In this month’s article we will go over the “Schedule A” section of the Title Commitment. For the purposes of this article we will use a Title Commitment issued by Chicago Title Agency, Inc. for reference. If you’re looking for excitement in a Title Commitment “Schedule A” can sometimes be the center of lots of excitement and drama, almost as much as the requirement section. You may be asking yourself “Really”? It is the smallest section of the Title Commitment, how could it possibly be exciting or the source of drama? Let’s dissect it and find out.
Our Title Commitment form here at Chicago Title was updated recently to be more user friendly for the consumer. It received a face lift if you will. We have added a whole new disclosure section at the top of Schedule A to show the consumer what company is issuing the Title Commitment, what office at Chicago Title you are working with (the Glendale office is my personal favorite), who your escrow officer and title officer are, the loan number if applicable, your escrow file number, the property address that is being searched and which revision of the Title Commitment you are viewing. Each time title amends the Title Commitment it is tracked, as well as the date the last amendment was completed, and is listed as Amendment No. 1 and so forth.
The next section of “Schedule A” is the Commitment Date. Most assume this is the date the original commitment was completed. This date is actually the date that the Title Plant’s current records are updated through, as of the date the chain of title was examined. Title Plants records are not up to date with the current date, at least not in Arizona. There is usually a lag between the current date and the recording date on the uploaded documents into the Title Plant. A Title Plant is a system or database that allows Title Companies to search and examine a specific chain of title for all recorded documents. In Arizona, Maricopa County is usually the most current up to date County in Title Plant, some smaller Counties take time to post recorded documents so they are further behind the current date. If you recall in last month’s article we discussed the term “Bring to date”, the Commitment date can be updated at any time by requesting a “Bring to date” to be completed. This allows Title to add or remove recorded documents that may not have been of public record at the title the original Title Commitment was completed.
The section following the commitment date lists the type of policies that are being requested and the proposed insured for each policy. See my article in the November 2017 AZREIA newsletter for more on types of policies. The proposed insured is normally the Buyer and/or the Lender in the transaction.
The next section containing “the interest in land” will contain one of three options: Fee simple, easement or leasehold. Fee simple is, according to dictionary.com, “a permanent and absolute tenure of an estate in land with freedom to dispose of it at will, especially in full fee simple absolute a freehold tenure, which is the main type of land ownership.” Basically, you own it and it’s yours to do with as you please, within the law. An easement is a piece of property that is owned by you, that you allow someone else to use legally with an agreement for a specific purpose. Example, the neighbor needs to drive across a portion of your land to access their land. Utility companies need to run power lines, sewers or drains and need access to those things. An easement allows the use of your land for that purpose, while ownership still belongs to you. Leasehold is where there is a lease in place, for both the land and the structure for an extended period of time. Leasehold is seen typically in the commercial arena but can be residential as well.
The next section (number 4 on Chicago’s commitment) is the current vested owner in the property. As an investor you will always want to check this section. This section is where most of the excitement and drama happens. Is the current vested owner the person that signed your purchase contract? If not it could be the difference between a legally binding contract and a non-legally binding contract. Does the person that signed your purchase contract have the right to sign on behalf of the current vested owner? If so, by what authority? Have you reviewed the paperwork that grants the authority? You will also want to pay attention to the actual vesting listed after the owner’s name.
See my article in the August 2018 AZREIA newsletter “Will the Real Property Owner Please Stand Up?” If one of the current owners is deceased there is always a possibility probate may need to be done on the decedent’s estate. If the current owners are divorced but both are still on title, they will most likely both need to sign the purchase contract. If you are unsure who owns the property or have questions about the current vesting contact your escrow officer to request a vesting and lien search to be completed on the property. It is fast, simple, and FREE.
The Last section is number 5 on our title commitment. Section 5 contains the legal description to the property. This section as well has been the source of many a dramatic escrow file. Be sure to review the legal description to make sure you are purchasing the correct property. Once in a while, there is more or less property than you had original agreed to purchase described in the legal description. In one escrow the property had been probated, however, the separate parcel for the alley was missed in the probate proceedings. Another file, the survey may not have been conducted properly and a deed was recorded leaving an abandoned strip of land behind the parcel. Was the lot number correct on the last deed? These are all important items that are examined and researched by Title to ensure you’re know exactly what you are purchasing.
Hopefully after dissecting tiny “Schedule A” you will agree, it may be small but it is very important. The next time you receive a copy of the Title Commitment take a look to see what is disclosed about your potential new property. Next month we will dissect “Schedule B Part I” aka the requirements section. Should you have any questions in regards to the Title Commitment, please contact your favorite title company and escrow officer. If you don’t have a favorite title company please contact Jill Bright (firstname.lastname@example.org) to find out more about working with Chicago Title. If you don’t have a favorite escrow officer please contact me at Amy. email@example.com or 480-675-4984. We would be happy to assist.
by Jill Bright AVP/Sr. Sales Executive