Title Insurance Basics for Chico, CA Buyers

Title insurance protects a Chico homebuyer against financial loss from problems in a property's ownership history, like unpaid liens, forged signatures, or missed heirs, that a records search didn't catch. It's a one-time premium paid at closing that covers the buyer or lender for as long as they hold an interest in the property.

What Is the Difference Between an Owner's Policy and a Lender's Policy?

There are two separate policies, and they protect two different people. The lender's policy protects the mortgage company's financial interest in the property and is required on nearly every financed purchase. The owner's policy protects the buyer directly and is optional, though almost every buyer chooses to carry one. If a title problem surfaces years after closing, an owner's policy is what protects your equity, not the lender's policy.

Who Pays for Title Insurance in Chico and Butte County?

Who pays is not set by law. It's set by local custom, and that custom varies by county across California. In Southern California counties, sellers typically cover the owner's policy. In much of Northern California, buyers often pay for both policies. In Butte County specifically, the customary split runs differently than either of those patterns: the fee is generally split with the seller paying roughly 75 percent and the buyer paying 25 percent. That's a local custom, not a rule, and it's fully negotiable in the purchase contract regardless of which side of the transaction you're on.

What Does Title Insurance Actually Cover?

Before issuing a policy, the title company runs a detailed search of public records tied to the property looking for anything that could cloud ownership: unpaid property taxes, old mortgages that were never properly released, mechanic's liens from unpaid contractors, boundary disputes, forged deeds, or an heir who was never accounted for in a prior sale. If one of those issues surfaces after you close and it was missed in the search, the policy covers your legal defense and financial loss, up to the policy amount.

How Much Does Title Insurance Cost in Butte County?

Premiums are filed with the California Department of Insurance, so they're not something you negotiate line by line the way you might negotiate a repair credit. Statewide, combined owner's and lender's premiums typically run about 0.5 to 1 percent of the purchase price. What is negotiable is who pays which portion and which title company handles the transaction, since price and service can both vary by underwriter.

Can I Shop Around for a Title Company?

Yes. Buyers and sellers are both free to choose their own title company, and it's worth asking your agent which local companies they've had reliable closings with. A smooth escrow depends as much on responsiveness and accuracy as it does on the premium itself.

Frequently Asked Questions

Is title insurance required to buy a home in Chico?
The lender's policy is required if you're financing the purchase. The owner's policy is optional, but it's the only policy that protects your own equity in the home, so most buyers carry both.

What happens if a title problem is discovered after I close on my Chico home?
If the issue existed before your policy was issued and wasn't disclosed on the title report, your title insurer covers the legal costs to defend your ownership and any resulting financial loss, up to your policy limit.

Can I negotiate who pays for title insurance in a Chico purchase contract?
Yes. Local custom sets a starting point, but the split between buyer and seller is negotiable and can be written into the purchase offer.

Do I still need an owner's policy if I'm paying cash?
Yes. Without financing, there's no lender's policy protecting anyone, which means an owner's policy is the only coverage standing between you and a title defect that surfaces after closing.

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About the Author
Kannon Christiansen is a Realtor with Keller Williams Realty Chico Area, serving buyers and sellers throughout Chico and Butte County.
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