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Title Insurance Can Be an Issue For Transfers of Real Property to a Trust

You should check your policy of Title Insurance for your real property before you transfer the property to a Trust.

To transfer real property to a trust, the client executes a grant deed, frequently called a “quitclaim deed” or a “trust transfer deed,” to himself, herself, or (in the case of a couple) themselves as trustee(s) of the trust.

CLTA POLICIES: Some Title Insurance companies have taken the position that the transfer of real property to a revocable living trust may terminate coverage of title insurance if you have a standard California Land Title Association (CLTA) policy. Before we transfer any of your real property to a trust, you should obtain any necessary endorsement (such as a CLTA 107.9 endorsement – additional insured) to ensure that the policy continues to apply to the trustee as insured.  The insurance company may charge you a fee to issue the endorsement.

ALTA POLICIES: The definition of the term “insureds” in the standard American Land Title Association (ALTA) policy is more expansive than in the standard CLTA policy, and thus at this time may cover a transfer to a revocable trust. You should check with your title insurance company to conform that this is the case for your policy, and get the confirmation in writing.

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