A title commitment is a document issued by a title company that discloses to all parties connected with a particular real estate transaction all the recorded title claims, encumbrances, and other matters from the title company. It is essentially a promise to issue the title insurance policy after closing, and contains the same terms, conditions, and exclusions that will be in the actual title insurance policy. The title commitment is a preliminary document to obtaining the title insurance policy, and identifies any specific requirements that need to be addressed prior to closing so that the title policy can be issued.
The title commitment includes various information, such as the conditions that apply to the title company issuing an insurance policy, basic information about the transaction, requirements the parties must meet for the company to agree to provide the title insurance, and exceptions, exclusions, and requirements stated in the title commitment. The title commitment is divided into two sections: Schedule A and Schedule B. Schedule A covers the basics of the transaction, such as the parties involved, the property description, and the purchase price. Schedule B-1 includes the requirements that must be met before the title insurance can be issued and the property can close, while Schedule B-2 includes the exceptions.
It is important to read the title commitment carefully and ensure that all information is correct, as any misinformation can cause legal headaches in the future. If there are any questions or unacceptable items on the title commitment, the buyer has several days to talk to their title company or their agent.
