One of the key documents in the title process is the title commitment. The title commitment essentially provides a promise to insure title, with certain conditions and exclusions. The commitment outlines the results of the title search process, anything that needs to be resolved, and what insurance policy the title insurer is willing to provide as a result.
Title insurance relies heavily on a process called “title clearing.” In that process, your chosen title agency starts by looking at the real estate purchase agreement, and then endeavors to make sure that the grantor can grant the title in question. In doing so, the agency will look to find defects, encumbrances, liens, and other issues with the title, if any exist. This is called the title search.
It is worth noting that there may not be any known defects with the title, which will be revealed by the title search. We go into much more detail about title clearing in this topic section.
Once the title search is complete, the title agents and title underwriters collaborate to produce a title commitment.
A title commitment is made up of sections called Schedules A through D.
Schedule A sets forth the elements of the policy being offered to the insured. This schedule will include the name of the insured, the policy’s effective date, a description of the property being insured, and the policy amount.
Schedule B1 details what will be excluded from the policy. These include both standard items and items specifically found during the property’s title clearing process or disclosed by the owner.
The first nine exclusions will contain standard items such as:
The items that follow these nine will be specific to the property.
It is important to understand these exclusions as the insured will not have a claim based on anything contained in this schedule.
Schedule B2 enumerates various issues, such as judgments and liens. There may also be requirements for remedies of such issues that would be outlined in this schedule. The process of remedying these issues is clearing the title. As part of clearing the title, the insured or the insured’s agent may also be required to obtain other kinds of documents or affidavits from third parties.
Many of these items, such as paying off the seller’s existing mortgage, are fairly routine, but some requirements can be representative of more substantial issues to be cleared by the title agency.
For example, if someone dies without a will, there may be a question as to who owns the title. In that case, clearing the title may require the title agent to obtain a release or quitclaim deed from anyone who might have a claim prior to insuring the title.
Other examples of problems which may require a remedy include:
Schedule D includes other information about the policy, including the premium cost, as well as who takes a share of that premium.
The information provided in Peak Title Professionals, does not, and is not intended to, constitute legal advice. All content is for general informational purposes only and is not intended to provide a complete description of the subject matter. Specific processes will vary based on applicable law. The title and closing process will be handled by a third-party attorney to the extent required by law. Product offerings vary by jurisdiction and are not available or solicited in any state where we are not licensed.
