What is ALTA title insurance?


ALTA stands for American Land Title Association and an ALTA policy is a title insurance policy that protects against damage or losses related to the defects in the transfer of title (which includes all the transfers of title). Basically, the ALTA title insurance policy is issued to protect the lender and ensure that it has an enforceable lien that is also valid.

As with other title insurance policies, an ALTA title insurance policy will protect against problems in the title such as:

  • Undisclosed and unrecorded mechanic's liens
  • Misrepresentation and identity theft - someone impersonating the owner
  • Acts of forgery on the deed or will
  • Easements
  • Disputes regarding boundary lines
  • Exercise of rights for water and mineral extraction
  • Encroachments
  • Life estates
  • Contested deeds and wills
  • The appearance of undisclosed heirs
  • Misrepresentation of civil status (i.e. saying one is single when in fact he is married or divorced). The spouse may have an interest in the policy by virtue of their legal union.

An ALTA policy is usually required by institutional lenders, with insured amounts up to the value of the loan, during the length or effectivity of the policy.

What happens is that title search will be conducted. If the title is deemed clear of any clouds or encumbrances, the ALTA title insurance policy will be issued. This is the same in concept as earthquake insurance in that insurance companies will usually not issue a policy for areas that are known to be earthquake prone.

When you are looking for an insurance company, it is best to use one that is a member of the ALTA, which works as the governing body of companies who sell title insurance. To check whether your title insurance policy is an ALTA policy, look at the policy terms and conditions - it should be defined by ALTA.

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