How to Read a Title Insurance Commitment (Preliminary Title Report)

Full Blog Post: https://retipster.com/title-commitmen...

0:00 - Intro
0:36 - What is a title insurance commitment?
2:40 - Overview Schedule A
3:14 - The difference between an Owner’s Policy and a Lender’s Policy
4:27 - Who pays for title insurance, the buyer or the seller?
6:58 - Overview of Schedule B - Section I Requirements
7:20 - How can the title insurance policy be effective?
7:56 - Owners/Sellers Affidavit covering matters of title
8:23 - Warranty deed from seller to buyer
9:15 - Execution and Discharge of Mortgage
10:15 - The benefits of having a title company or a closing attorney
11:01 - What if you are not able to get the discharges signed?
11:37 - What if the title company doesn’t have the full legal description of the property?
12:36 - What if the title examiner finds out the property is part of a homeowner's association?
14:01 - What if liens against your property appear in the title history?
15:25 - Payment of taxes
16:23 - Going through boilerplate stuff included in most of the title commitments
18:04 - What if you want to see the documents the title examiner went through to come up with the list?
19:05 - Overview of Schedule B - Section II Exceptions
19:32 - Rights or claims of parties in possession not shown by the public records
19:46 - What if public utilities go through your property?
20:16 - Lien or claims against the property not shown in the public records
20:27 - What if title issues start to arise after the date of the title commitment?
21:15 - Taxes or assessments that become a lien against the property after the date of closing
21:28 - Which risk cannot be insured against?
21:48 - What if a governmental entity has rights to your property?
22:21 - Summary
23:20 - The title insurance policy
23:52 - What to do if a title issue arises in the future?
25:12 - Final thoughts

When I was getting started in the land business, most of the properties I bought were cheap because I didn't have much money to invest, and the lower-end properties were all I could afford. As a result, I spent a lot of time closing my deals and doing my title work.

I won't lie - doing all this legwork requires A LOT of extra time, effort, and energy. It also opens the door for you to make mistakes. If you're planning to do this, it's important to go slow and take your time to understand what you're doing. It's a process where accuracy is VERY important.

Suppose you're approaching this with no prior experience closing real estate transactions (a category I suspect most people fall into). In that case, it's not a bad idea to get some help from an experienced title professional or closing attorney on your first couple of deals just to make sure you're doing it right.

Even if you have to pay out a huge chunk of your profit on your first deal, it's still a bargain IF you pay close attention to what they're doing and ask many questions to ensure you're learning the process. Once you understand how to close a simple transaction, you can save a lot of money on your future deals. I've easily saved myself tens of thousands by doing it this way... but it was only possible because I took plenty of time to understand the process before I jumped into it myself.

Suppose you're closing this kind of deal yourself. In that case, the title company will give you a "title report" (aka - Title Commitment or Preliminary Title Report), which can be a fairly complicated and confusing document with A LOT of information. The first time I tried to close a deal WITH title insurance, but WITHOUT the help of a title company to facilitate the closing, I was wildly confused about what I was looking at. It took me a long time (and several conversations with the title company) to figure out what I needed to do with this document.

I've put together the video above to help you understand how to decipher what's written in a title commitment.

Essentially, you need to look at the full laundry list of items on Schedule B, Section I, ensure every item is complete, and then deliver them to the title company. Once they have your full package, they will take the information and get your title insurance policy processed and finalized.

Keep in mind - you won't have any effective title insurance protection UNTIL all of these steps are complete, and you've paid your title insurance premium.

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