Understanding the Terms of Title and Title Insurance
To understand the terms of any contract, one needs to understand the meaning of the terms used in it. Here we explain for buyers, sellers, lenders and REALTORS® many of the terms, as well as the steps involved in Title and Title Insurance.
What Is Title?
Title is a collection of rights you have as the owner: To legally own real estate you must “hold title.” When you purchase a property, its title is transferred to you from the seller as part of the closing process.
To make sure the seller actually holds legitimate title, and discover any existing claims against it, a title company conducts a Title Search, the results of which are written out in a Commitment.
Preliminary Title Report – A written report issued by a title company, preliminary to issuing title insurance, which shows the recorded condition of the title of the property in question.
Title Commitment – A binding contract with a title company to issue a specific title policy, showing only those exceptions contained in the commitment and any intervening matters after the date of the commitment and prior to the effective date of the policy. The commitment contains all information included in the preliminary title report, plus a list of the title company’s requirements to insure the transaction. It also includes the standard exceptions from coverage that will appear in the policy.
What is Title Insurance?
Title Insurance is an insured statement of the condition of title or ownership of real property. For a one-time-only premium, the named insured and their heirs are protected against title defects, liens and encumbrances existing as of the date of the policy and not specifically excluded from it. In the event of a claim, the title company provides legal defense from the policyholder and pays any covered losses incurred as a result of such claim.
Title Insurance is available in two types of coverage and a buyer should have both on the property.
Sellers generally buy the Owner’s Title Policy as part of their closing costs.
If there is a mortgage on the property the buyer pays for a Lender’s Title Policy, but usually benefits from a price break due to the two-policy purchase. No lender policy is required for a cash transaction.
Both policies describe any considerations, exclusions, and exceptions there may be in the coverage, and include three “Schedules.”
Both policies also include these five sections:
Covered Risks – what the policy insures against
Exclusions – limits of coverage that are outside the title company’s control
Schedule A – specific information on the title and policy
Schedule B – the exceptions to title found during title search (unreleased mortgages, easements, taxes, restrictions on use, etc.)
Conditions – relationship between the insured and the title company, the title company’s rights regarding settling a claim, and the extent of liability
A full range of title and closing services for every market segment
Comprehensive title, escrow and closing services are available for the following market segments:
Servicing and Default Management
Title and escrow services are critical elements of the real estate transaction and having a strong title partner will improve borrower satisfaction, eliminate unnecessary expense, and reduce the time between sales agreement and closing.
Combining innovative technology with an emphasis on customer service has made Chronos Solutions one of America’s fastest growing title companies. We have sought out and hired the best talent in this industry. In many cases, the team members in your community are people you already trust.
Contact us to connect with one our team members today, at email@example.com.
To read more about Chronos Solutions’ full suite of title and closing services for Origination and Servicing and Default, click below.
Origination Title and Closing Services
Default and REO Title and Closing Services