Title insurance protects against problems with ownership that existed before you bought the home: unpaid liens, forged or defective deeds, missing heirs and mistakes in the public record. If you have a mortgage, your lender requires a policy that protects the lender. The owner's policy is the one that protects you, and in a typical Arizona resale the seller pays for it.
How it differs from other insurance
Homeowners insurance covers things that might happen later, like a fire or a burst pipe, and you pay for it every year. Title insurance covers things that already happened, before you owned the home, and you pay for it once, at closing. The coverage lasts as long as you or your heirs have an interest in the property.
Most of the premium pays for the work done before the policy is issued. The title company searches the public record, finds the problems and has them cleared before you close. The policy is there for what the search could not find.
The two policies
Lender's policy. Required on nearly every mortgage. It covers the lender up to the loan amount and shrinks as you pay the loan down. It does not protect your equity.
Owner's policy. Covers you up to the purchase price. If a valid claim against the title appears after closing, the insurer pays to defend your ownership and covers your loss if the defense fails.
When both are bought together in one transaction, the second policy is issued at a reduced rate.
Who pays in Arizona
Under the Arizona Association of REALTORS resale contract, the default is:
- The seller pays for the owner's policy.
- The buyer pays for the lender's policy.
Both are negotiable, and new-build contracts written by the builder often differ. Your Loan Estimate and Closing Disclosure show exactly what you are paying. See Arizona Closing Costs: Who Pays What and How to Read a Loan Estimate.
Arizona is an escrow state. A title and escrow company, not an attorney, handles the closing. One company usually does both jobs: the escrow officer holds the money and documents, and the title department searches the record and issues the policies.
What it protects against
- A lien from a prior owner's unpaid taxes, contractor bills, HOA dues or court judgment.
- A deed that was forged, signed under a false power of attorney, or signed by someone who lacked the capacity to sign.
- An heir or a former spouse who never signed away an interest in the property.
- A mortgage that was paid off but never released of record.
- Errors in the legal description or in how a document was recorded.
- Fraud, including someone selling a property they do not own.
Vacant land and homes owned free and clear by out-of-state owners are favorite targets for seller impersonation. It happens here.
What it does not cover
- Problems you create or agree to after you buy.
- Items listed as exceptions in the policy, such as recorded easements and the subdivision's covenants.
- Zoning and other government regulations.
- Matters a survey would have shown, unless you buy extended coverage.
- Physical condition of the house. That is what the inspection is for.
The title commitment is the document to read
A few days after escrow opens you receive a title commitment, sometimes called a preliminary report. It is the title company's offer to insure, and it tells you what it will not insure.
- Schedule A lists who owns the property now, the legal description and the policy amounts.
- Schedule B has two parts: the requirements that must be met before closing, such as paying off the seller's loan, and the exceptions that will remain after closing.
Read the exceptions. Open each linked document. Look for:
- Easements that cross the area where you plan a pool, a casita or a block wall.
- Covenants that restrict rentals, RV parking or exterior changes.
- A solar lease or a financing statement recorded against the property.
- Anything about shared driveways, wells or private roads.
The Arizona resale contract gives you a short window after you receive the commitment, five days by default, to object in writing. Do not let it pass unread.
Standard and extended coverage
A standard owner's policy insures against defects in the public record. An extended policy adds protection for matters outside the record, such as unrecorded liens, encroachments and some boundary issues. Lenders usually receive extended coverage. Ask your escrow officer which type the owner's policy will be and what the difference costs. On property with unusual boundaries, acreage or older improvements, it is worth asking.
What it costs
Title insurers in Arizona file their rates with the state Department of Insurance and Financial Institutions, so pricing is based on a published schedule tied to the price and loan amount. Rates do differ from company to company, and you are allowed to choose the provider. In practice the purchase contract names the title company, and the party paying for the owner's policy usually has the most say.
Ask about discounts if the home was bought or refinanced within the past few years. Some schedules offer a reduced rate when a recent policy exists.
When you refinance
Your owner's policy stays in force. The new lender needs a new lender's policy, because the old one ended when the old loan was paid off.
Protect yourself from wire fraud
The largest title-related loss buyers suffer is not a defect in title. It is a fake email with new wiring instructions.
- Get wiring instructions directly from your escrow officer, in person or at a phone number you looked up yourself.
- Treat any email that changes the instructions as fraud until you prove otherwise by phone.
- Call to confirm before you send, and again right after.
For the rest of the process, see The Arizona Escrow Timeline and Closing Day in Arizona.
Why ask me
- I answer the question before I sell you anything. If renting, waiting or a different program is the better move, I will say so.
- Real numbers, not a calculator guess. I price your actual scenario, side by side, with the fees on the page.
- Every program under one roof. Conventional, FHA, VA, jumbo, and non-QM options like bank statement, DSCR and asset-based loans, so the program fits you instead of the other way around.
- You talk to the principal. Ricky Khamis is President of EPiQ Lending, NMLS #173141, lending in Arizona since 1999 and a 2025 Presidents Club Winner at CMG Home Loans. Direct line: (480) 999-9842.
EPiQ Lending is NMLS #1936984, at 7975 N. Hayden Road, Suite A-101 in Scottsdale. Verify all of it before you trust any of it: Ricky's EPiQ Lending profile, the Scottsdale branch, and the license itself at NMLS Consumer Access. Hold every lender to that standard, including us.
More plain-English answers in the Mortgage Education library.
Equal Housing Opportunity. This is general information, not a commitment to lend or an offer to extend credit. Program guidelines, eligibility requirements and documentation standards vary by investor and change over time. Rates, terms and program guidelines change and depend on credit approval, property appraisal and other qualifying factors. Not all applicants will qualify. This is not legal or tax advice; consult a qualified professional about your own situation.
Find out which program actually costs you less
FHA, conventional and jumbo price the same borrower very differently once the mortgage insurance is compared across the years you will own the home. Tell me the shape of your file and I will run them side by side.
Looking at a specific home? Send me the address and I will run the numbers: rickykhamis.com/analyze
