The title commitment is our roadmap to issuing title insurance and getting your deal closed. Technically, it is our commitment to the insured parties to issue title insurance under the disclosed circumstances. It is comprised of the title examiner’s analysis of the documents revealed in the title search. The commitment is divided into three different schedules – Schedules A, B-I and B-II.
Schedule A is the Who, What, When & How Much of the title commitment. It tells us who owns the property and whose interests will be insured (“Proposed Insured”). It also tells us what real property interest is being insured (“Legal Description”). And finally, it tells us the proposed limits or amounts of the title insurance. For example, if you’re buying a property for $350,000, your proposed coverage amount would be $350,000.
We refer to Schedule B-I as the Requirements section of the commitment. In short, it discloses what will be required in order to clear title and close your real estate transaction. The most fundamental requirements will be the proper execution and recording of the documents to be insured – deeds and the mortgages. The remaining requirements will relate to clearance of encumbrances. Should the owner have a mortgage on the property, you will find a requirement for the release and satisfaction of that mortgage. Or, if the property taxes are due and payable, you would find a requirement for the payment of those taxes.
Schedule B-II is the Exceptions section of the title commitment. It is comprised of references to documents of record over which we can not insure. As the insured, it is important for you to understand what items will not be covered under your title insurance policy and Schedule B-II shows you just that. Exceptions are commonly items that “run with the land.” They could be the covenants, reservations and restrictions associated with a community association. Or, they could be easements for utilities to access the property in order to maintain their lines or service. These items are important to an owner’s enjoyment of the land but also affect that owner’s interest. For that reason, we must except these types of items from coverage.