Definition
A title commitment is a preliminary report issued by a title company stating the conditions under which it agrees to issue a title insurance policy. It outlines current ownership, the property’s legal description, and any recorded matters that affect title.
It is not insurance itself — it is a promise to insure subject to listed requirements and exceptions.
Core Sections (Typical Structure)
Schedule A – Basic Transaction Information
- Current owner of record
- Proposed insured (buyer/lender)
- Policy amount (purchase price or loan amount)
- Legal description of the property
Schedule B – Exceptions
Lists items that will not be covered by the title policy unless removed or endorsed.
- Easements
- CC&Rs (covenants, conditions & restrictions)
- Utility rights-of-way
- Recorded agreements
- Survey exceptions
Schedule C – Requirements
Lists items that must be satisfied before the policy is issued.
- Payoff of existing mortgages
- Release of liens
- Recording of new deed or loan documents
- Entity authority documentation
Why It Matters
The title commitment tells you:
- Who legally owns the property
- What encumbers the property
- What must be cleared before closing
- What risks you are accepting at closing
For investors, it protects against hidden liens, ownership disputes, and unknown encumbrances that could impair value or prevent resale.
Common Issues Found in Title Commitments
- Unreleased prior mortgages
- Judgment liens
- Unrecorded easements
- Boundary or survey discrepancies
- Missing legal description references
Investor Review Checklist
- Confirm legal description matches the deed and survey.
- Review Schedule B exceptions for restrictive covenants or access issues.
- Ensure Schedule C requirements are satisfiable before closing.
- Request endorsements if needed (e.g., access, zoning, survey).
- Coordinate with lender to meet policy requirements.
Example
An investor purchases a small apartment building. The title commitment reveals a recorded utility easement cutting through the rear lot. While not fatal to the deal, it limits future expansion plans and may affect parking redesign. Identifying this pre-closing allows proper underwriting and negotiation.
Title Commitment vs. Title Policy
- Title Commitment: Pre-closing promise to insure, subject to conditions.
- Title Insurance Policy: Issued at closing and provides actual coverage.