A California escrow is about to close on a residential sale. The title company reports that the property has a recorded CC&R (Covenants, Conditions, and Restrictions) from a homeowners association. The buyer asks whether the CLTA title insurance policy will protect him if the HOA enforces a restriction he disagrees with. The agent should explain that:
Correct Answer
C) The CC&Rs will appear as an exception on the title policy, meaning the buyer takes the property subject to them and the policy will not cover HOA enforcement
Recorded CC&Rs are listed as exceptions on the title insurance policy, meaning the policy does not insure against them. The buyer takes the property subject to the existing CC&Rs. The preliminary title report discloses the CC&Rs so the buyer can review them before closing, but the title insurance policy will not cover losses arising from HOA enforcement of these recorded restrictions.
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A California homebuyer asks her agent about the difference between a deed of trust and a grant deed. The agent explains that in California real estate:
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