Title Commitment Vs. Title Insurance: The Notable DistinctionBy Barbara Pronin
Getting a deal accepted is exciting, but as every experienced agent knows, a lot of things need to happen before the deal closes. Among them are the studies and inquiries undertaken by the title company detectives.
How important are these steps on the road to a timely closing? Let’s start with the first of a two-step process known as the title commitment. Issued early in the closing process, or as soon as title underwriters have determined that the title of the property in question is legitimate, or free of known defects or encumbrances, the commitment letter signifies our commitment to issue a title insurance policy – in the form of two policies, one for the lender and one for the homeowner. Composed of four sections, the title commitment sets forth the following:
Unlike traditional insurance which protects against future events, title insurance protects against claims for past errors or occurrences, such as:
For the lender, this insurance protection lasts until the mortgage is paid in full. For the owner, it stays in effect for as long as the owner or his/her heirs retain an interest in the property. Barbara Pronin is an award-winning writer based in Orange County, Calif. A former news editor with more than 30 years of experience in journalism and corporate communications, she has specialized in real estate topics for over a decade. |
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