The following information is provided by the California Department of Insurance.  For more information, link to: http://www.insurance.ca.gov/0100-consumers/0010-buying-insurance/0080-compare-premiums/title-terms.cfm.

Purpose  Title insurance provides coverage for losses that occur when a land title is not free and clear of defects (e.g. claims and defects that were unknown when the title insurance was written).  Two types of title insurance policies are common, a lender's policy and an owner's policy. 

Lender's Policy When you take out a mortgage, the lender seeks protection for their investment by requiring lender's title insurance against losses resulting from claims made by others against your new home.  This policy does not protect you nor does the seller's title insurance policy protect you.

Owner's Policy  Since a lender's policy does not protect your financial interests, an owner's title insurance policy is worth serious consideration.  If someone has a claim against your new home and you are not insured, the result could be financial disaster.  Many insurers offer discounts when both the lender and owner policies are purchased at the same time. 

Residential Owner's Policies used in this survey:

The CLTA policy is usually referred to as the "standard form policy" and is generally intended to insure the owner of residential real estate. This policy has the most basic coverage compared to the other two policies used in this survey insofar as the policy generally insures matters that are disclosed in public records, and excludes most matters not disclosed in the public records.  However, some off-the-public-record matters that the CLTA form does insure include forgery, lack of capacity, or non-delivery of the deed.

ALTA-Residential - This policy has more coverages than the basic CLTA policy and insures some matters not disclosed in public records, such as survey boundaries, and property access rights.  The ALTA policy is a nationally standardized form used by lenders on a countrywide basis and is favored by institutional lenders which re-sell loans in the secondary markets.

ALTA Homeowner's Policy of Title Insurance - This policy has the broadest coverages compared to the CLTA and ALTA-Residential, insuring many matters not disclosed in the public records, such as easements, lack of access, encroachments, violations of codes, violations of deed covenants, conditions or restrictions, or lack of marketable title. The ALTA Homeowner's Policy of Title Insurance is the default title policy for the California Real Estate Sale and Purchase Agreement - Contract Form.

Choice of Title Insurer Per the Real Estate Settlement Procedures Act (RESPA) of 1974 (Public Law 93-533), a seller cannot require you to purchase title insurance from any particular company.  This survey should be used as you shop for both types of title insurance and be sure that any company you select meets your standards and those of your lender. 

Please visit the Federal Department of Housing and Urban Development (HUD) for additional information on RESPA and title insurance.  The California Department of Insurance (CDI) also has a Title Insurance Brochure that you may find helpful.

Escrow  California Financial Code Section 17003 defines escrow as "any transaction wherein one person for the purpose of affecting the sale, transfer, encumbering, or leasing of real or personal property to another person, delivers any written instrument, money, evidence of title to real or personal property or any other thing of value to a third person to be held by such third person until the happening of a specified event or the performance of a prescribed condition, when it is then to be delivered by such third person to a grantee, grantor, promisee, promissor, obligee, obligor, bailee, bailor, or any agent or employee of any of the latter."

Title insurance issues are normally part of this escrow process and are handled differently in Northern and Southern California.  In Northern California, title insurance companies tend to handle all title and escrow services in the same transaction.   In Southern California, the title and escrow transactions are separate with escrow being provided by banks, escrow companies, or title companies.  Practices will vary from county to county so be sure you understand the dynamics of your individual transaction(s).

Title Homeowners Fee The fee paid for the portion of the title insurance policy that protects the buyer of the home for a purchase. Not applicable in case of refinance.

Title Lender Fee The fee paid for the portion of the title insurance policy that protects the lender for purchase.

Escrow Sale Fee The fee paid for the escrow for a  purchase. Not applicable in case of refinance.

Escrow Loan Fee For a sale or purchase, the fee paid is a loan tie-in fee if required by the escrow company.

For a refinance, the fee paid is for the escrow of a refinance.