In California, there are two types of title insurance policies. The CLTA (California Land Title Association) policy insures the property owner and the ALTA (American Land Title Association) is an extended coverage policy that insures the lender against possible unrecorded risks excluded in the CLTA policy.

How does a foreclosure clear the title to a property?

Generally, foreclosure tends to eliminate liens junior to the foreclosing lien but not liens senior to it. Property liens normally line up on a property’s title by their seniority, meaning when they’re recorded. Tax liens are the most senior liens, and when they’re foreclosed, liens junior to them usually are wiped out except for other tax liens.

Can a judgment lien be wiped out in a foreclosure?

Because a tax sale can wipe out a lender’s lien, servicers often pay property taxes even if a homeowner doesn’t. In order to extinguish (get rid of) an inferior judgment lien and get clear title, the lender’s attorney includes the judgment lienholder in the foreclosure lawsuit.

Can a title insurance company insure a mortgage that has been paid off?

A title insurance company that has actual knowledge that an open-of-record mortgage has been properly paid off will insure title without exception to that mortgage since it can prove that the mortgage does not constitute a lien of the real property and therefore that the mortgage also does not impair the marketability of title of the property.

Can a title be sold with a judgment lien?

Satisfying the judgment is the best assurance that the title is lien free. The only exception to this rule is if the seller is given an opportunity by the title insurance company to execute a “Not-Me-Affidavit” swearing that the name of the person on the judgment lien is not them.