In this step of the process we get to review the “title commitment”. The title commitment is the documentation that is provided by the title company to disclose to us what they found when they did their title search. A title search is when the title company investigates the “chain of ownership” of the property. They look to see if there are any claims, liens, or encumbrances on the property. They also research whether there are any claims against the seller.
All of these issues are researched and investigated. If any outstanding issues are found, they will be listed on the title commitment so we are aware of them. So Schedule B Section 1 and Schedule B Section 2 are of particular importance.
The title commitment is also the title companies “promise” to issue us title insurance at closing. Title insurance is required to get a loan, and is a good idea to have even if you weren’t getting a loan. This insurance is designed to cover you in the event of someone making a claim against the property in the future.
I encourage you to read the title commitment. I also encourage you to ask as many questions as you need to. If you do have questions or concerns, I will likely refer you to the title company or an attorney as I am not allowed to advise you on title issues.
There’s nothing to do in this step of the process unless you find something in the title commitment that you do not like…for example, if it turns out the seller is not actually the rightful owner of the property or there are outstanding liens…that would be a problem! The vast majority of the time there’s nothing, but it’s still an important part of the process.
Click here for important information about “What is Title and how does it work?” from the Colorado Real Estate Commission.