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What Is a Title Commitment?

A title commitment is issued by a title insurance company, outlining what the offered title insurance covers as well as any exceptions.

 

What Are the Benefits of Title Insurance?

A title insurance policy is one of the common methods for protecting yourself against defects or encumbrances on a property’s title.

How to Obtain a Policy

Before the policy is issued, the insurance company will conduct a title search to find any potential issues that might arise in the future. Through the examination of public records, the company will find and review any documents that might result in problems, such as liens, tax assessments, other tax documents, and special documents, such as divorce or bankruptcy filings. The results of this report are then put together in the title commitment, which represents the extent of the insurance and any exceptions. Also called a title binder, it is a proposal that becomes binding when you pay for the insurance.

Types of Title Insurance

Lenders favor a lender's policy of title insurance; however, you should note that the title commitment for these policies will only protect the lender and is tied to the mortgage, not the property. In  contrast, an owner's policy will remain in force as long as you stay in the property and can protect you against title claims unknown at the time of the purchase, such as forged documents or missing heirs who turn up and demand a portion of the property's worth.

 

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