Quick Answer
A title commitment is a title insurer's commitment to issue a specified title insurance policy after stated requirements are satisfied and subject to listed exceptions, terms, and conditions. It is not the final policy, but a preview of what the policy will cover once the transaction closes.
If you are involved in a real estate transaction, you will encounter a document called a title commitment. Understanding this document is important because it tells you what the title company found and what needs to happen before closing.
What Is Included
A title commitment typically includes:
- The proposed insured (who will be covered by the policy)
- The policy amount and type
- The interest in real estate being insured
- The current owner of the property
- A legal description of the property
- Requirements that must be satisfied before the policy is issued
- Exceptions to coverage (matters not covered by the policy)
- Terms and conditions
What Are Requirements?
Requirements are actions that must be completed before the title company will issue the policy. Common requirements include:
- Recording the deed transferring ownership
- Recording the mortgage or deed of trust
- Paying off existing liens or mortgages
- Obtaining releases for satisfied liens
- Providing proof of legal authority for entities (corporate resolutions, trust documents, etc.)
What Are Exceptions?
Exceptions are matters that the title policy will not cover. They represent issues that already exist on the property but are excluded from coverage. Common exceptions include:
- Existing easements of record
- Restrictive covenants and conditions
- Taxes and assessments
- Liens that will not be paid off at closing
- Encroachments or boundary issues
- Mineral rights reservations
Not all exceptions are problems. Some are standard and expected. But you should review them carefully. See How to Read a Title Commitment for a step-by-step guide.
Is the Commitment the Final Policy?
No. The commitment is a preliminary document that shows what the policy will look like once the transaction closes and all requirements are satisfied. Think of it as a promise to issue the policy, not the policy itself. The final policy is typically issued after closing and recording.
Why Should Buyers Review It?
Buyers and their agents should review the title commitment carefully because it reveals matters affecting the property that may influence the decision to proceed. An easement across the backyard, a restriction on use, or an unpaid tax lien are all things you want to know about before closing.
Key Takeaway
The title commitment is a critical document that shows what the title company found, what needs to be resolved, and what the final title insurance policy will cover. Review it carefully and ask questions about anything you do not understand.
FAQs
How long is a title commitment valid?
Title commitments typically have an expiration date. They are valid for a specific period (often 30 to 90 days). If the closing does not happen within that timeframe, a new commitment or an update may be needed.
What if I disagree with an exception on the commitment?
You can discuss exceptions with your title company and your attorney. Some exceptions can be removed if documentation is provided to satisfy the concern. Others are standard and cannot be removed. Always ask about exceptions you do not understand.