Maggie Coakley

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What is a Title Commitment?

Posted On: April 18th, 2018 1:51AM

 

In most cases, home buyers about to close a real estate transaction will receive a copy of the title commitment for review a few days before their close date.

What is a Title Commitment?

A title commitment is a document that contains the terms, conditions and exclusions that will be in the final signed copy of the insurance policy issued by the title company to the buyer after closing. It lists all the details about the property, and promises to issue title insurance if all stipulations are met in Section B.

This title insurance policy protects the new owner in the event an issue comes up that could affect the ownership title of the property. For the same reason, if the new owner is buying with a mortgage, the lender will also require one known as a lender’s policy.

The title commitment consists of:

  • Schedule A: legal description of the property, sale price, loan amount, lender details and the names of the buyers and sellers
  • Schedule B: requirements (of which must be met) include: tax payments, recording the new deed and loan documents, release of liens and proof of identity, exceptions stipulated by the title company and exclusions which the title company cannot cover, i.e. government regulations or any arising bankruptcy claims

What are you protected from and how?

Some deeds could be claimed by heirs, be forged or they could have been executed under false or expired power of attorney. The title insurance searches all public records for any such issues that could prevent a clear transfer.

Why review the title commitment?

The commitment does not guarantee that all issues arising after purchase will be dealt with by the title company. Consider any exceptions carefully; if any issues arise over any of these you will not be able to turn to the title company to solve them.

It is best to have the title commitment read by your attorney to ensure that you completely understand the exceptions and which terms are unacceptable. This will avoid any nasty surprises at a later date.

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