The combination of excitement and dread you may be feeling after purchasing your first home is perfectly normal. The added responsibility of searching for and acquiring homeowners’ insurance could also likely explain why you feel so overwhelmed. Fortunately, there are always professionals who can guide you through this process. There is also one type of insurance in particular that you should strive to become as familiar with as possible upon becoming a homeowner: title insurance. Let’s take a closer look at this form of protection.
Title Insurance For Homeowners
Title insurance is a form of indemnity insurance that shields both homeowners and lenders against financial loss resulting from defects in a property’s title, which refers to a document certifying legal ownership of said home (e.g. deed). Examples of defects to a title include liens, encumbrances, property restrictions, and public record errors. Given that both the lender and the homebuyer are protected under title insurance, the typical plan includes two policies. This industry has grown substantially in recent years. According to market research firm IBISWorld, revenue for the title insurance industry in the United States grew at an annual average rate of 2.7% between 2015 and 2020.
However, there is also an important aspect of title insurance that your real estate agent should inform you about: the title commitment. Here is a close analysis of what this is.
What Is A Commitment?
A commitment refers to the title company’s pledge to issue an insurance policy for the home upon closing. This commitment, also occasionally called a “title binder,” typically includes the same terms and conditions that are found in the insurance policy. The American Land Title Association (ALTA) generally dictates the process for issuing title insurance policies.
A lender’s policy is usually required if you decide to take out a mortgage for your property.
Promise After Closing
A commitment is one of the most essential promises a title company should make to a homeowner after closing. It is a type of pledge that is designed to be as specific as possible, which means that it contains not only what the title insurance policy includes, but also what it excludes.
Title Insurance Is Commonly Required
Nearly every standard purchase and sale agreement includes clear instructions obligating a title insurance seller to offer the homeowner this form of protection. A title insurance owner’s policy is important to have because it shields you in case there is ever an unknown problem related to your property that may subsequently create further issues. For instance, if the previous owner of your home failed to pay taxes or other fees, you may potentially become responsible for these payments without title insurance. Therefore, be sure to acquire this type of insurance in order to avoid any disputes, legal or otherwise.
Always Review The Commitment
It’s imperative that you always review your title commitment for several reasons. Firstly, title companies are only prepared to insure against unexpected problems that arise later. Prior to issuing this commitment, however, the company typically peruses public records and notifies the buyer that any items that could potentially impact the property’s title are excluded from insurance coverage. These items are often called “exceptions.”
Common examples of such exceptions include public utility easements (e.g. your local power company sets up wires that run across your home). Be sure to speak to an attorney or other legal professional for clarification on any doubts you may have about exceptions to title insurance coverage.
Talk To The Experts At Mathis Title
Speak to the professionals at Mathis Title Company in Fairfax, Virginia to learn more about a title commitment. We serve various towns in Fairfax County and provide personalized real estate settlement services, as well as legal advice. Robin Mathis is an attorney who has more than 30 years of experience and who was sworn into the U.S. Supreme Court. Ann Andreatos is a title agent with over 14 years of experience and who has a keen capacity to detect errors in documents and subsequently solve all issues related to property titles.
During the sale and purchase of a home, Mathis Title will hold the funds that are being transferred in an escrow account prior to the title transfer and closing. After the title order has been approved, Mathis agents will launch a title search to ensure a clean title transfer. We will always make sure all of your needs and concerns are addressed, even post-closing. Call Mathis Title Company today at (703) 214-4020 or contact us online for more information about our services, which include drawing up purchase agreements, mechanics lien, refinancing, and settlements.