).
6. 06Water Heater Strapping — Sellers must disclose the water heater is properly strapped per CA code.
7. 07Lead-Based Paint Disclosure — Required by federal law for any home built before 1978.
8. 08Solar Panel Disclosure (CA SB-477, 2021) — If the property has solar panels, the seller must disclose the financing arrangement (owned, leased, PPA) and provide the contract.
9. 09Mello-Roos / Special Assessments — If applicable.
10. 10HOA Documents — If a Common Interest Development: CC&Rs, financials, meeting minutes, pending litigation, etc. (Buyer has 5 days to rescind after receiving these.)

Toxic Materials in the House

Disclose any known issues with: lead paint (pre-1978), asbestos (typically 1930–1977 homes), radon, carbon monoxide leaks, mold, formaldehyde, methamphetamine contamination history.

Defects as Deal Breakers

Buyers most frequently back out of a purchase because of problems uncovered during inspection. Sellers blanch at pre-sale inspections because they’ll have to disclose. But weighed against failed deals and the inevitability of disclosure, sellers can avoid additional problems by inspecting before listing.

How you show your home affects how quickly it sells AND the final price.

Shine From the Street

A well-kept, neatly landscaped property is inviting. Refuse containers out of view. Lawn freshly trimmed. Fertilize a few weeks before listing. Woodwork free of chipped paint.

Polish Your Entry

Front door clean or freshly painted. Brass knobs polished. Consider a planter of fresh flowers on the porch.

Minor Repairs — A Major Plus

Repair loose doorknobs, cupboard hinges, dripping faucets, stained sinks, loose caulking, sticking doors and windows, damaged window screens.

Clutter Is Unattractive

Tidiness makes rooms look larger and helps the buyer visualize their decor. Workout rooms, sewing rooms, laundry rooms, home offices should be as organized as the main living space.

Lighting Does Wonders

Open, airy spaces feel welcoming. Drapes, curtains, mini-blinds open. Turn on all lights when showing at night.

Closet Space Is A Plus

Neat, well-organized closets appear larger.

Bathrooms That Sparkle

Remove stains from sinks, toilets, bathtubs, and shower doors. Unclog slow drains. Hang fresh towels.

The Clean Kitchen

The most important room. Clear clutter from countertops. No dirty dishes. Hide countertop appliances. Replace worn flooring. Clean the ventilating hood.

More Showing Tips

• Avoid having too many people present — buyers feel pressured
• Don't tag along or force conversation with the buyer
• Turn down stereo or TV so buyer and realtor can talk
• Keep pets out of the way, preferably out of the house
• Never apologize for the appearance of your home — let your realtor handle concerns
• Let your realtor negotiate price and terms

1. 01Price Your Home Right. Your agent researches comparable sales and advises on the appropriate range.
2. 02Be Flexible On Financing Terms. Flexibility may secure a better selling price.
3. 03Time It Right. Ask a real estate professional whether the market cycle is poised to net you the most money.
4. 04Make Your Property Accessible. Lock boxes are great. Appointment-only showings are most restrictive — the easier to show, the better the odds.
5. 05Use the Latest Marketing Technology. Make sure your agent uses MLS, internet sites, social media, virtual tours, 3D scans, professional photography. (Newmarket Edge bundles these.)
6. 06Stage Your Property Correctly. Put items in storage, create more light, play music. Improve the ambience.
7. 07Selling Property Is Not Seasonal. Property sells year-round. Don’t base decisions on the season.
8. 08Re-evaluate the Marketing Plan. Every 10 days. Make adjustments based on the current market and buyer feedback.
9. 09Analyze Why You Are Not Getting Offers. 80% of buyer activity comes from MLS listings. If no offers and you’re flexible with showings, it may be price — not your agent.
10. 10First Impressions Are Golden. Sales fall through over unkempt lawns, cluttered closets, unpainted doors, hard-to-work locks, blown bulbs, bad colors, stains, unlit areas, foul smells. Spend time on the little things.
11. 11Make The Right Repairs. Consult a real estate professional before making improvements. Some upgrades won’t yield value; others substantially will.
12. 12Give the Sales Process Enough Time. Homes may take 3–6 months in any market. Don’t be forced to accept a disappointing offer.
13. 13Screen Prospects Adequately. A realtor pre-qualifies buyers financially so you don’t lose negotiation time.
14. 14Believe You Can Make a Difference. Top sellers are responsible for at least 1 in 10 of their own sales. Network with friends, hand out flyers, keep the house move-in ready.
15. 15Test the Market Carefully. Never list unless you’re ready to sell. If your plan harbors indecision, resolve it before you list.

A clean, phase-by-phase checklist you can print and tick off as you go.