Welcome to the Kazi Law Firm! We are a boutique law firm steeped in Texas tradition personifying the warmth and congeniality consistent with southern hospitality. We believe in preserving integrity and professionalism with true Texan charm, staying true to our roots, while providing essential, affordable legal services to all. Located just north of Dallas, Texas in the rapidly growing suburb of Frisco; the Kazi Law Firm concentrates on contracts drafting and review, immigration law, will & estates, real estate law, landlord, tenant, mediation, and general business law needs.
Often times, our clients are first time home buyers or relocation residents that are purchasing their first home in Texas. The most commonly asked question by both clients is “what is the title commitment?” They are under contract on the purchase of their new home and the title company has sent over a massive set of documents to review and object to in a timely manner. I think it’s crucial to explain this vital aspect in the home buying process and what the purpose of the title search and title commitment is.
Title Commitment:
The title company’s main responsibility is to make sure that the owner legally owns the property and has the right to sell it. They’re going to do their best to find all recorded liens on the property, verify the seller’s marital status (if there are any spouses or inheritors who have rights to the property) so that they can give the buyer a “clean” title that no one can dispute. The title commitment is the result of the title search that the title company performs.
The title commitment shares any potential issues, as well as disclosing encumbrances on the title that the buyer can’t escape from. For example, the title company may disclose a deed restriction or easement that the buyer may have a fundamental issue with, allowing them to walk away from the contract within a pre-negotiated number of days after receiving the title commitment. If the community has a deeded restriction limiting the number of vehicles you can own and park in your driveway, the buyer may legally object to this constraint and walk away from the transaction. Therefore, if you have specific or unique plans for your property, such as keep horses or install solar panels or pools, be sure to pay close attention to the title commitment and deed restrictions to ensure that you will legally be allowed to accomplish those goals.
Title Search:
The title search is the first item a title company initiates once they receive a copy of your executed contract. The purpose is to make sure the seller actually owns the home, free and clear. In essence, the title search allows the title company to trace the property’s ownership and ensure the title is not “clouded.”
The title company checks the following:
- Chain of Title: They verify the property’s ownership history, making sure that ownership properly transferred from each owner in the past. This also checks to make sure all spouses are accounted for and in agreement with selling the subject property.
- Tax Search: Ensuring that the taxes are paid and current on the subject property.
- Judgment Search: The seller might be prohibited from selling the property if there is a judgment against the seller (until the judgment is paid off).
Note: Texas is a community property state, which means that for married couples, everything you buy is half-owned by your spouse, even if only your name is on all the purchase documents. If you are in the middle of a divorce and thinking about buying a home, your soon-to-be-ex will own half your home if you close before the divorce is finalized.
Schedule A:
This schedule represents the details of the transaction. Essentially, the facts including the who, what, where, and how? Schedule A will include the legal description of the subject property, the buyers’ names (called the Proposed Insured), and the sellers’ names, as well as the amount of coverage for the property.
Note: Be sure to check the spelling and accuracy of buyers’ names under “Proposed Insured” (Section 1), check that the sellers’ names match the contract (Section 3), and make sure the legal description is correct and complete (Section 4).
Schedule B:
This schedule is directed to the buyer and lender that will receive a title policy. Under this section, the title company advises you of encumbrances on the property, or items that they are not searching for and therefore, not responsible for.
The following items cannot be changed by the buyer:
- Deed restrictions / Restrictive covenants: restrictions imposed by the original property developer on how you can use your home, even if you are not in an HOA.
- Taxing jurisdictions
- HOAs: whether or not you belong to an HOA
- Recorded Easements: utility easements are most common, permitting access to your property to other people for specific purposes
- Leases & mineral rights: Even though leases convey with the property, the title company is not responsible for any leases in effect, nor do they generally know who owns the mineral rights. Note: If you know the property has a lease, you need to get that lease from the seller and review it. You buy the terms of the lease with the contract.
Schedule C:
This schedule is often referred to as the “Clear to Close” schedule and is effectively the “to-do” list of everything that needs to be cleared up prior to successfully closing on your new home. Existing liens like the seller’s mortgage company will appear here. Many of the requirements listed here are a normal part of the transaction. Other requirements may be specific from the title company’s underwriter. Note: Most issues are found in this section. Be sure to check for unexpected liens, such as city tax liens, second mortgages, mechanics liens, etc. Check for former spouses uncovered by the title company who may need to sign off on the deal as well.
Schedule D:
This schedule is primarily for disclosure purposes. You should see the amounts that are being paid from closing toward both the owners’ and lender’s title policy. These should be the same amounts on the final documents (unless there are subsequent amendments changing the closing price or loan amount).
Problems or Defects Discovered?
There are occasions where some problems are serious enough that the transaction cannot close without first being resolved. Please keep in mind that the title company cannot fix problems, only the seller can. Most issues are relatively small and swiftly resolved, but not all. In the event of a major impediment that the seller cannot fix, the buyer may terminate the deal and gets their earnest money refunded. Some problems won’t cause the transaction to close, but still might be a problem for the buyer. For example, there may be easements or restrictions that cause the buyer to change their mind about the property. The contract has a negotiable number of days that the buyer can walk away after receiving the title commitment.
As you can see, it is critical for buyers to understand the title committment before purchasing a property. The title commitment sets forth the framework for how smoothly a transaction can go (or not in some cases). It’s best to not have any surprises at the closing table or thereafter in the future. Be sure to consult with an experienced real estate lawyer before making the greatest purchase of your lifetime.
I built my law practice on the premise of being a life raft in a sea of sharks. I want to be an advocate for those that have been wronged and are too intimidated to seek help. My firm is here to explore your options, guide you through your legal journey, and give you that safe space to ask questions! There’s no such thing as a stupid question…Only the ones you don’t ask. So, my question to my clients is not “do you have any questions?” But rather “what questions do you have?”
As always, the Kazi Law Firm is standing by to help you in your time of need. Don’t hesitate to contact us today. We specialize in real estate law, landlord-tenant disputes, immigration, and wills & estate planning. Family is at the core of our practice. Just as we treat our family with respect and understanding, we treat yours. Come join the Kazi Law Firm family today!
Why swim alone in shark-infested waters when you don’t need to?
