Understanding Your Title Commitment

What is Title Insurance?

Title insurance is a unique form of insurance because it protects you against ownership claims against your property. A Title insurance policy provides protection to you and your heirs for as long as you own your house. Unlike other types of insurance, title insurance protects you from events that happened in the past.

How does title insurance work?

The title company does a careful search and examination of all recorded documents to determine who currently owns the property, whether it has been properly deeded, and what other parties may have an interest or claim in the property. The Title Company will reach out to any applicable parties to remedy any of the requirements that must be cleared prior to the closing. Once the closing takes place, the title company records the documents and issues the final title policy.

Why Do I Need Title Insurance?

The American Land Title Association reports that 36% of all real estate transactions have a defect in title. Title insurance protects against loss or damage against any future claims people may have against your ownership of the property. Should a title problem arise at any future date, the title company will stand behind the policy holder, both monetarily and with legal defense if necessary, to pay claims and defend their title to the property.

Understanding Your Title Commitment

Schedule A: Who, What, Where, and How Much”

Schedule A sets forth the effective date, name of current property owner (sellers), proposed insured (buyers), legal description of the property, amount of insurance (sales price), and the name of the lender and loan amount if applicable

Tip: Please make sure you double check the spelling of your name in this section

Schedule B-I: Requirements

Schedule B-1 lists all items that must be satisfied or cleared in order to issue the title policy that covers the new owner and lender. Examples: payoff of current mortgage, any liens on the property, mistakes in the chain of title, unpaid property taxes

Schedule B-II: Exceptions

Schedule B-II notifies the buyer and lender of any exceptions from the insurance coverage. These exceptions are items that are not insured on the title policy. This can include restrictive covenants, mineral rights, water rights, or utility easement.

Tip: If your policy includes Owner’s Extended Coverage (section 8.1.3 of your contract) there are standard or general exception that may be deleted