Title Insurance is a valuable tool used to expedite the real estate closing process. When property is sold the buyer wants to know that the seller has full right to sell, if the seller has any liens (mortgages, tax liens, judgments, etc.) against the property, or if any others have the right to use part or all of the property (i.e. an easement to use a road or driveway, right of first refusal, electric, gas, or other utility right of way or perhaps restrictions against certain types of use).
A Commitment for Title Insurance is issued after the seller and the buyer agree to terms. The Commitment shows the items of record indicated above as well as real estate tax, and when applicable, utility and special assessment information. The Commitment is used to clear items which the buyer and buyer's counsel deem necessary. Does this mean the buyer will have clear title? This is not necessarily so.
When the items necessary to transfer title to the buyer have been recorded, the Owners Policy is requested. An examiner then researches the property and issues the Policy once the items necessary to insure have been recorded. Any items not satisfied or matters accepted by the buyer and buyer's counsel will be shown in Schedule B of the Policy (exclusions from coverage).
A Loan Policy works the same way as an Owners Policy except it insures the lender for the amount of the loan. Many lenders require the borrower to provide such insurance.
Escrow is an important part of the sale. The seller and buyer may want a neutral party to act as closer or to hold funds and/or documents to assist the closing process. Both the seller and buyer should have counsel to advise them.
The closer can not advise either party since the closer is a neutral party. The closer's primary duty is to facilitate the exchange of the documents necessary to transfer title for the purchase price as set forth in the closing instructions and statements. The closing may take place at a title agency, law firm, real estate company or a lending institution.
A search is a list of documents from a starting point (usually a date in time) to the present. This list is accompanied by copies of the documents shown in the search. It is the responsibility of the party using the search to make any determinations based on those documents. A search does not insure anybody.
An abstract is also a list of documents much like a search. An abstract contains a certification and may start at the original entry (the date the first document was recorded on the property) or may be more than forty years. An abstract is usually examined by an attorney. The attorney then writes an opinion of title primarily to indicate whether or not marketability of title exists. An abstract does not insure anybody.