The Title Commitment – What It Is and Why It’s Important

In real estate closings, a document is circulated called the “title commitment”. This document is the result of an examination of the history of a parcel of land. Without it, the buyer would know very little about the background and nuances of the property they are purchasing. The title commitment is provided by a title insurance underwriter, and is ultimately an offer from the underwriter that they will insure title to the property if certain requirements are met.

The title commitment is divided into different sections or “schedules”. Schedule A contains basic information such as the property address and legal description of the land, the proposed insureds name and seller’s name, and the proposed amount of insurance.

Schedule B contains the requirements necessary to convey marketable title from seller to buyer. Some examples of requirements are:

• Recording the deed
• Satisfying liens
• Ordering an estoppel from the homeowners’ association
• Verifying the existence of a corporation
• Complying with a marital settlement agreement
• Probate of an estate

It is the closing agent who ensures that these requirements are met prior to closing and puts the parties on notice of any requirements that are not standard so that these items can be resolved.

Schedule B also includes “exceptions” to the title policy, what the title insurance policy will not cover. The actions of the closing agent can remove some (but not all) of the policy exceptions.
Some examples of actions that result in removal of policy exceptions are:

• Requesting an estoppel
• Obtaining a municipal lien search
• Ordering a survey

If a closing agent does not perform the tasks that are necessary to remove certain policy exceptions, then these items will remain as exceptions to a buyer’s title policy and the buyer will be responsible for issues that would have been uncovered if these items had been obtained. Additionally, if a closing agent performs a task but does not ensure the corresponding exception is actually removed, the buyer will be responsible for issues just the same as if the task had not been completed. A buyer should not assume that just because a title commitment was received that all necessary actions have been completed.

Therefore, it is important to use an experienced closing agent that will ensure that all requirements to convey marketable title from seller to buyer are being met and to ensure that the buyer is adequately protected.

Berlin Patten Ebling, PLLC

Article Authored by Jessica Featherstone, Esq.

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

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