Title Insurance and Escrow for San Diego Buyers: What Each One Does and Who Pays
Title insurance protects you if someone later finds a defect in the ownership history of your home, and escrow is the neutral service that holds the money and documents until the sale closes. In Southern California, the California Department of Insurance says they are usually handled by separate companies, and the seller customarily pays for the owner's title policy.
The short answer
- Title insurance covers defects, liens and other problems with a property's title that existed before you owned it.
- A lender's policy protects the lender. An owner's policy protects you.
- The premium is paid once, at the close of escrow.
- Who pays is set by local custom and is negotiable. The Department says sellers customarily pay in Southern California.
What title insurance does
According to the California Department of Insurance's residential guide, title insurance is a contract that protects against losses if a property's title has defects, liens or encumbrances that no one knew about when the policy was issued. It also guarantees the priority of the lender's loan. It covers problems that arose before you owned the home, as of the date the policy is issued.
Owner's policy and lender's policy
| Policy | Who it protects | Amount |
|---|---|---|
| Lender's policy | The lender's security interest. It does not protect you. | The loan amount |
| Owner's policy | You, for as long as you own the property | Should be the full purchase price |
The Department notes that coverage is limited to the value of the property at the time of a claim, and that buying both policies from the same insurer is usually cheaper. If you finance the purchase, your lender will require its own policy. The owner's policy is the one that protects you, so ask what it will cost.
Standard and extended coverage
A standard policy mainly covers defects found in a search of public records, plus a limited set of other risks. An extended policy also covers off-record matters such as unrecorded easements, encroachments and boundary conflicts. The Department says the insurer typically requires a survey for extended coverage.
Optional endorsements can add protection for things like environmental liens, covenant enforcement and boundary accuracy, for an added cost. Lenders may require some of them. Ask your escrow officer what is being added and why.
What the premium is and who pays
The premium is a one-time payment at the close of escrow, based on the amount of coverage. There are no continuing premiums. The Department says insurers must file their rates and forms with the Insurance Commissioner, and that rates differ among companies.
Who pays is set by local custom, not by law, and it can be negotiated in your contract. The Department says sellers customarily pay in Southern California, buyers customarily pay in Northern California or the cost is split, and buyers usually pay the premium for the lender's policy. The person paying for the policy chooses the insurer. See my closing costs guide for the rest of the line items.
Title versus escrow
The Department explains the difference this way. Title insurance covers defects. Escrow is a neutral service that holds funds and documents, prepares and records documents, and disburses funds. In Northern California, title companies usually handle both. In Southern California, they are usually separate.
That means a San Diego buyer typically deals with an escrow officer for the money and paperwork and with a title company for the report and policy. Your earnest money goes into escrow, which I explain in earnest money deposits in San Diego.
The title report you receive
The Department says you should receive the results of the title search, which describe the property's title and include a preliminary title report or commitment. Read it, ask what each exception means and bring questions to your agent and escrow officer early. Items found there can affect your contingencies, which I cover in home buying contingencies explained.
What this guide cannot promise
I am not an attorney, and title and escrow questions can turn legal. The Department's guide does not give premium amounts, and rates differ by company and price. Ask your escrow officer or title company for a written estimate and for the policy forms.
My advice for San Diego buyers
- Ask for an estimate of the owner's and lender's policy costs early.
- Find out who pays under your contract before you accept an offer.
- Read the preliminary title report as soon as you receive it.
- Ask what each exception and endorsement means in plain words.
- Compare title companies if you are the one choosing and paying.
A note on advice
I am a REALTOR®, not a lender, attorney, tax professional or financial advisor, so this guide is general information. Your lender can tell you what you qualify for, and a CPA or attorney can answer tax and legal questions.
Call or text me at (619) 402-4614 or send me a message.
Call or text (619) 402-4614Contact Trevor LandressRelated guides
- Down Payment Assistance Programs for San Diego Buyers: What Exists and Who Qualifies
- Adjustable-Rate vs. Fixed-Rate Mortgages in San Diego: How Each One Works
- How to Read a Home Inspection Report in San Diego Without Panicking
- Final Walkthrough Checklist for San Diego Home Buyers
- What Are the Steps to Buying a Home in San Diego?
- How Much Are Closing Costs When Buying a Home in San Diego?
Frequently asked questions
What does title insurance cover?
It protects against losses from defects, liens or encumbrances in a property's title that were unknown when the policy was issued.
What is the difference between an owner's and a lender's policy?
A lender's policy protects the lender and equals the loan amount. An owner's policy protects you and should equal the full purchase price.
Who pays for title insurance in San Diego?
It is set by local custom and is negotiable. The California Department of Insurance says sellers customarily pay in Southern California, and buyers usually pay for the lender's policy.
Is title insurance a monthly cost?
No. The premium is paid once, at the close of escrow.
What is the difference between title and escrow?
Title insurance covers defects in title. Escrow is a neutral service that holds funds and documents, prepares and records documents and disburses funds.
About the author
Trevor Landress is a San Diego REALTOR® with Coldwell Banker West (DRE# 02126901). He was born and raised in San Diego and has been licensed since 2021.
Trevor helps homeowners sell, guides first-time buyers through the home buying process and assists investors with their next acquisition. His work includes negotiating offers, analyzing market trends, building pricing strategies and running marketing campaigns for his listings.
He serves clients across San Diego County, from coastal communities like La Jolla, Del Mar and Carlsbad to neighborhoods inland.
Trevor is part of the Campbell Group, a three-generation real estate team, and he and the Campbell Group consistently rank as a top producing team at Coldwell Banker West each month. He writes these guides to help San Diego buyers and sellers navigate an ever-changing market. To talk through your plans, call or text (619) 402-4614 or contact Trevor Landress.
How I help San Diego home buyers
I help buyers sort out their budget, understand their loan options with a lender, search for homes, write and negotiate offers, keep track of inspection and contingency deadlines and stay organized through closing.
How I help San Diego home sellers
I help sellers price their home, prepare it for the market, market it to buyers, review and negotiate offers and manage the steps from an accepted offer to closing.
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