Which statement best describes a title commitment?

Which statement best describes a title commitment?

• A. It is a binding policy.
• B. It is a contract to issue a policy of title insurance.
• C. It is a warranty of title.
• D. It is a certificate of title.

Answer: (B)

A title commitment is the insurer’s agreement to issue a title insurance policy once specific requirements are met. It lays out the proposed policy terms, the insured party, the coverage amount, and the conditions that must be satisfied before the policy is issued. It also lists items that will be excluded from coverage, called exceptions, so the buyer knows what gaps may remain even after the policy is issued. This makes it a contract to issue a policy, not the policy itself, and not a warranty of title. A warranty of title would guarantee that the title is free of defects, which a commitment does not do; it simply promises to issue a policy if the stated conditions are fulfilled. It also isn’t a certificate of title, which is a separate document showing ownership.

A title commitment is the insurer’s agreement to issue a title insurance policy once specific requirements are met. It lays out the proposed policy terms, the insured party, the coverage amount, and the conditions that must be satisfied before the policy is issued. It also lists items that will be excluded from coverage, called exceptions, so the buyer knows what gaps may remain even after the policy is issued.

This makes it a contract to issue a policy, not the policy itself, and not a warranty of title. A warranty of title would guarantee that the title is free of defects, which a commitment does not do; it simply promises to issue a policy if the stated conditions are fulfilled. It also isn’t a certificate of title, which is a separate document showing ownership.