Quick Answer
Schedule B of a title commitment generally identifies matters affecting the proposed title insurance, divided into requirements (conditions that must be satisfied before the policy issues) and exceptions (matters the policy will not cover). Both sections directly affect your closing and your coverage.
After verifying the basic transaction details on Schedule A, your next stop is Schedule B. This is where the title company lists what needs to happen before closing and what your title insurance policy will not cover. Understanding Schedule B is essential for a smooth closing and for knowing what protection you will actually have.
What Is Schedule B
Schedule B is typically divided into two parts: Schedule B-I (requirements) and Schedule B-II (exceptions). Some insurers combine them into a single list, but the distinction between the two categories matters.
What Are Requirements
Requirements are conditions or actions that must generally be satisfied before the title insurer will issue the contemplated policy. These are things that need to happen, typically before or at closing. Common requirements include recording the deed, paying off existing mortgages, providing entity documents, and obtaining lien releases. For a complete discussion, read What Are Title Requirements?
What Are Exceptions
Exceptions are matters that the proposed title insurance policy will not insure against. These include easements, restrictive covenants, mineral reservations, and other matters affecting the property that will remain after closing. For a detailed explanation, read What Are Title Exceptions?
Understanding the difference between requirements and exceptions is one of the most important skills for reading a title commitment. For a direct comparison, see Requirements vs. Exceptions on a Title Commitment.
Why Schedule B Deserves Attention
Schedule B reveals the conditions you must meet and the risks you are accepting. Overlooking an unexpected requirement could delay closing. Overlooking an exception could mean accepting a limitation on your property use that you did not anticipate.
Are All Exceptions Bad
No. Many exceptions are standard and expected. An electric utility easement across a property, for example, is common and typically does not affect use. Some exceptions, such as standard exceptions printed on the commitment form, apply broadly. Others are specific to the property and deserve closer attention.
Can Schedule B Change
Yes. As the transaction proceeds, new requirements may be added (if new issues are discovered) and requirements may be removed (when satisfied). Exceptions may also be modified or removed if acceptable evidence is provided. For more on removing exceptions, see Can Title Exceptions Be Removed?
What Should Buyers and Agents Review
- Existing mortgages or liens that must be paid
- Judgments or tax liens against the seller
- Easements that could affect property use
- Restrictive covenants or HOA rules
- Mineral rights reservations
- Requirements that seem unusual or unexpected
Key Takeaway
Schedule B tells you what must happen before the policy can issue (requirements) and what the policy will not cover (exceptions). Review both sections carefully. Ask your title company about anything you do not understand.
FAQs
Can a requirement become an exception or vice versa?
In some circumstances, yes. A requirement that cannot be satisfied may be changed to an exception. For example, a mortgage that cannot be paid off may be listed as an exception rather than a requirement. See the comparison between requirements and exceptions.
Do I need an attorney to review Schedule B?
While a real estate agent or title company can explain what Schedule B contains, title companies cannot give legal advice. If you have legal concerns about exceptions or requirements, consult a real estate attorney.