Escrow & TitleIntermediateCalifornia Exam

What is the purpose of a 'title commitment' (commitment for title insurance)?

AThe buyer's commitment to purchase the property, as typically handled by an escrow officer

BA commitment by the title company to issue a title insurance policy, subject to specified conditions and exceptions, after examining the titleCorrect

CThe lender's commitment to make the loan, consistent with standard title insurance practice

DA commitment by the escrow company to close by a specific date, per customary closing procedure in California

Why A commitment by the title company to issue a title insurance policy, subject to specified conditions and exceptions, after examining the title Is Correct

Answer B: A commitment by the title company to issue a title insurance policy, subject to specified conditions and exceptions, after examining the title

A title commitment (also called a title binder or preliminary title report in California) is the title company's commitment to issue a title insurance policy once specified requirements are met (such as payoff of existing liens). It shows the conditions and exceptions to the proposed policy.

Exam Tip: Escrow & Title

Escrow questions test the neutral third-party role and the sequence of closing events. Remember that the escrow agent acts as a dual agent for both buyer and seller and cannot advocate for either side.

Key Escrow & Title Terms in This Question

Lien

A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.

Title Insurance

Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.

Escrow

A neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.

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Key Terms to Know

Title Insurance

Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.

Escrow

A neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.

Lien

A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.

Pre-Approval

A lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.

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