Prior to closing on a property sales transaction, buyers are given a Title Commitment document by the title company. The Title Commitment details what the title company plans to cover (and exclude)
under the Buyer’s Title Insurance Policy it plans to issue, following a thorough examination of the public records concerning the history of that property (known as a chain of title.)
The Title Search
During that search, any defects or “clouds” on the title are revealed, such as assessments or liens, judgments or unpaid tax bills, unsatisfied contractor’s liens, incorrect signatures or notary stamps or even fraudulent documents. Until such defects are corrected, a clear title cannot be issued for the property, though
the title company may decide that the defects are small enough to still render the property insurable.
Usually a Title Commitment doesn’t make use of a comprehensive title search all the way back to the original grant of the land and therefore the Commitment doesn’t make use of a complete Abstract of Title. Therefore the Title Commitment doesn’t indicate definitively that the buyer will never face a problem with the
title—thus the need for title insurance, which protects the buyer for the entire time they own the property from financial loss due to a defect undiscovered in the initial title search. The title company will also accompany the buyer to court in the event of any future title challenge.
The buyer is allowed to review the Title Commitment for several days. They are encouraged to talk to an attorney or the title company, if they have any questions on any of the information on the Commitment. They then can, within that limited time period, let the seller know if there is anything unacceptable to them in the Title Commitment and try to reach an agreement with the title company
to modify or delete the unacceptable provision so closing may proceed on schedule.
Title Commitment documents are more fully explained at www.alta.org.