Quick Answer
Reading a title commitment means verifying the proposed insured, policy amount, property interest, vested owner, legal description, then carefully reviewing the requirements and exceptions. If anything seems wrong or unclear, ask questions before closing.
A title commitment can look intimidating at first glance. But once you understand the structure, it is straightforward. Here is a step-by-step guide to reading one.
Step 1: Verify Basic Transaction Info
Start by checking the basics:
- Proposed insured: Your name should appear as the proposed insured (or the lender's name for the lender's policy).
- Policy amount: Should match the purchase price (owner's policy) or loan amount (lender's policy).
- Date: The effective date of the commitment, which shows when the search was performed.
Step 2: Check the Current Owner
The commitment identifies the current owner (the seller). This should match what you expect from the purchase contract. If there is a discrepancy, it could indicate a chain of title issue that needs to be addressed. Understanding what clear title means helps put this in context.
Step 3: Review the Legal Description
The legal description describes the property's boundaries and location. It should match the property you are buying. The description may include lot and block numbers (subdivision), metes and bounds, or a combination of both.
Step 4: Read the Requirements
Requirements are things that must happen before the policy is issued. Common requirements include:
- Recording the deed to the new owner
- Recording the deed of trust or mortgage
- Paying off existing liens or mortgages
- Obtaining releases for prior liens
- Providing documents for entity buyers (LLCs, corporations, trusts)
If you see a requirement that does not make sense or seems unnecessary, ask your title company to explain.
Step 5: Read the Exceptions
Exceptions are matters that the title insurance policy will not cover. These are listed in Schedule B of the commitment. Common exceptions include:
- Easements for utilities or access
- Restrictive covenants
- Taxes and special assessments
- Mineral rights reservations
- Encroachments or boundary overlaps
Some exceptions are standard and expected. But if you see something unexpected, such as an easement you did not know about or an old lien that was never released, you should discuss it with your title company, agent, and attorney. Find out what happens when a title search finds a problem.
Step 6: Ask Questions
If anything on the commitment is unclear, ask. The title company expects questions. It is better to understand now than to discover an issue after closing. Learn about the process from opening title to closing for the bigger picture.
Red Flags Worth Asking About
- Unknown liens or judgments against the property
- Names on title that do not match the seller's name
- Unreleased mortgages from prior loans
- Easements that could affect how you use the property
- Restrictions that could limit your plans for the property
Key Takeaway
The title commitment is your preview of what the title insurance policy will cover. Check the names, amounts, legal description, requirements, and exceptions. Ask about anything you do not understand. Your title company is there to help.
FAQs
Can I get a copy of the title commitment before closing?
Yes. You should receive a copy of the title commitment early in the transaction process. Review it promptly so there is time to address any issues before the closing date.
How many schedules does a title commitment have?
Most title commitments have at least four schedules: Schedule A (basic information), Schedule B-I (requirements), Schedule B-II (exceptions), and sometimes additional schedules for specific matters. Your title company can walk you through each one.