When you receive your commitment, verify the proposed insured on the schedule A. It may be you or another designation. Look for the contract sales price and compare the loan amount to your contract. If it is all cash then no need to worry about the loan amount. The boxes should be checked for an owner’s title insurance policy and loan policy, if not paying cash. Check the estate or interest in the land described and referred to in the commitment (fee, leasehold, etc.). Look for a date and time. Look at the land description. It should not be an address; it should be a complete legal description. If these items do not appear on your commitment Schedule A, you should ask your attorney, Realtor, and escrow agent why they are not there.
There are specific title commitment issues:
Easements: An easement gives persons other than the owner access to or a rightof-way over the homeowner’s property. Easements should be considered, espe- cially if the buyer is considering changes such as improvements and use.
CC&R’s and other deed restrictions: The declaration of covenants, conditions and restrictions for a homeowner’s association is recorded against the property. CC&Rs can be enforced by an association, or it may be enforced by the other homeowners. As a buyer, you should carefully read the CC&Rs and any other documents affecting the property and usage.
Access: Failure of the public records to disclose a right of access to the property will be noted in the commitment. Landlocked property may be sold. The lack of access must be disclosed to the buyer.
Military airports: Buyers in the vicinity of a military airport will appear on the commitment.
Judgments: A recorded judgment is a lien on all real property. A judgment lien against the seller usually must be paid prior to the escrow closing.
Bankruptcy: If the seller has filed bankruptcy, the bankruptcy trustee will have to approve the sale before escrow closing. A court order may be necessary. Be prepared for the time involved.
Liens: There are numerous types of liens that may need to be paid and released before the escrow closing. These liens may include state and federal tax liens. In a federal tax lien the government establishes its interest in the property and any property acquired after the lien is filed.
Endorsements: In addition to the coverage available under the title insurance, additional coverage can be obtained through endorsements. You should ask for everything that is available. Then make a decision after the explanation for the products that fit. If they cannot explain, or if they say, “There are no additional products” then find someone who can really help you.
Title Insurance Policy: The title insurance policy is issued after recording. The title insurance policy does not insure that a title defect will not occur; it insures that if a title defect occurred prior to the policy date; the buyer will be indemnified if the defect cannot be cured.
It is extremely important to read the commitment completely. Consult with your attorney. It may be the best money you spend for a lifetime of comfort.
Otis Phillips has been in the title business since 1978 and has served as an independent title agent, in direct office management, and in the underwriter arena in 14 states. Contact him at firstname.lastname@example.org or 505.577.3601.