What is Title Insurance?

Definition: A contract where by the Insurer for valuable consideration agrees to indemnify the Insured in a specified amount against loss through defect of title to real estate wherein the latter has an interest either as a purchaser or otherwise.

Purpose: The Title Insurance services are designed to afford real property owners, lenders, and others with interest in real estate, the maximum degree of protection from adverse title claims or risks. The financial degree of protection from adverse title claims or risks. The financial assurance offered by a Title Insurance Policy is, of course, the primary aspect of title protection. The Policy affords protection both in satisfying valid claims against the title as insured and in defraying the expenses incurred in defending such claims.

The Title Search

Title companies work to eliminate risks by performing a search of the public records or through the title company's own plant. The search consists of public records, laws and court decisions pertaining to the property to determine the current recorded ownership, any recorded liens or encumbrances or any other matters of record which could affect the title to the property. When a title search is complete, the Title Agency issues a Commitment for Title Insurance (pre-lim) detailing the current status of the title.

The Commitment for Title Insurance

The commitment for Title Insurance contains vital information which can affect the close of escrow: such as, ownership of the subject property; how the current owners hold title; matters of record that specifically affect the subject property or the owners of the property; a legal description of the property; and an informational plat map.

Reviewing the Commitment For Title Insurance

The Commitment should be reviewed immediately by all parties with special attention to the following area:

• Verify the current ownership/vesting. Make certain the names on the report are the same as the names on the purchase contract.

• Verify the legal description

• Review Schedule B1 (Requirements). If you can't locate an easement, if an unexpected deed of trust appears, etc., call your Escrow Office right away. Often similar names will produce judgments, and liens which are not the responsibility of the parties . . . Social security numbers, birth dates, and prior marriages/divorce history can eliminate similar name problems.

• Review Schedule B2 (Exceptions). Watch for bonds, deeds of trust, current taxes, CC&R's, and be aware of restrictions and easements on the property.

• Look for surprises! Top-notch Escrow Officers and title companies go out of their way to resolve problems quickly. Call your Escrow Officer as soon as something comes up so that it can be resolved early in the transaction.

If you have any questions about the Commitment or how to read it,
contact your Incredible Real Estate Agent or your Escrow Officer!