Understanding the Title Insurance Commitment of Your Policy

If you are purchasing real estate, then you will have title insurance as part of your title insurance policy. What this means is that during the purchase of the house, the company providing the title will examine public records. Next, the insurance company will provide you with a title commitment document, or binder. This document is essentially the contract, It sets forth the requirements which need to be met before you can have the title insurance policy. Also, it includes any exceptions which the policy will not cover. The document will contain a list of things which need to be done before the policy for the new home can be granted. It will also contain the Schedule A which will have the record of the search which is vital to proceeding to the next stage of the sale.

Requirements of Title Insurance

The insurance policy document will give you a simple list of things that need to be done in order to satisfy the demands of the title company. You may find that things like payment of the current mortgage is a requirement of the insurance, Other common features are evidence of the buyer's mortgage, payment of taxes on the property, a survey into the condition of the property and any liens against the real estate being satisfied. Most of these requirements can easily be fulfilled. Once all of these requirements have been satisfied, you can then return to the title company with the commitment papers.

Exceptions of Title Insurance

Exceptions are items which will not be included in the title insurance. The exceptions are typically listed in the section of the policy that is usually known as Schedule B. They might include any existing claims that are known, but where not found on the records. Also, it can include any financial encumbrance or any lien that was not found by the search. This section will give you a clear idea of what is, and what is not on the policy. Other exceptions, such as a right of access held by another person, or proximity to a military airport, will also be included in this area of the commitment papers. Your policy should be examined by both the buyer and seller carefully.

After the Papers Have Been Received

After you have received the commitment papers, you will have a certain number of days to contact the seller and make a suitable list of all the exceptions and requirements. This will serve as a notice to the seller and helps the buyer close the escrow. As the escrow company is just an agent for the title insurer, providing the seller with as much information as possible is necessary is vital to keeping the real estate process flowing.

The title insurance policy is an important part of a real estate purchase transaction. The policy ensures that the transfer of title is made legally that you are the owner of the property.