The CLTA standard policy

The California Land Title Association (CLTA) is the standard title insurance policy.

Several other types of title coverage are also available, including:

  • an American Land Title Association (ALTA) owner’s extended coverage policy;
  • an ALTA residential (ALTA-R) policy; and
  • an ALTA homeowner’s policy.

The CLTA standard policy is purchased solely by buyers, carryback sellers and private lenders. The CLTA standard policy insures against all encumbrances affecting title which can be discovered by a search of public records prior to issuance of the policy. Any encumbrance not recorded, whether or not observable by an inspection or survey, is not covered due to the CLTA policy exclusions and standard exceptions.

The CLTA standard policy contains pre-printed exceptions listed in the policy as Schedule B, also called standard exceptions or regional exceptions. It is the inclusion of these preprinted boilerplate exceptions which makes the CLTA policy a “standard” policy.

Alternatively, the American Land Title Association (ALTA) owner’s extended coverage policy is a type of title insurance policy which expands the risks insured against versus the standard CLTA policy. An ALTA owner’s policy does not contain pre-printed exceptions, only the typewritten exceptions listing the encumbrances which are known to the title company and affect title to the property.

The CLTA standard policy (as well as the ALTA policy) protects the insured against:

  • the unmarketability of title or the inability to use it as security for financing;
  • lack of ingress and egress rights to the property; and
  • losses due to the ownership being vested in someone other than the buyer.

All title insurance policies provide coverage forever after the date and time the policy is issued. Coverage is limited to the dollar amount of the policy, which is generally adjusted for inflation. Coverage is further limited by the exclusions, exceptions, and conditions on claims. [See RPI e-book Real Estate Principles Chapter 52]

Policy exclusions

The CLTA standard policy (as well as the ALTA policy) contains Schedule A exclusions to coverage which bar recovery by the buyer or joint protection carryback seller for losses due to:

  • zoning laws, ordinances or regulations restricting or regulating the occupancy, use or enjoyment of the land;
  • the character, dimensions or location of any improvement erected on the property;
  • a change in ownership or a parceling or combining of the described property by the insured buyer;
  • police power, eminent domain, or violations of environmental protection laws, unless a notice or encumbrance resulting from the violation was recorded with the county recorder before closing;
  • encumbrances known to the insured buyer or lender which are not recorded or disclosed to the title company;
  • encumbrances which do not result in a monetary loss;
  • encumbrances which are created or become encumbrances after issuance of the policy;
  • encumbrances resulting from the buyer’s payment of insufficient consideration for the property or delivery of improper security to the lender also insured under the policy; and
  • the unenforceability of the insured lender’s trust deed lien due to the lender’s failure to comply with laws regarding usury, consumer credit protection, truth-in-lending, bankruptcy, and insolvency.

History of the term

“Association” finds its root in the Medieval Latin term “associationem,” meaning, “action of coming together for a common purpose.” The usage first appeared in the 1530s.

It was first used to reference a sense of formal (usually written) permission from an individual or entity in an authoritative position granter to another to do something (marry, hunt, drive, etc.). This usage first appeared in the early 15th century.