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