UNDERSTANDING THE TITLE COMMITMENT
You’re under contract to purchase or sell real estate and you get a document from the Title Company called the Title Commitment. At first glance, this can be a very intimidating document. I mean, all these new terms that you may or may not have ever heard of, like Metes and Bounds, Fee Simple, Restrictive Covenants, Standby Fees, T-2R…..I think you get the point.
Just remember, the Title Commitment is to provide the terms and conditions on which the title company will be issuing a title policy. It is a commitment for title insurance. In Texas, title insurance is usually paid for by the seller and protects the buyer, should a lawsuit arise due to a claim of ownership or lien, etc. against the property. The Title Company will seek to clear up the title issues or pay you for your losses.
There are 4 parts to a Title Commitment called Schedules. So let’s break it down:
The Facts – contains the information directly related to the listed transaction:
- Effective date of the title commitment
Type of policy being issued
The name of the proposed insured
The estate or interest in land to be covered
The person in whom title is currently vest
The legal description of the property to be insured
Be sure to check that this information matches the contract.
This section is directed towards the buyer and includes the items that are exceptions to the coverage. These items cannot be changed and are there for your review. However, if the buyer finds any of these exceptions not acceptable, the buyer may make objections in accordance with the purchase contract. The Standard exceptions that accompany every real estate transaction are listed in the TREC contract under Title Policy and include, but not limited to, Deed Restrictions, Standby Fees, Taxes and Assessments, to name a few. Other exceptions that are considered Specific to each property would be items like Build Lines, Easements, Encroachments etc.
This section list the requirements that will need to be satisfied in order for the title company to issue the title policy. This section includes any defects to the title, such as liens and/or judgments. Schedule C is included in the commitment but not in the actual Title Policy to be issued after closing. All items on Schedule C must be removed prior to or at closing.
This section discloses the title companies settlement charges, the parties to whom the premium is paid to and the ownership and agents of the title company.
I hope this information has provided you a better understanding of The Title Commitment.
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