Step 13: Read the title commitment

The preliminary title commitment, sometimes also known as a preliminary title report or binder, is a commitment to issue a title insurance policy at the closing for the benefit of the Buyer. This form of title insurance that you’ll receive is an owner’s policy which is paid for by the Seller and provides the new owner with protection from any claims that can be made against the title on the property. A Buyer getting financing must pay for a lender’s title policy as well that protects the lender’s interest in the property.

Click here for a PDF called “Why You Need Title Insurance.”

The initial preliminary title commitment may still be missing information such as marital status, lender information, etc., so be sure to check when updates are received too. You want to review this document to make sure it’s accurate in the Schedule A section, and then review the Schedule B – Requirements. You can find resources online explaining more about title commitments, but looking for unusual items here is a good idea.

Another critical part to review is the Schedule B – Exceptions, which are things the insurance will not cover. Several items are always on here like property taxes, easements shown on a subdivision plat, and any CC&Rs from an HOA. These title commitments usually provide hyperlinks to recorded documents in the exclusions section that can be looked at to identify the particulars.

Per the terms of the contract a Buyer has five days to review the preliminary title commitment from receipt and notify the Seller if they have any objections which would cause them to cancel. Because this contingency is time sensitive make sure to review the title commitment as soon as it arrives, which is often in the first week of being under contract. If you have questions about the preliminary title commitment make sure to bring them up right away.

Arizona Residential Resale Purchase Contract - Title Commitment & Title Insurance
Arizona Residential Resale Purchase Contract Lines 123-132

Click here for a PDF called “Owner’s Policy Comparison.”

Step 14: Review the HOA documents