Updated: Jul 27
Many homebuyers understand that title work is part of buying a home, but they don’t always understand what it's all about or its significance. So when handed a copy of the title commitment before closing, it is easier to just glance at it and set it aside than it is to look at it and try to understand it.
A title commitment is a vital part of your new property and your real estate transaction in general. And it is too important to ignore. Let’s talk about what this document is, why it is so pertinent, and how to read it.
What is a Title Commitment?
The title commitment is a document that discloses any recorded claims to the title, encumbrances, and so forth found during the title search. Consider it a promise (or commitment) by the title company that they will issue a title insurance policy after closing as long as all the stated terms and conditions are met and any issues stated therein are cleared up before closing.
There are usually 3 main sections to a title commitment, including Schedule A, Schedule B (Section I Requirements), and Schedule B (Section II Exceptions).
Schedule A should contain identifying information, such as the effective date, the buyer's name and lender's name (the owners of the insurance policies), the insured amounts, a legal description of the property, as well as the interest being insured in the property.
Schedule B, Section I Requirements includes information about mortgages, liens, judgments, taxes, HOA fees, and the like. This section also requires the title agent to record the deed, mortgage, and survey (if applicable). Again, each of these must be addressed prior to closing.
Schedule B, Section II Exceptions states what the title insurance policy is not agreeing to cover. These exclusions may be any unpaid taxes or easements, for example.
It is important to note that the title commitment is different from the title insurance. Even though they both address the title to the property, they are not the same. The title commitment will be given to you prior to your closing. Because title insurance can come with such great risk, an underwriter for the insurance company will ensure that everything in the commitment has been satisfied prior to the issuance of the title insurance policy. This takes place after closing.
Why Your Title Commitment Matters
It is important that you take the time to look over your title commitment when you receive it. For instance, you definitely want to make sure that everything is stated correctly on the commitment, such as your name, the legal description of the property, and any dates and dollar amounts listed. But that’s not all. Take a look at these items, too:
Look at the exceptions in Schedule B. Give yourself the chance to understand what is not going to be covered by your title policy and what that means for you.
Review the conditions. While you may understand certain standard conditions that have to be met, such as paying off a loan at closing, there may be other conditions included, such as HOA rules and conditions. Make sure you read them thoroughly so you can confirm you want to move forward with the purchase.
If you have any concerns, submit them in writing to the title company. Do not just make a phone call or leave a voicemail. Make sure that your concerns are in writing, received, and documented. The title company will have a certain amount of time to address them.
And if you have any questions about your title commitment at all, ask your title agent. They are often more than willing to give you an explanation.
Learn More About Title Commitments from Bulldog Title
At Bulldog Title, we want our clients to fully understand their title commitment and what it means in regard to their home purchase and their future title insurance policy. If you have any questions or would like to learn more, contact us today at (318) 361-0061.