California Real Estate SalespersonTransfer of PropertyMedium
A buyer purchasing a commercial property wants title insurance coverage that includes protection against unrecorded mechanics' liens, boundary/survey issues, and unrecorded easements. Which type of policy should the buyer request?
- AALTA extended coverage policy
- BAbstract of title
- CPreliminary title report only
- DCLTA standard coverage policy
Show answer & explanationAnswer & explanation
Correct answer: A. ALTA extended coverage policy
An ALTA (American Land Title Association) extended coverage policy provides broader protection than a standard CLTA policy, including matters that would be disclosed by an accurate survey or physical inspection, such as unrecorded easements, encroachments, and mechanics' liens—items not covered under a standard CLTA policy.
Why the other options are wrong
- B. An abstract of title is merely a historical summary of recorded documents, not an insurance policy.
- C. A preliminary title report is not a policy of insurance; it simply discloses matters that will be excluded unless resolved.
- D. A CLTA standard policy covers only matters of public record, not off-record risks like unrecorded liens or survey issues.
ALTA vs CLTA Title Policy
CLTA (standard) policies cover recorded title matters; ALTA (extended) policies add coverage for off-record risks like surveys, unrecorded liens, and encroachments.
- CLTA = standard coverage, based on public records
- ALTA = extended coverage, includes physical inspection/survey risks
- Lenders typically require ALTA policies for greater protection
Memory trick: ALTA = 'All the Land, Then Add' extra survey risks