How to read a Title Commitment
This information is specific for the BUYER after making an offer and beginning the under-contract process.
Once you have received a copy of your title insurance “commitment” from the title company, it’s important to review promptly. Depending on the title company, this initial commitment usually arrives as an email connecting you to the title company’s secure portal. This is a critical document that outlines what title insurance (which is very different from homeowner’s insurance) will cover, and not cover, regarding the use of your property and land.
To give you a general overview of a title commitment, here are the parts of the commitment you’ll want to pay particularly close attention to:
Schedule A. Please review this page for accuracy. You’ll also want to verify that the Owner’s Policy being issued is an ALTA 2006 or 2021 policy. You will likely see the kind of interest in the land, i.e., fee simple, leasholds, joint tenancy, tenancy in common, et cetera.
Schedule B-1 Requirements. These are items that must be addressed prior to, or as a part of, closing. Items usually include information about release of existing loans, release of deed information, et cetera.
Schedule B-2 Exceptions. These are items that the title insurance company will not insure. These may include recorded easements with the county, covenants (HOA-related), restrictions or liens tied to the land. You may see clickable links to the scanned documents. These are all connected to the property’s history. If Owner’s Extended Coverage (OEC) is being purchased, the title company should delete standard exceptions 1-4; however, it is very important to verify with the title company that ALL FOUR standard exceptions will in fact be deleted on the final policy. This is the purpose of OEC coverage.
Per the Contract To Buy and Sell Real Estate, you have until the Title Objection Deadline to review and object to anything contained within the schedule B-2 Exceptions on the title commitment.
Real estate brokers are prohibited (per license law) from reviewing and giving advice on the Schedule B-2 Exceptions. Therefore, contact the title company with any questions you have, keeping in mind that they are unable to give you legal advice or legal opinions; however, the title company can often offer clarification on any specific items or questions you may have.
If you have further questions, concerns, or want a legal opinion, consider consulting with an attorney (who works with title and land law) to review, and possibly object to, items within the Schedule B-2 Exceptions. If you do not already have an attorney who specializes in this area, I am happy to provide you with some referrals. Although I cannot tell you what to do, I can, however, get you to the right people who can.
