What is a Title Commitment (Policy)?

A title commitment is a document outlining the rights being conveyed in a real estate transaction. This document may consist of four “Schedules”, or a list of items to be met, that describe various conditions, exclusions and exceptions that will apply to the title insurance policy to be issued. Once a title company issues a title commitment, it is saying that it will grant insurance on that property if all the requirements set forth in the document are met. This is critical because it alerts the buyer, lender or other party involved in the transaction of any issues that could restrict the use of the property or invalidate title insurance. Any limitations or restrictions are typically supported by the appropriate document.

Typical content of Title Insurance Policy is as follows.

Schedule A contains general information about the buyer and seller and outlines the rights the buyer will receive upon transaction completion. Names and other affiliated information of the current owner, buyer, and lender are outlined in Schedule A. The legal description of the property, insurance value, benefitting easements are also included.

Schedule B usually consists of two sections.
Section One – Requirements: lists requirements to be met before policy comes into force.
Common requirements include:

• All taxes must be paid.
• Submittal of a current ALTA Survey.

Section Two – Exceptions.
Examples of exceptions to title policy include:

• Easements and rights of way.
• Zoning and building restrictions.
• Liens against the property.
• Unrecorded information.

Schedule C includes any issues that must be resolved before a title insurance policy is issued.

Schedule D discloses title insurance policy information such as the estimated amount of insurance premiums, who else (if third parties) collect premiums from the insurance policy, loan amount and any title insurance endorsements.

A thorough title commitment review is essential and often the lender is the most scrutinizing reviewer of the title commitment. Once all requirements and conditions are met, then the title insurance policy is issued.