Following our article last month on the topic of exceptions, an important part of the title insurance commitment, this month we are going to discuss Requirements, shown on Schedule B Section 1 of the commitment.
Requirements are written conditions that must be satisfied or it will be converted into an exception in the policy. The process of satisfying requirements is called “clearing title”. There are 4 typical requirements or general requirements made on each title commitment:
- Pay the agreed amounts for the interest in the land and/or mortgage to be insured
- Pay us the premiums, fees and charges for the Policy
- Documents satisfactory to us creating the interest in the land and/or mortgage to be insured must be signed, delivered and recorded.
- You must tell us in writing the name of anyone not referred to in this Commitment
The remainder of the requirements on the title commitment results from the terms of the transaction itself and what is found of record against the property or the individuals/entity in title. Most of these requirements will fall into the following categories:
- Properly executed deed(s) from the vested parties to the purchasers.
- Properly executed mortgage from the purchaser to lender.
- Properly executed releases for any open mortgages on the property.
- Properly executed releases or satisfactions of any judgments, liens or bankruptcy issues.
- Proof of good standing, as well as corporate papers and resolutions for entities coming in and out of tile.
- Plus any other unique circumstances to the transaction that will call for explanation from the seller or buyer to satisfy the clearing of title.
Many requirements made on a title commitment are a result of changes in people’s lives; marriage, divorce, death, accidents, bankruptcy and many other life changing events.. Although most of the requirements are fairly easy to meet, once in a while, you run into something that takes quite a bit of detective work. The most common example of this is the missing marital status of the Grantor on a deed.
In both Kansas and Missouri, it takes one to buy and two to sell if you are married. This is because both states recognize marital rights. If there is not a marital status on a deed then it must be ascertained if that Grantor was married at the time and if so, the spouse might have to sign.
Title companies do not make these requirements to be difficult they are made with the ultimate goal to clear the title and retain the lowest amount of risk for the seller, purchaser, and lender as to any hidden defects on the property