What is a Title Commitment?

What is a Title Commitment?

A Title Commitment is a document issued by a title insurance company before issuing a title insurance policy. It serves as a promise to issue the title insurance policy in the future, provided certain conditions are met. The Title Commitment outlines the terms, conditions, and exclusions that will be in the final title insurance policy. It provides important information about the legal status of the property.

The main components of a Title Commitment include:

1. Schedule A: Details the proposed insured, the amount of insurance, the current property owner, and the legal description of the property.
2. Schedule B-I (Requirements): Lists specific requirements that must be met before the title insurance policy can be issued, such as resolving any outstanding liens or discrepancies.
3. Schedule B-II (Exceptions): Enumerates exceptions to the coverage that will not be insured against by the policy, such as existing easements or encroachments.

The title commitment provides a blueprint of what the final title insurance policy will cover and any issues that need to be addressed before the property transaction can be finalized.

Frequently Asked Questions About Title Commitments

How is a Title Commitment different from a Title Policy?

A Title Commitment is a preliminary document that outlines the conditions for issuing a title insurance policy. It is not the actual insurance policy. The Title Policy is issued after the conditions in the Title Commitment are met, providing insurance coverage for the property against specific title defects and risks.

What should I do if I find issues in the Title Commitment?

If you find issues in the Title Commitment, you should discuss them with your real estate attorney, real estate agent, or title company. They can help you understand the implications and work to resolve any problems before closing. This might involve clearing liens, resolving disputes, or addressing any listed exceptions.

Can a Title Commitment expire?

Yes, a Title Commitment has an effective date and is typically valid for a specific period, often 90 days. If the transaction does not close within that timeframe, a new Title Commitment may need to be issued.

Why are there exceptions listed in the Title Commitment?

Exceptions are listed in the Title Commitment to inform the buyer and lender of specific issues that the title insurance policy will not cover. These might include easements, restrictive covenants, or encroachments. Knowing these exceptions helps parties understand the limitations of their coverage.

What is the effective date in a Title Commitment?

The effective date is the date on which the title search was completed and the Title Commitment was issued. It indicates the status of the title as of that date.

Do I need to review the Title Commitment before closing?

Yes, it is essential to review the Title Commitment before closing. This review ensures that you are aware of any potential title issues and can address them before completing the transaction. It helps prevent future legal complications regarding property ownership.

Who pays for the Title Commitment?

The cost of the Title Commitment is typically part of the closing costs. Depending on the terms of the purchase agreement, either the buyer or the seller (or both) may be responsible for paying these costs.