A title commitment gives the details of what is covered in title insurance. It discloses all liens, burdens, defects, and obligations associated with a property, which impacts the ability to transfer a sold property. Claims stemming from eminent domain, bankruptcy, and legislation are exclusions, while liens that the buyer can’t accept are called exceptions. These exclusions and exceptions in the title commitment must be satisfied before the title company can provide title insurance. Reviewing the title commitment avoids vulnerability to future challenges on the property. Addressing any concerns immediately can expedite the title commitment process.
How the Title Company Ensures a Clear Title
Before the title company writes the policy, a title search is conducted to determine if the title is clear. During this process:
- Property transfers on record are pulled for the sold property.
- In addition to tracing the ownership details, this requires identifying the details for any liens and other encumbrances on the property, including easements.
- The title company ensures that every lien or transfer of the property is disclosed.
After the search is completed, a report is compiled and sent to the buyer and seller for review, prior to the issuance of title insurance.
Uncovering Hidden Defects and Clearing Clouds on the Title
When the title search reveals another commitment on the property, it is referred to as a cloud on the title. A defect can also arise prior to the close, based on an action by the owner or new information that arises. This typically includes encroachments, incorrect survey details, unpaid betterments, tax liens, and foreclosure attempts. It can also include recent improvements that do not pass code inspection.
To expedite the closing and clear clouds on the title, the title company will do the following:
- Determine when the defect originated and who’s responsible for clearing it.
- Work with the buyer and seller to remove any clouds.
- This can include addressing unpaid judgments as well as fixing or reversing improvements to make sure the property is up to code.
The title company tries to resolve any clouds on the title behind the scenes. Alternately, the buyer might be asked to remove or release liens in order to obtain the property. Once all liens are satisfied, the buyer receives the deed along with a title insurance policy. This usually takes two weeks, but can vary greatly based on the unique circumstances of each transaction.
At the end of the title commitment process, either the title is cleared and title insurance is issued, or the defect remains and the buyer and seller determine how to move forward.
Baer Reed is a woman-owned business support service that provides various real estate support services. Contact us for a consultation about how we can support your title commitment process or other requirements.
Mr. Reyes graduated with honors from the Ateneo de Manila University, where he received the Procter and Gamble Student Excellence Award. He obtained his Juris Doctor degree from the Ateneo de Manila School of Law. During law school, Mr. Reyes was part of the Philippine delegation to the Willem C. Vis International Commercial Arbitration Moot held in Vienna, Austria. He was also a member of the Ateneo Society of International Law and the St. Thomas More Debate Society. He completed his internship at the Public Attorney’s Office. He wrote a thesis entitled: “To Kill A White Elephant: An Analysis of the Fiduciary Exception to the Corporate Attorney-Client Privilege”. Mr. Reyes is admitted to practice law in the Philippines and the State of New York.
Ms. Lardizabal-Manzano is a graduate of San Sebastian College-Recoletos, where she earned her B.A. in Political Science. In 2003, she received her law degree from Lyceum of the Philippines and was admitted to practice law in 2004.
Matthew Hersh earned a B.A. in Political Science from Columbia University in 1990 and graduated cum laude from Georgetown University Law Center in 1999. He also holds a master’s degree in international relations from the Georgetown University School of Foreign Service.
Cap. Avi Levak (Res. IDF) graduated from from Israel’s prestigious Ben-Gurion University of the Negev with a Bachelor of Science in Computer Science and Mathematics. He is also a Leadership and Communication coach trained in TuT coaching by Alon gal in Israel. Avi specializes in high-level, in-depth analysis of business and client needs, within systems and software strategy and architecture.
Ms. Tyler graduated cum laude from Georgetown University and received her law degree, cum laude, from Georgetown University Law Center. During law school, she interned at the United Nations Economic Commission for Europe. She also worked on The Tax Lawyer journal and was a member of the award-winning Barristers’ Council Mock Trial Team. Ms. Tyler is admitted to practice law in the State of California and the District of Columbia.
Ms. Cruz-Anonuevo graduated cum laude and top nine in her batch from Miriam College with a degree of Bachelor of Arts in InternationalStudies. She obtained her Juris Doctor degree from Ateneo de Manila University School of Law in Rockwell. During law school, she interned in Rivera, Santos, Maranan & Associates. She was also part of Ateneo’s Labor Law Bar Operations. She wrote her thesis on, “Stealing Privacy: Limitations on Media’s Photographic Invasion.,” Ms. Cruz-Anonuevo is admitted to practice law in the Philippines.
Ms. Aquino-Batallones obtained a Bachelor of Arts degree in Development Studies (with Minors in Global Politics and Hispanic Studies) from the Ateneo de Manila University. In 2011, she received her Juris Doctor degree from Ateneo de Manila University School of Law. During law school, she interned at Romulo Mabanta Buenaventura Sayoc & de los Angeles then became an intern of Ateneo Legal Services Center’s Clinical Legal Education Program.
Mr. De Guzman graduated from San Beda College with a degree of Bachelor of Arts Major in Economics and received his law degree from San Beda College of Law. He is multilingual and is fluent in three languages: Chinese, Filipino, and English. He was admitted to the Philippine Bar in 2003.