Quick Answer
A requirement must be completed or resolved before the title insurer will issue the policy. An exception is something the policy will not insure against. Requirements are typically addressed before or at closing; exceptions remain as limitations on coverage.
Two of the most important concepts on a title commitment are requirements and exceptions. While both appear on Schedule B, they serve different purposes. Understanding the difference helps you know what needs to happen and what your policy will actually cover.
Comparison Table
| Aspect | Requirement | Exception |
|---|---|---|
| What is it | A condition that must be satisfied before policy issuance | A matter the policy will not insure against |
| Must it usually be addressed | Yes, typically before closing | Generally no (it remains as an exclusion) |
| Can it remain after closing | No, must be satisfied | Yes, it becomes a policy exclusion |
| Example | Existing mortgage being paid off at closing | Utility easement across the property |
| Purpose | Ensure title is insurable before policy issues | Define what the policy does not cover |
Why the Difference Matters
Confusing a requirement with an exception can lead to misunderstandings about what needs to happen before closing. If you see a requirement and assume it is optional (like an exception), you may be surprised when it delays closing. Conversely, if you see an exception and think it must be fixed (like a requirement), you may pursue unnecessary actions.
Can Something Move Between Categories
In some situations, yes. A requirement that cannot be satisfied may be converted to an exception. For example, if an old mortgage cannot be released because the lender no longer exists, the title company may change it from a requirement to an exception, meaning the policy will not cover that issue.
For detailed explanations of each category, read What Are Title Requirements? and What Are Title Exceptions?
Key Takeaway
Requirements must be satisfied before the policy issues. Exceptions remain as coverage limitations. Know which is which when reviewing your title commitment.
FAQs
Can something be both a requirement and an exception?
Not typically on the same commitment. A matter is either something that must be resolved (requirement) or something that will remain as a coverage limitation (exception). However, a matter could appear as a requirement initially and be moved to exceptions if it cannot be resolved.
Who decides whether something is a requirement or an exception?
The title insurer determines this based on underwriting guidelines. If you disagree with a designation, you can discuss it with your title company and provide evidence that may change how the matter is treated.