An American Land Title Association (ALTA) policy is a title insurance policy that protects against title issues and ensures the lender has a valid lien. ALTA was formed in 1907 to make the industry more streamlined and professional. Most institutional lenders require a HIGH policy, and 25% of properties have title issues that must be resolved before a policy can be issued. There are six types of HIGH policy.
An American Land Title Association (ALTA) policy is a title insurance policy that insures against losses you may suffer in the transfer of title through the purchase of a property. Helps prevent and protect against title issues such as forged deeds, unregistered mechanical liens, impersonation of owner, easements, water rights, boundary disputes, mining claims, living estates, encroachments, contested wills and other assessments and liens. The most basic purpose of an ALTA policy is to ensure that the lender has a valid lien that is enforceable.
In the early days of the United States, land was purchased and transferred between owners with the help of movers. These professionals searched public documents for information relevant to the property being sold and helped record the necessary deeds. In 1876, the first title insurance company was established by a Philadelphia-based group of carriers to protect lenders against title fraud and errors. In 1907, the American Land Title Association was formed in an effort to make the industry more streamlined and professional, as well as safer for lenders, sellers, and buyers.
Most institutional lenders require a HIGH policy to protect your interests against loss. This policy is generally up to the full amount of the loan, for the entire life of the loan. A title company will first perform a detailed title search of a property, and if it is clear, a STOP policy will be issued. Just as a traditional insurance company will not write flood insurance for a house in a floodplain, they will not write a HIGH policy for a property with obvious title problems.
Twenty-five percent of properties have title issues that must be resolved before a HIGH policy can be issued. Policies vary as to who pays for title insurance, depending on where and to whom the policy is issued. This type of policy adheres to state and local property laws, because title issues are generally not regulated at the federal level. There are six types of HIGH policy: Lender, for the bank or institution that lends the money to buy the property; Lease from the lender; Owner, for those who buy the property; Lease from owner; Residential; and construction loan. For those buying or selling property, it’s smart to find a title company that is a member of ALTA.
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