Real Estate Transactions By Gilles Baillargeon: Understanding a Title Commitment

This part of the commitment stipulates the basic facts of the transaction, including: the date of certification (the effective date),the proposed insureds (purchaser and lender), the types and liability amounts of the policies to be issued, the estate being insured, how the title to the state is currently vested (present owner or owners and how they hold title), the legal description and address of the subject property and the estimated title insurance charges, based on provided information.
Items to Review in Schedule A upon receipt:

• Make sure that all information is spelled or inputted correctly and matches the contract including the spelling of the buyer’s names, purchase price, sellers’ information, property address, and legal description.

This section lists the necessary requirements that must be met before a title policy can be issued, including any or all of the following items: releases of deeds of trust, releases of tax liens, entity or estate documentation, releases of judgments, correction deeds, warranty deeds, and deeds of trust.

Items to review in Schedule B-1 upon receipt:

• Power of Attorney: If any parties are using a Power of Attorney, make sure to get a copy of the POA to your closer well in advance of the closing for review.
• Business Entity: If the seller or buyer is a business entity such as a limited liability company, or partnership, requirements may ask for verification of signing authority.
• Multiple Deeds of Trust: Sometimes the title commitment will show two deeds of trust on a property, yet the seller has only a single loan. Notify your closer immediately if this is the case so that a Release of Deed of Trust from the previous lender or a Letter of Indemnity from the previous title company can be obtained.
• Federal Tax Liens or Judgments: The requirements may show these items. If these liens do affect your seller or buyer, please contact the appropriate parties to obtain payoff information. If the liens show up as a result of a common name, the seller or buyer may be asked to supply additional information to verify their identity.
• Death Certificate: If one of the parties has passed away but the title has not cleared, a death certificate must be recorded in lieu of the other party signing the Warranty Deed. Contact a legal professional for more information on how to handle a death in a real estate transaction.
• Owner’s Policy on Vacant Land: This type of policy may require an ALTA or other type of survey. This is typically paid for by the seller.

This section typically requires the agent of the title company to order mortgage, judgment, lien, tax and other payoff statements in order to clear title. 

For mortgage payoff statements you will need the loan number, name of the parties on the mortgage, and the social security numbers of the parties on the mortgage. If you are a third party ordering the mortgage payoff statement you will need the above information along with a signed authorization form hand-signed by the parties on the mortgage. 

For judgments and liens, this information is available to the public. You may call the county clerks office and reference the party and case number of the judgment or lien and ask for a payoff statement. 

For taxes you will call the tax collectors office in the county where the property is located. You will reference the account number, folio number, or parcel ID number, all of which can be found when searching the property address on the counties tax collector website. 

This section lists the necessary exceptions to title. The items not being insured by the title company which include seven standard exceptions, taxes, and further burdens such as covenants, conditions, and restrictions (CC&R’s); easements, and/or mineral reservations.

The seven standard exceptions are found on every title commitment but may be deleted or revised on the policy. If buyers have questions regarding specific exceptions, they should consult a real estate attorney.