Title commitment is not title insurance

Question: Six months ago we signed a purchase contract to pay cash for a “fixer-upper” home in the Encanto area of Phoenix. The title commitment showed no title problems. We backed out of the purchase of the home during the inspection period because of a nasty neighbor. The nasty neighbor has now moved, and we have signed a new purchase contract to buy the home. If we already have a title commitment showing no title problems, why do we need another title commitment, or have to pay for a title insurance policy?

Answer: If you close on the purchase of this home without another title commitment, and a title insurance policy, you would have no protection if the original title commitment had failed to find an easement, mortgage, or other title exception. A title commitment is just what it says, a commitment to issue a title insurance policy at close of escrow, and not a title insurance policy. Arizona law specifically provides that a buyer cannot rely on a title commitment. A.R.S. § 20-1562(5).

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