Jul 2013

Read the instructions, dear!

By Marc Shaw

Whether you’re involved in a buy/sell deal or simply refinancing, there will be an abundance of paperwork.  Once past the Agreement of Sale and/or the mortgage approval stage, the next critical document is provided by your trusted PA title insurance company.  This is the title insurance commitment and should be looked upon as the instruction manual for a smooth and proper transaction.  The pa title insurance commitment provides a bounty of information, some of which you may already know, some of which may be a surprise, all of which should be dealt with in advance of settlement. Your experienced and knowledgeable pa title insurance company reviews the land records at your county courthouse, and combines that data with information provided by you, the realtor or the lender.  The end result is the title commitment.  Here’s a summary of what you’ll find on this document:

The report is typically divided into three sections:

Schedule A, identifies the owners of the property.  Are those the names you expected to see?  If not, you should raise the red flag immediately.  Is an owner dead?  Is title held in the name of a trust? Are all owners dead? You want to be sure that the correct person or entity is the one signing the deed or mortgage documents. Moreover, if there is a issue with ownership let the PA title company know right away so they can properly add any requirements that are needed.  Schedule A also confirms the types of title insurance policies to be issued (owners and/or loan) as well as the amount of insurance coverage.  Lastly, Schedule A identifies the property by the county assessment records.  Let’s make sure it’s the right one!

Schedule B-1, better known as the ‘requirements’ section of the report.  This is where your experienced pa title insurance agent will list all matters that need to be dealt with in some manner prior to settlement.  Here you’ll find outstanding mortgages, judgments, liens, or specific requirements to the specific transaction at hand.  For instance, if one of the parties is a corporation or trust,  or if the property is subject to a condominium or homeowners association, then there are additional tasks to be completed.  Isn’t it better to not have to scramble the day before closing to gather this information? Review it right away and have plenty of time to get mortgage payoffs, subordination agreements, lien satisfactions, corporation documents, powers of attorney, etc.

Schedule B-2, the final section and is better known as the ‘exceptions’ section.  Here you’ll find those items which are not covered by the title insurance policy.  Typically, this section includes restrictions, easements, rights-of-way, Declarations of Condominium and other documents that in some way affect the use of the property.  Shouldn’t the buyer of the property know in advance if he’s going to be allowed to open a corner bar or build that in-ground pool or park in the alley out back? It’s all here and should be carefully reviewed.

Even a simple ketchup packet comes with directions (“tear here”).  Buying, selling or refinancing property is a complicated matter, one with hundreds of pieces of paper, numerous parties and limited time frames.  Rest assured that there’s a reliable instruction manual to help you through it.  Count on your knowledgeable and experienced pa title insurance company to create it for you. And read that title commitment!