What is a title commitment?
A title commitment is the result of title. So to understand the commitment element, we first must understand this nebulous concept of title.
Let’s first focus on what title means related to property ownership. Title is defined as:
In property law, a title is a bundle of rights in a piece of property in which a party may own either a legal interest or equitable interest. The rights in the bundle may be separated and held by different parties. It may also refer to a formal document, such as a deed, that serves as evidence of ownership.
In the home buying process, you want to know that the person from whom you are purchasing the property has the right to sell it. In other words, they must currently be on the Title to the property. While you can look this up on the county auditor’s site, how do you know that they purchased it from someone who held Title, and the person before them … going back far enough?
That is where title commitment comes in. Through the title commitment, the title company is telling you that they reviewed the chain of Title for the property and everything is in order. The commitment is that they are committing to being able to offer you title insurance, which insures you against any mistakes that could be made by the title company. This way, if they missed something, you either don’t lose your property or you have the insurance to compensate you for it.
It is important to actually read through the title commitment, because sometimes there are aspects of the insurance that are not going to be as thorough as you might want them to be. Coverage can vary, so it is vital to take an hour or two and read through the title commitment.
In the title commitment document, there are two sections — Schedule A and Schedule B. Schedule A contains the commitment date, policies that will be issued, amounts, the proposed insured, the interest in the land and the owner, and a description of the property. This section is typically relatively standard without surprises. However, Schedule B contains the requirements, exceptions and exclusions. This is the section to which you must pay the most attention.
Ask your real estate agent about any questions after you have read through the title commitment so that you understand the insurance that will be a part of your closing procedures. In many areas of Ohio, the title insurance is paid for by the seller, not the buyer, but always double check your Purchase Contract for how that will be arranged.
If you need a title company recommendation in Ohio, please contact us. We will be happy to offer a few suggestions of companies we have done or are doing business with who will do a great job for you.
If you are interested in buying a property in Ohio, please contact Sara Marie Brenner.