Blog Posts, Home Buyers, Resources

Understanding Your Title Commitment

Title insurance is an important component of purchasing a property, and it’s important for you to carefully review and understand your Title Commitment.  The Title Commitment is organized into the following three main sections: Schedule A, Schedule B – Section 1, and Schedule B – Section 2. Each section is explained below.

SCHEDULE A

1) Effective date: This is the date the County Clerk and Recorder certifies through. This date is usually a week or two behind the date the title commitment is issued. This is because documents are filed with the County Clerk and Recorder each day, and it takes the county some time to index and image each recorded document. 2A) Owner’s Policy Proposed Insured: This is the name of the Buyer as it appears on the Contract. This name will also appear on all future Closing documents, the Deed, and the Final Title Policy, just as it is written. If your name is typed incorrectly please let the Title Company know, and also advise your Realtor and/or Lender.

2B) Loan Policy Proposed Insured: The lender has requested a loan policy of title insurance, and this is how the lender requested for their name to appear. If you are working with a Mortgage Broker, this name may be unfamiliar. If the lender has not been determined yet or has not provided instructions to the title company yet, this may appear as “TBD” (To Be Determined). If the Buyer is paying cash rather than obtaining a loan, this will be blank.

Charges – Title Premiums, Endorsements, and Tax Certificates: These are fees for the items that the Company has determined may be required by the lender and/or to meet the terms of the Contract and loan. The lender may request additional endorsements than those shown. Please note that the charges do not include any closing fees. 3) The Estate or Interest in the Land: This describes how the current owner holds legal title to the property.

4) The Land Referred to in the Commitment: This is the “legal” property description for the real estate.

SCHEDULE B – SECTION 1, REQUIREMENTS

This section contains the requirements that must be satisfied in order to provide the title policy and clear title to the Buyer and/or Lender. Some requirements will be met prior to closing, and others will be met at the time of closing. The Title Company will generally take care of satisfying these requirements by obtaining the necessary information, such as requesting payoff statements from current lenders. However, there may be times when your assistance is needed.

SCHEDULE B – SECTION 2, EXCEPTIONS

These items are Exceptions to coverage on the Final Title Policy. They usually include things that are recorded with the County Clerk and Recorder, such as plats, easements, and covenants, but may also include unrecorded items that the Title Company is told about, such as leases. The Title Company is notifying you that these items exist.

Since these items have been disclosed to you, you will not be provided any coverage for them. However, if the additional Owner’s Extended Coverage is included, Items 1-5 will be deleted from the Final Title Policy. If you would like copies of any of the Exceptions listed on Schedule B-Section 2, please let the Title Company.

Hopefully, this summary has been helpful in understanding the Title Commitment. Please also refer to the full Title Commitment jacket, which details additional conditions for the issuance of a Final Title Policy.  Contact the Title Company directly with any questions or concerns you have about the Title Commitment.  In addition, you may request a “pro-forma policy” from the title company if you’d like to see an example of your final policy prior to closing.

 

Source: Canyon Title

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