Which statement correctly completes this sentence: The obligation of the issuing company under the current commitment is not intended to be in lieu of either policy?

Which statement correctly completes this sentence: The obligation of the issuing company under the current commitment is not intended to be in lieu of either policy?

• A. It is identical to the ALTA Owner’s Policy
• B. It is identical to the ALTA Lender’s Policy
• C. It is not intended to replace either policy
• D. It replaces both policies

Answer: (C)

A title commitment is a preliminary promise from the title insurer to issue title insurance at closing under the standard ALTA forms, not the final insurance policy itself. It outlines what must be done (or what must be cleared) before the policy can be issued and lists any exceptions that will appear on the policy. Because it’s a planning and compliance tool for the closing, it isn’t the actual protection you’ll receive once the deal closes. That’s why the statement that best completes the sentence is that the obligation under the current commitment is not intended to replace either policy. The ownership policy and the lender policy are the actual, enduring protections issued after closing. The commitment guides the process and sets conditions, but it does not substitute for the coverage those policies provide. The commitment can’t be identical to either policy because the final policy’s scope, endorsements, and protections depend on what’s finalized at closing. It also can’t replace both policies, since once the policy is issued, you have real, ongoing title insurance for the owner and/or the lender, not a commitment.

A title commitment is a preliminary promise from the title insurer to issue title insurance at closing under the standard ALTA forms, not the final insurance policy itself. It outlines what must be done (or what must be cleared) before the policy can be issued and lists any exceptions that will appear on the policy. Because it’s a planning and compliance tool for the closing, it isn’t the actual protection you’ll receive once the deal closes.

That’s why the statement that best completes the sentence is that the obligation under the current commitment is not intended to replace either policy. The ownership policy and the lender policy are the actual, enduring protections issued after closing. The commitment guides the process and sets conditions, but it does not substitute for the coverage those policies provide. The commitment can’t be identical to either policy because the final policy’s scope, endorsements, and protections depend on what’s finalized at closing. It also can’t replace both policies, since once the policy is issued, you have real, ongoing title insurance for the owner and/or the lender, not a commitment.