Reading Title Commitments
When purchasing real estate, you will be asked to review a title commitment. But what does that really mean and what should the buyer be aware of when reviewing?
A Title commitment is an offer to issue an insurance policy if certain requirements are met. The commitment will explain the extent of coverage, what conditions must be met, any documentation related to the title, and any items exclude from coverage.
Once a title order is placed, the selected title company will conduct an extensive search of public records for anything that effects the title. This could be liens against the property, easements from utility companies, mineral and water right documentation, and more. If a problem is discovered, more than often the title company will take care of it without your knowing it has been done. But it is the buyer's and buyer's agent's responsibility to review the title commitment for any concerns. The easiest part is making sure the buyer, seller, lender and property information are correct. Next, review the insurance dollar amount, type of insurance policy and premium rate to insure they are correct.
In the following sections are items to be aware of when reviewing the title commitment, but not all items you may encounter.
In SCHEDULE A - check the following:
Type of policy
Quality of estate
In SCHEDULE B - check the following:
Exceptions for rights of parties in possession
Encroachments, boundary disputes, and matters requiring a survey
Construction and worker’s compensation liens
Easements not shown in public records
Note Any Special Exceptions:
Matters relating to the parties (such as issues relating to partnership agreements, authority questions and marital status)
Any questions or concern should be brought to the attention of your broker so you can discuss any issues needing to be addressed prior to the Title Objection deadline. Responding quickly to the issues will ensure a smoother real estate transaction process:)