In Escrow: Want to better understand your Title Commitment?

Here’s a simple guide to reading and understanding a title commitment;

In the realm of real estate transactions, the provision of title insurance by the seller to the buyer is a standard practice. As part of this process, just before the closing date, you will receive a document known as a “title commitment” to review and keep for your records. This title commitment is essentially a commitment from the title company, to issue a title insurance policy upon completion of the transaction. It mirrors the terms, conditions, and exclusions that you will find in the final title insurance policy. Furthermore, the title commitment outlines any specific prerequisites that must be fulfilled before the title policy can be issued

Most title companies throughout the country employ standardized forms for both title commitments and title insurance policies, as prescribed by the American Land Title Association (ALTA). While your specific title commitment will contain unique transaction details, a typical ALTA title commitment encompasses the following key elements:

Schedule A: The Fundamentals

This section of the title commitment provides essential information about the transaction, including the current titleholder’s name, the property’s legal description, the proposed insured party (the buyer), the sale price, and the lender’s name. It’s imperative to review these details meticulously to ensure accuracy.

Schedule B: Requirements and Exceptions

Requirements

Under Schedule B, you’ll find two distinct sections: “Requirements” and “Exceptions.”

The “Requirements” portion itemizes the necessary actions to be taken either before or during the closing. These can include:

• Clearing outstanding property taxes
• Settling any existing mortgages held by the seller
• Releasing any liens affecting the property’s title
• Recording new deeds and any relevant loan documents
• Rectifying any title-related discrepancies

Exceptions

On the other hand, the “Exceptions” section enumerates elements that will not fall under the protection of the title insurance policy. These can encompass:

• Mineral and water rights
• Utility and access easements
• Covenants and restrictions imposed by a Homeowners Association
• Existing plat restrictions

It’s essential to scrutinize the exceptions carefully, as they can impact your rights and ownership of the property. Title commitments will often feature hyperlinks to specific documents recorded with the County Clerk and Recorder, facilitating your review of these documents with ease.

Navigating Your Title Commitment

Should you have any queries or concerns regarding a particular requirement or exception listed in the title commitment, please don’t hesitate to contact your title company. A quality title company should be committed to assisting you in comprehending your title commitment and addressing any uncertainties well in advance of the closing date.

The team at Real Estate Professionals, and the Title Companies we partner with, are committed to ensuring a transparent and smooth real estate transaction, and your understanding of the title commitment is a crucial step in achieving that goal.