Pioneer Title Agency In the News

June 11, 2019
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Title Commitment – How to Read One

When buying a house, it may feel like you are bombarded with document after document from your agent, lender, and title company. While it is important to look over all these documents, we want to discuss one in particular-your Title Commitment or Prelim.

During your house hunt, you probably realized no two properties are identical. It’s the same with title commitments, no two are exactly the same. We hope this post gives you some of the basics to help you understand this important document and dodge any surprises from the past.

First, what is a title commitment?

This is a document issued by your title company (bonus points if that title company is us). This document is a promise to issue a title insurance policy. Broken down a little more, this document is a map that your escrow officer will use to cure any defects with the property to make sure it transfers free and clear.

Now, you might be saying, “Oh, I know what insurance is – I don’t need to read this!” but before you exit out of this super helpful blog post – we want to point out title insurance is very different from other forms of insurance. You see, most forms protect against unforeseen future problems, title insurance is all about eliminating risk prior to insuring. Also, this is a one-time premium instead of monthly installments.

Reviewing the Commitment.

You will receive the title commitment during the escrow process. As you do your due diligence reviewing the document, don’t hesitate to reach out to your title agent or realtor for clarification. You will want to understand the terms, requirements, exceptions, and exclusions spelled out in this document.

The commitment is typically divided into:

  • Schedule A
  • Schedule B, which may be divided further into:
    • Requirements
    • Exceptions and exclusions

 

Below is the anatomy of a title commitment – we hope this helps you navigate the document and make your closing a little less stressful!