Reviewing Your Title Commitment
Title insurance is a part of every real estate transaction, but it can be confusing! Here's a quick rundown of terms and some resources for helping you understand the title commitment you've received.
A Title Commitment is a document prepared by the title company that outlines the conditions under which they will issue a title insurance policy. The commitment typically includes information about the property's ownership history, any liens or encumbrances on the property, and any restrictions or easements that may affect the property's use.
Title insurance is a type of insurance that protects homeowners and lenders from financial loss due to defects in a property's title or ownership history. The insurance policy covers the cost of defending against any claims made against the property's title, as well as any losses resulting from those claims.
When a property is being purchased, a title search is conducted to ensure that the seller has the legal right to sell the property, and that there are no liens, claims, or other issues that could affect the property's title.
Once you are under contract to purchase a property you will receive the Preliminary Title Commitment, which contains:
Owner's name(s)
Legal Description of the property
Proposed coverages (there is an owner's policy, typically paid by the seller, and a lender's policy, paid by the buyer if they are purchasing with a loan).
Requirements: a list of what must occur in order for the sale to close (this includes things like paying off any loans the seller has on the home, and paying off liens/judgements).
Exceptions: The exceptions section of a title commitment is a list of items that will not be covered by the title insurance policy. It will include things like easements, liens, or encroachments.
What do You Need to Do?
When we receive your Preliminary Title Commitment I check the accuracy of the basic facts such as names, legal description, and look for anything "out of the ordinary" in the requirements section.
You, too, should look at the spelling of your name, your lender's information, and read through the document.
Look through the resources below.
If you have questions, let me know! If I can't answer them, I'll refer to the title professionals and/or an attorney.