Title insurance offers protection for a wide range of real estate transactions. Purchasers seek insurance when they buy. Lenders seek insurance when they lend. Upon completion of a transaction, State Street Title will issue a title policy insuring its customer. The title policy is the end product. This represents the contract between the insurer and the insured.
A customer will approach State Street seeking title insurance. From this point, we begin a process of communication with our client, as there are numerous steps that must be taken before State Street can issue its policy. We communicate, in large part, through use of the title commitment.
The title commitment contains three parts: Schedule A, Schedule B-I, and Schedule B-II.
Schedule A sets forth the parameters of the transaction. It discloses the parties, the amount of the sale or finance, and a description of the land which is the subject of the transaction. Schedule A can be described as the “informative page.”
Schedule B-I sets forth the particular requirements that a customer must satisfy. Schedule B-I strikes to the heart of the matter. This schedule represents the meat and potatoes of the deal. This schedule will give direction to the customer as to what title issues, if any, need to be cleared up, prior to closing.
Schedule B-II sets forth the exceptions to coverage. Most of the items sets forth in this schedule will appear as exceptions to coverage on the title policy. Common exceptions include building and use restrictions, recorded easements, and easements appearing on the plat.
The title commitment falls within the jurisdiction of title examination. Title examiners are responsible for the production of the title commitment. Of note, a title commitment is true to its name. It is a commitment from the title company to insure its customer, if particular conditions are satisfied.
A title commitment represents the process, whereas a title policy represents the product.
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