Title Commitments Explained: What to Look for Before Closing
When buying a home or property, one of the key documents you’ll encounter during the process is a title commitment. It’s a vital part of securing a clean and clear title before you officially close the deal. But what exactly is a title commitment, and why is it so important?
What Is a Title Commitment?
A title commitment is a preliminary report issued by a title insurance company that outlines the terms and conditions under which they’ll issue a title insurance policy. Essentially, it’s a promise that the title company will insure the title to your property once all conditions are met. This document is crucial for both buyers and lenders, as it provides assurance that the property is free from legal issues like unpaid taxes, liens, or ownership disputes.
Key Sections of a Title Commitment
A typical title commitment is divided into several sections, each with its own importance. Here’s what you should focus on:
- Schedule A – Basic Information
Schedule A includes essential details like the property’s legal description, the proposed insured parties (you and your lender), and the amount of coverage. Double-check this section to ensure all information is accurate, as even a small error can cause problems down the road. - Schedule B – Requirements
This section outlines the requirements that must be fulfilled before title insurance can be issued. Common requirements include paying off existing liens, clearing judgments, or resolving any legal disputes. Ensure that these requirements are addressed before you close to avoid delays or complications. - Schedule B – Exceptions
Here, you’ll find any issues that the title company will not cover, such as existing easements, encroachments, or other rights of third parties. While these exceptions may not necessarily prevent you from moving forward, they could affect how you use the property. Pay close attention to this section and consult with your title company or attorney if you’re unclear about any exclusions.
Why You Should Care About Your Title Commitment
Reviewing your title commitment carefully before closing is essential to avoid unpleasant surprises later. Any discrepancies, unresolved issues, or unexpected claims can delay your closing or even jeopardize your ownership of the property.
Before signing off, make sure all conditions are met and that you understand the exceptions to your title coverage. Taking the time to review and clarify the details of your title commitment will give you peace of mind and help ensure a smooth closing process.
In the end, a title commitment isn’t just paperwork – it’s your safeguard for a successful and secure real estate transaction.
