You're about to pay $900,000 for a house. But what if someone else claims they own it? What if there's a lien you didn't know about? What if the seller didn't actually have the right to sell?
Title insurance protects you from these nightmares. It's a one-time fee that protects your ownership for as long as you own the property. In Washington State, the seller typically pays for your owner's policy, but you need to understand what it covers and what it doesn't.
This guide explains title insurance in practical terms: what the two types of policies are, how to read your preliminary title report, what standard exceptions mean, typical Washington costs, and real Seattle title issue examples.
Table of Contents
- What Is Title Insurance?
- Two Types of Policies
- The Title Search Process
- Preliminary Title Report
- Standard Exceptions
- What's Covered vs Not Covered
- Washington State Title Insurance Costs
- Title Companies in Seattle
- Real Seattle Title Issues
- Summary: Key Takeaways
- Next Steps
- Additional Resources
What Is Title Insurance?
Basic Definition
Title insurance:
- Protects your ownership rights
- Covers past title defects
- One-time premium
- Lasts as long as you own property
- Protects against financial loss
Not the same as:
- Homeowners insurance (protects future events)
- Warranty (protects condition)
- Home inspection (finds physical problems)
Why You Need It
Protects against:
- Unknown liens or judgments
- Forged documents
- Errors in public records
- Undisclosed heirs
- Fraud or impersonation
- Mistakes in prior deeds
- Unpaid taxes
- Easements not disclosed
Real example:
Seattle buyer purchases home. Six months later, discovers previous owner's contractor filed lien for unpaid work ($45,000). Title insurance pays the lien.
Without title insurance:
- You pay to defend ownership
- You pay to clear title defects
- You could lose property
- Legal costs can be enormous
With title insurance:
- Insurance company defends you
- Insurance company pays claims
- Your ownership protected
- Peace of mind
Two Types of Policies
Owner's Policy (You)
What it is:
- Protects your ownership
- Covers purchase price amount
- One-time premium
- Lasts forever (as long as you own)
Who pays in Washington:
- Seller typically pays
- Negotiable
- Standard practice in WA
- Part of seller's closing costs
Cost:
- Based on purchase price
- $900,000 home: ~$2,000–$2,500
- Includes title search and exam
- One-time fee
What it covers:
- Title defects existing before you bought
- Legal defense costs
- Financial loss up to policy amount
- Specific covered risks (see policy)
Why you need it:
- Protects your investment
- Required by most lenders (for their policy)
- Standard in real estate transactions
- Relatively inexpensive for protection
Lender's Policy (Your Lender)
What it is:
- Protects lender's interest
- Covers loan amount
- Required by lender
- Lasts until loan paid off
Who pays:
- You (buyer) pay
- Part of your closing costs
- Not negotiable if you have loan
- Separate from owner's policy
Cost:
- Based on loan amount
- $720,000 loan: ~$1,000–$1,500
- Less than owner's policy
- Simultaneous issue discount
What it covers:
- Lender's loan amount
- Not your equity
- Decreases as you pay down loan
- Only protects lender, not you
Why lender requires it:
- Protects their investment
- Standard lending requirement
- Reduces their risk
- You can't get loan without it
Washington State Practice
Typical arrangement:
- Seller pays: Owner's policy
- Buyer pays: Lender's policy
- Both issued simultaneously
- Discount for simultaneous issue
Total cost example ($900,000 purchase, $720,000 loan):
- Owner's policy: $2,200 (seller pays)
- Lender's policy: $1,200 (buyer pays)
- Simultaneous discount: -$300
- Total: $3,100
Negotiable:
- Can negotiate who pays
- Sometimes buyer pays both
- Sometimes seller pays both
- Depends on market and negotiation
The Title Search Process
What Title Company Does
Step 1: Title search (1–2 weeks)
- Search public records
- County recorder's office
- Court records
- Tax records
- Federal liens
- Bankruptcy records
Step 2: Title examination
- Review all documents
- Identify issues
- Determine insurability
- Prepare preliminary report
Step 3: Preliminary title report
- Shows current ownership
- Lists liens and encumbrances
- Shows easements
- Lists exceptions to coverage
- Provided to buyer and lender
Step 4: Clear title issues
- Seller clears liens
- Resolve disputes
- Correct errors
- Obtain releases
Step 5: Closing
- Issue final policies
- Record new deed
- Insure title
- Protect ownership
Timeline
Day 1–3: Order title
- Escrow orders from title company
- Provides property information
- Pays search fee
Day 7–14: Preliminary report issued
- Title company completes search
- Issues preliminary report
- Sends to all parties
Day 14–21: Review and clear issues
- Buyer reviews report
- Seller clears any liens
- Resolve any problems
Day 30–45: Closing
- Final title update
- Issue policies
- Record deed
- Title transfers
Preliminary Title Report
What It Shows
Schedule A (Property information):
- Property address
- Legal description
- Current owner
- Purchase price
- Type of policy
Schedule B-I (Requirements):
- What must be done before closing
- Liens to be paid off
- Documents to be signed
- Conditions to be met
Schedule B-II (Exceptions):
- What's NOT covered by insurance
- Standard exceptions
- Specific exceptions
- Easements and restrictions
Plat map:
- Property boundaries
- Easements shown
- Lot dimensions
- Visual representation
How to Read It
Current owner:
- Verify seller's name matches
- Check spelling
- Confirm ownership type (individual, trust, LLC)
Legal description:
- Matches purchase agreement
- Correct lot and block
- Correct subdivision
- Correct county
Liens and encumbrances:
- Mortgages (seller's, will be paid off)
- Judgments (must be cleared)
- Tax liens (must be paid)
- Mechanic's liens (contractor claims)
Easements:
- Utility easements (common)
- Access easements (driveways, paths)
- View easements (rare)
- Conservation easements
CC&Rs (if applicable):
- Covenants, Conditions, and Restrictions
- HOA rules
- Architectural restrictions
- Use restrictions
Common Issues Found
Unpaid liens:
- Seller's mortgage (normal, paid at closing)
- Tax liens (seller must pay)
- Judgment liens (seller must clear)
- Mechanic's liens (contractor disputes)
Action: Seller must clear before closing
Easements:
- Utility easements (normal)
- Access easements (may affect use)
- Drainage easements (may affect building)
Action: Review carefully, understand impact
Boundary disputes:
- Unclear property lines
- Encroachments (neighbor's fence on property)
- Adverse possession claims
Action: May require survey, legal resolution
Errors in records:
- Misspelled names
- Wrong legal description
- Recording errors
Action: Title company corrects
Undisclosed heirs:
- Previous owner died
- Estate not properly settled
- Heirs may have claims
Action: Seller must resolve, may delay closing
Standard Exceptions
What They Are
Standard exceptions:
- Items NOT covered by insurance
- Listed in every policy
- Can sometimes be removed
- Important to understand
Why they exist:
- Limit insurance company's risk
- Encourage due diligence
- Protect against known risks
- Standard industry practice
Common Standard Exceptions
1. Rights of parties in possession
- Tenants living in property
- Squatters
- Anyone physically occupying
Why it matters:
- Insurance won't cover if tenant claims ownership
- You should inspect property
- Verify no unauthorized occupants
How to remove:
- Physical inspection
- Verify property vacant or tenant disclosed
- Title company may remove after inspection
2. Unrecorded easements
- Easements not in public records
- Visible from inspection
- Prescriptive easements (long-term use)
Why it matters:
- Neighbor may have right to cross property
- Utility companies may have access
- May affect use
How to remove:
- Survey shows easements
- Physical inspection
- Title company may remove with survey
3. Matters that would be disclosed by survey
- Boundary disputes
- Encroachments
- Lot size discrepancies
Why it matters:
- Fence may be on wrong property
- Building may cross boundary
- Lot may be smaller than stated
How to remove:
- Get survey ($500–$1,500)
- Title company removes with clean survey
4. Unrecorded liens
- Mechanic's liens not yet recorded
- Tax liens not yet filed
- Recent judgments
Why it matters:
- Contractor could file lien after closing
- You could be responsible
How to remove:
- Difficult to remove
- Seller provides affidavit of no work done
- Wait period after closing
5. Taxes and assessments
- Current year property taxes
- Special assessments
- Utility charges
Why it matters:
- You're responsible for taxes after closing
- Prorated at closing
How to handle:
- Standard exception
- Taxes prorated at closing
- Not typically removed
Seattle-Specific Exceptions
Shoreline regulations:
- Properties near water
- Shoreline Management Act restrictions
- Building limitations
Seismic hazard areas:
- Earthquake zones
- Liquefaction zones
- May affect building
Historic district restrictions:
- Landmark properties
- Architectural review required
- Renovation limitations
Tribal treaty rights:
- Fishing and hunting rights
- Access rights
- Rare but important
What's Covered vs Not Covered
Covered Risks
Title insurance covers:
- Forged deeds or documents
- Unknown heirs claiming ownership
- Errors in public records
- Fraud or impersonation
- Undisclosed liens (existing before policy)
- Mistakes in prior deeds
- Incorrect legal descriptions
- Missing signatures
- Unpaid taxes (before policy date)
Real examples:
Example 1: Forged deed
- Previous owner's signature forged
- Sale was invalid
- Real owner claims property
- Title insurance: Defends you, pays claim
Example 2: Unknown heir
- Previous owner died
- Heir not included in estate
- Heir claims ownership
- Title insurance: Resolves claim, protects you
Example 3: Recording error
- Deed recorded incorrectly
- Shows wrong owner
- Creates title defect
- Title insurance: Corrects error, insures title
Not Covered
Title insurance does NOT cover:
- Issues you created after buying
- Issues you knew about before buying
- Zoning violations
- Environmental hazards
- Building code violations
- Eminent domain (government taking)
- Native American land claims (in some cases)
- Issues disclosed in preliminary report
Why not covered:
- You can inspect/discover these
- Not title defects
- Other insurance covers (homeowners)
- Government actions
- Known issues
What to do:
- Home inspection for condition
- Zoning research before buying
- Environmental assessment if concerned
- Review preliminary report carefully
Washington State Title Insurance Costs
How Costs Are Calculated
Based on purchase price:
- Sliding scale
- Higher price = higher premium
- But not proportional
Seattle examples:
$500,000 purchase:
- Owner's policy: ~$1,500
- Lender's policy (80% LTV): ~$800
- Total: ~$2,300
$750,000 purchase:
- Owner's policy: ~$1,900
- Lender's policy (80% LTV): ~$1,000
- Total: ~$2,900
$1,000,000 purchase:
- Owner's policy: ~$2,400
- Lender's policy (80% LTV): ~$1,300
- Total: ~$3,700
$1,500,000 purchase:
- Owner's policy: ~$3,200
- Lender's policy (80% LTV): ~$1,800
- Total: ~$5,000
Who Pays What
Standard Washington practice:
Seller pays:
- Owner's title insurance policy
- Title search and examination
- Document preparation
- Recording of deed
Buyer pays:
- Lender's title insurance policy
- Recording of mortgage
- Notary fees
Total seller cost (typical):
- $900,000 sale: ~$2,500–$3,000
Total buyer cost (typical):
- $900,000 purchase, $720,000 loan: ~$1,200–$1,500
Negotiable Items
Can negotiate:
- Who pays owner's policy
- Who pays lender's policy
- Who chooses title company
- Who pays escrow fees
Market dependent:
- Seller's market: Buyer may pay more
- Buyer's market: Seller may pay more
- Standard practice: Seller pays owner's
How to negotiate:
- Include in purchase agreement
- "Seller to pay all title insurance costs"
- Or "Buyer and seller split title costs"
- Or standard (seller owner's, buyer lender's)
Title Companies in Seattle
Major Title Companies
National companies:
- Chicago Title
- Fidelity National Title
- First American Title
- Old Republic Title
- Stewart Title
Regional companies:
- Pacific Northwest Title
- Ticor Title
- WFG National Title
What they do:
- Title search and examination
- Issue insurance policies
- Escrow services
- Closing coordination
Choosing a Title Company
Usually chosen by:
- Seller (if seller pays)
- Buyer's lender (if lender requires specific company)
- Mutual agreement
What to consider:
- Reputation and experience
- Local knowledge
- Responsiveness
- Escrow services
- Closing location
Questions to ask:
- How long have you been in business?
- How many Seattle closings do you do?
- What's your typical timeline?
- Do you offer mobile closing?
- What are your fees?
Real Seattle Title Issues
Example 1: Unpaid Contractor Lien
Situation:
- Ballard house, $925,000
- Previous owner had roof work done
- Contractor not paid: $18,000
- Lien filed after sale
Problem:
- New owner responsible for lien
- Must pay or lose property
Resolution:
- Title insurance paid lien
- Pursued previous owner for reimbursement
- New owner protected
Lesson: Title insurance protects against unknown liens
Example 2: Boundary Dispute
Situation:
- Fremont house, $850,000
- Neighbor claims fence on wrong property
- Boundary dispute
- Neighbor threatens lawsuit
Problem:
- Survey shows fence 2 feet over line
- Neighbor wants fence moved
- Expensive to resolve
Resolution:
- Title insurance paid for survey
- Negotiated with neighbor
- Moved fence
- Resolved dispute
Lesson: Survey exception matters, get survey if concerned
Example 3: Forged Deed
Situation:
- Capitol Hill condo, $650,000
- Previous sale involved forged signature
- Real owner claims property
- Buyer's ownership challenged
Problem:
- Buyer could lose property
- Paid $650,000
- Legal battle expensive
Resolution:
- Title insurance defended buyer
- Paid legal costs
- Resolved claim
- Buyer kept property
Lesson: Title insurance protects against fraud
Example 4: Undisclosed Easement
Situation:
- West Seattle house, $800,000
- Neighbor has easement for driveway access
- Not disclosed in sale
- Neighbor uses driveway daily
Problem:
- Buyer didn't know about easement
- Affects property use
- Reduces value
Resolution:
- Title insurance paid claim
- Compensated buyer for reduced value
- Easement remains (can't be removed)
Lesson: Review preliminary report carefully, understand easements
Summary: Key Takeaways
- Title insurance protects ownership rights against past defects
- Two policies: owner's (protects you) and lender's (protects lender)
- Washington: seller typically pays owner's policy, buyer pays lender's policy
- Preliminary title report shows ownership, liens, easements, exceptions
- Standard exceptions: parties in possession, unrecorded easements, survey matters
- Covered: forged deeds, unknown heirs, errors, fraud, undisclosed liens
- Not covered: issues you created, known issues, zoning, environmental
- Cost: $2,000–$3,000 for owner's policy on $900,000 home
- Review preliminary report carefully, understand exceptions
Next Steps
- Review preliminary title report when received (Day 7–14)
- Understand exceptions and what they mean
- Ask questions about anything unclear
- Consider survey if boundary concerns ($500–$1,500)
- Verify seller clearing liens before closing
- Confirm policy amounts match purchase price and loan
- Keep policy forever (you'll need it if you sell or refinance)
Related articles:
- WA Contract to Close Timeline – Complete closing timeline
- Closing Disclosure Guide – Understanding closing costs
- Closing Day Guide – What happens at closing
- Purchase and Sale Agreement Overview – Understanding the contract
Additional Resources
Title insurance information:
- American Land Title Association: alta.org
- Washington State Insurance Commissioner: insurance.wa.gov
Title companies:
- Chicago Title: ctt.com
- Fidelity National Title: fnf.com
- First American Title: firstam.com
Your team:
- Escrow officer: Explains title report
- Agent: Reviews with you
- Attorney: If complex issues (optional)
Disclaimer: This guide provides general information about Washington title insurance. Title insurance requirements and costs may vary. Always consult with a qualified title insurance professional for advice specific to your situation. This is not legal or insurance advice.