Title Search, Title Report, and Title Commitment – Exactly What Are They and How Do They Work Together?
The title search, title report, and title commitment are three completely different things, but they work closely together, and each one is important in the process of your real estate transaction. As a trusted title company at the Lake of the Ozarks since 1984, we have noticed that people don’t always know what they are or how they differ. At Arrowhead Title, we are dedicated to communicating with and educating our clients so they understand the process. So, we decided to write a blog explaining these three important elements of your closing. If you are curious as to exactly how these three things differ, and how they work together when you come to the closing table, we invite you to keep reading this blog to learn the details!
A title to real property is a document that proves who has ownership rights to that piece of land. The title search is a very deep and detailed search into any available public records to learn exactly who owns the property and is legally able to sell it. This is a very comprehensive process because a title will have information on the land and the owners going back to the very first owner. All along the history of that piece of land, there could be potential clouds on the title. Those clouds could be things like unknown heirs, errors in public records, even fraud or forgery. Not only will the title search verify the owner is legally able to sell the property, but it will also discover if there are liens on the property and that there are no unpaid tax liabilities, etc.
The title report is basically an accumulation of all the information discovered in the title search. It will include details about the property and the owner, it will list any liens as well as easements and any encumbrances, it will include any restrictions, covenants, etc. that affect your use of the land. It will also include tax information and if any unpaid taxes are owed. The purpose of the title report is to inform the potential buyer of the pertinent information found in the title search so that they can make an informed decision as to exactly what they’re buying and whether it’s worth it for the price, considering the information found in the title search.
The title commitment is based on the information in the title report. It is a pledge from the title company that they will issue a title insurance policy when your real estate transaction closes. The title commitment may include conditions or exceptions based on the information in the title report. Conditions are like prerequisites that must be fulfilled before the title insurance policy will be issued. Most often, conditions include things like paying off the mortgage and liens associated with the property at the time of closing. They may also include requiring a survey or resolving any lawsuits associated with the property. Whatever conditions are included in your title commitment, they must be satisfied before the title insurance policy will be issued. Exceptions to title commitments are things that the insurance policy will not cover. It can also include ways that property may have limitations on its use, for example, covenants, easements, restrictions, etc.
Bringing it All Together
As you can see, all three of these parts of the process are interdependent. The information in the title search is required to create the title report. The title report is needed to make an informed decision on whether the property is worth purchasing at the price that has been negotiated. But we also know that unknown issues can come even years after you purchase the property. That’s where the title insurance comes in. Having a commitment from your title agency at Lake of the Ozarks that they will ensure title insurance based on the title report, gives you the confidence to move through the closing process and onto the closing table. Your real estate transaction needs all three of these coming together to make your closing happen.
When you are in need of a title search at Lake of the Ozarks, you can rest assured that our title company in Lake Ozark is going to be extremely thorough and accurate in the research we do. You can rely on us to bring you a title report that has the details you need to make an informed decision, and that we will stand behind the title insurance policy we provide for you. When you are ready for your next real estate transaction, remember Arrowhead Title. Because we know and operate on the belief that accuracy really does matter! If you enjoyed this blog and would like to stay informed with all of our tips and information about real estate at the Lake of the Ozarks, use the links below to follow us on social media.