For realtors, lenders, and investors, a clear understanding of title commitments and title insurance policies is crucial for safeguarding their clients’ and their own financial interests in a real estate transaction. Tier 1 Title is dedicated to providing comprehensive and understandable explanations of these vital documents.
The title commitment, issued before closing, is essentially a promise to issue a title insurance policy once certain requirements are met. It outlines the current state of the title, including the legal owner, any existing liens or encumbrances, and the conditions that must be satisfied (e.g., clearing outstanding mortgages, resolving judgments) for a clear title to be conveyed. Realtors should review the title commitment carefully with their clients to identify any potential issues that need to be addressed prior to closing.
The title insurance policy, issued after closing, is the actual contract that protects the insured party (either the homeowner or the lender, depending on the policy type) against financial loss arising from title defects that were not discovered during the title search. Owner’s title insurance protects the buyer’s ownership rights for as long as they own the property, while lender’s title insurance protects the lender’s security interest in the property.
Tier 1 Title ensures that both the title commitment and the policy are accurate and clearly explain the scope of coverage and any exceptions to that coverage. Understanding these documents empowers all parties to proceed with confidence, knowing their investment is protected against potential title-related risks.
