When you get close to finalizing your home purchase, your agent will give you something called a “commitment for title insurance.” (It’s also sometimes called a “title binder” or “preliminary title report.”)
Read it. We can’t say this enough: Read it! This document outlines what they will and will not cover in your title insurance. This document is like a contract to enter a contract – it will contain the same terms, conditions, and exclusions that will be in your final title insurance policy.
Why is it important to read it? You need to know beforehand what the insurance will cover and what it won’t. In some cases, you can ask the title company to remove an exclusion or ask for additional coverage for an exclusion. And, if you’ve got questions, ask the title company or your agent to help you.
In other cases, you can fix a problem before it costs you money. For example, the title company’s research may show that the home’s fence is actually on the neighbor’s property. If you know this before closing on the home, you can ask the seller to move the fence or you can seek an easement from the neighbor to allow the fence to remain where it is.
This document will also let you know if there are any easements or restrictions that could impact your future plans for the property, like installing a shed or building a garage or other structure.