Understanding a Title Commitment
Before purchasing a property, buyers receive several important documents. One of them is the title commitment from the title company handling the transaction. At first glance, it can look technical and overwhelming. When you understand what you are looking at, a title commitment becomes a helpful roadmap to the property’s legal history and what needs to happen before closing. Title insurance protects you from financial loss caused by defects in title, such as undiscovered liens, ownership disputes, or recording errors.
A title commitment is the title company’s promise to issue your owner’s and/or lender’s title insurance policy after closing, provided certain conditions are met. It outlines:
- Basic property information
- Items that must be addressed before closing
- Recorded matters affecting the property
What’s Inside?
A title commitment has three main sections: Schedule A, Schedule B Part 1, and Schedule B Part 2.
Schedule A
Think of this as the “who and what” section. Schedule A confirms:
- The type and amount of title insurance coverage
- The current owner(s) of the property
- How the current owner acquired title
- The legal description of the property
Schedule B – Part 1 (Requirements)
This section lists everything that must be completed before the title company can issue the final policy. Not every requirement applies directly to the buyer. Many items are handled behind the scenes. This section outlines what must happen to ensure clear title at closing. This may include:
- Payoff of existing mortgages or liens
- Payment of property taxes or municipal assessments
- Recording of new documents for your transaction
- Additional documentation needed from the buyer, seller, or lender
Schedule B – Part 2 (Exceptions)
Some exceptions are standard in every policy. Others are specific to your property. This section explains how the property may be legally encumbered and what obligations or restrictions come with ownership. This section lists items that will not be covered by the title insurance policy. These often include:
- Easements (rights allowing others to use part of the property)
- Covenants or HOA restrictions
- Plats or recorded agreements
- Rights-of-way
What Does This Mean For You?
The two sections buyers should pay closest attention to are Schedule B Part 1 and Schedule B Part 2.
- Schedule B Part 1 helps you understand what needs to happen before closing. It can also give insight into current property taxes, existing mortgages that must be paid off, and items that require documentation or action.
- Schedule B Part 2 helps you understand the recorded obligations tied to the property, such as HOA rules, utility assessments, or easements.
When you purchase property, you are not just buying the home itself. You are also buying its recorded history and responsibilities. The title commitment outlines those clearly so there are no surprises.
A title commitment is not something buyers are expected to interpret alone. Eagle Title and your Realtor are there to review it with you, answer questions, and ensure everything is addressed properly before closing.