Post on 04-Jan-2016
The Title Commitment
(Lender’s Policy)
What is a commitment?
Reflects the condition of title Sets forth requirements Eliminates the risk of future attacks on title Commits to issuance of policy for 6-month
period − provided no changes in title occur prior to closing and requirements have been satisfied
Parts to a Title Commitment
Schedule A – name of borrower, name of lender insured, amount of loan, legal description
Schedule B, Section I – checklist of requirements to be cleared by borrower prior to close; outlines transaction
Schedule B, Section II – exceptions to policy; items NOT insured by title company
Requirements
Name of borrower or borrowing entity Organizational documents for borrower Copies of leases affecting the property Amount of the loan Any information for unreleased liens on the
property (e.g. deeds of trust, etc.) Requirements putting property in borrower’s
name
What is a policy?
A contract whereby the insurer (underwriter) for valuable consideration agrees to indemnify the insured in a specified amount against loss through defect of title to real estate
Parts to a Policy
Schedule A − same as commitment Schedule B, Part I − exceptions (same as
Schedule B, Section II on commitment) Lender only: Schedule B, Part II −
subordinate items
Standard Coverage
Insurer insures that Borrower is owner of record No recorded defects, liens or encumbrances
on the title Right of access to and from the property Marketable title to the property Insured mortgage is valid and enforceable
Standard Coverage (cont.)
Does NOT insure against items not of record such as Taxes or assessments Defects that would be discovered by
inspection Easements, liens or encumbrances Problems that a correct survey would disclose
Standard Coverage (cont.)
Unpatented mining claims, patent reservations and water rights
Labor or mechanics’ liens Rights or claims of parties in possession
Extended Coverage
Lender receives same assurances as standard coverage
Also protects against both matters which are shown by public records and certain matters which are not shown by public records
Standard vs. Extended
Be sure to order ALTA extended for “extended coverage” − not ALTA standard