What is required in a title policy regarding outstanding liens?

In a title policy, outstanding liens must be listed in the title commitment and the final policy. This requirement ensures that the insured party is fully aware of any existing financial encumbrances on the property before the transaction is completed. The title commitment serves as a preliminary report that outlines the current state of the title, including the presence of any liens, which could affect the ownership rights or financial interests in the property. By including this information in both the commitment and the policy, the insurer provides a transparent overview of the risks involved, which is essential for informed decision-making by all parties concerned.

Such disclosures protect the buyer by allowing them to understand any existing liabilities that may need to be addressed or negotiated prior to closing the deal. Therefore, it is critical for ensuring the integrity of the transaction and safeguarding the interests of the insured.