- Any tax liens on the property?
- Any property taxes owed on the home?
- Any court judgments against property?
- Any hidden or previously undisclosed co-owners?
- Any name confusions or fraud in the chain of the title?
- Any mechanic liens on the property?
- Any recorded and/or unrecorded mortgages, etc.?
The title company researches answers to all these questions and afterwards will issue a title insurance commitment. A title insurance commitment tells a purchaser what the title insurance company needs in order to insure the title. The title insurance commitment consists of four schedules:
Schedule A: Includes basic information about the property i.e. the current owner, legal description and the effective date of the county records. Section A also includes the name of the proposed insured – the bank name and/or the name of the party purchasing the owner’s policy.
Schedule B: This section will list the parties that have any interest or control of or the use of the property, such as utility easements and building setbacks. This would be a part of the land that a utility company has the right to use. A setback prevents the owner from building a certain distance from the property line. Schedule B is also the area in which exceptions will be noted. Exceptions are anything that will not be covered by title insurance.
Schedule C: Includes any matters which must be resolved before the seller can transfer title to the buyer and before the title company will issue a policy. Items commonly found in schedule C include existing liens (current mortgage), judgments, tax liens, Mechanic’s and material man liens, marital status issues, etc. Everything in Schedule C must be addressed or corrected in order for the title company to insure the title.
Schedule D: – This section lists all parties who will collect any part of the insurance premium including underwriters, title agents and attorneys. It also shows the amounts being paid for the owner’s title insurance policy, the mortgage company’s amount and any endorsements.
If you are financing the purchase, the lender will require a lender’s title policy in order to finance the property (this protects the lender). Additionally, as a purchaser, you can negotiate with the seller to pay for an Owner’s title policy (this protects you in case any title issue arises after the purchase).