What Is a Title Commitment & Why Is Important To Your Closing

Yes, buying the first property is an exciting period in everyone’s life. However, at the same time, it can be nerve-racking simply because there is too much paperwork a person has to go over, and most importantly, they have to understand every single paragraph they read.

Well, a title commitment is one of the most important documents that you will have to go over. It is crucial that you fully understand each section, which is why we will discuss them in this article in great detail.

What is title commitment?

A title commitment is a document that states that the property will have a title insurance policy upon closing the deal. According to another definition, it guarantees your title rights as a new owner, but this can greatly differ between the states. This document contains all the information that will be listed in the title insurance policy, but it isn’t ratified, meaning that it is not legally binding. This is the main difference, so make sure not to mistake one for another.

Is it required by law?

No, you are not required by law to have this document, but this still doesn’t mean that you should ignore it. First of all, when applying for a loan and going through the entire process of getting it, the lender will probably require you to provide them with this document before signing the final paperwork.

Furthermore, this document lists everything that is not covered by the title insurance policy. It is crucial to be familiar with this if you want to close the deal successfully. Plus, this list will enable you to be fully aware of the conditions, so you will have the opportunity to rethink whether you should make the purchase or not.

What does it include?

A title commitment is divided into multiple sections. The content of these can vary between the states, but the main information is the same.

Schedule A

This section includes some basic data such as personal data of the buyer, the type of insurance policy that will be issued (Owner’s and/or Lender’s Title Policy), the description of the property, seller’s personal info, the price, and so on.

It is crucial that the representatives of both the buyer and seller closely inspect this section. For example, other people may be listed on the owner list, and if they didn’t sign the document, it is not legally binding. You would be surprised to learn how often this occurs in case of a divorce or death. If any of the data doesn’t match the information in the contract, everything has to be investigated one more time to resolve the issues.

Schedule B

This is the part of the document that you must focus on because it includes exceptions and requirements.

Firstly, here you will find a list of exceptions, that is, the list of things that are not covered by the title insurance policy. Most of these are standard exceptions, but there may be some that are specific to that property. It is vital that you as a buyer fully understand every single point. If you don’t agree with some, a title company may be able to remove them, insure over them, or discard them. Nevertheless, there are many factors that can affect the outcome, which is why you have to consult with professionals such as Contact them and ask them to explain a certain point if you do not understand it. This is something that you have to do to prevent any potential issues in the future.

Furthermore, when it comes to the other part, here you will find all the requirements that must be met in order to get the title insurance. This list may include things such as recording the new deed and loan documents, the release of liens, tax payments, proof of identity, and so on. Once again, if you notice anything that shouldn’t be there or something you weren’t aware of, you have to notify your escrow so that they could investigate it.

Things to consider

Now that we have explained the sections of the title settlement, here are some things you have to consider before signing the document.

First things first, you have to know what is included in this document, that is, you have to know what you are looking for. We have already mentioned this, but here it is again. Look for personal info of both parties, then the details regarding the amount of insurance, and the details regarding the property that is being insured. Most importantly, look for the list of requirements that have to be met in order to get the insurance, as well as the list of things that are not covered by it. All of this information is listed in the above-discussed two sections. Naturally, Section B deserves all your attention since you have to be certain that you are purchasing the right property. When it comes to Section A, professionals will go over it and correct any mistakes. However, this doesn’t mean that you shouldn’t do the same inspection.

Why does it matter?

We assume that the answer to this question is pretty obvious by now. We understand that you may feel overwhelmed by the paperwork you have to go over and sign, but, as already stated, this document is, without a doubt, one of the most important that will cross your desk.

Buying a property is always a large investment, which is why it is crucial to be familiar with every single point in this document. It is the only way to rest assured you are making the right choice. You have to learn about the exceptions, that is, the things that are not covered by the insurance. If you don’t agree with it, consult your representative and see if they can be changed or discarded. If this is not the option, you should ask yourself whether you should proceed with the investment. The same thing goes for requirements and conditions that may be listed if you are buying a property in a subdivision.

Peter is a freelance writer with more than eight years of experience covering topics in politics. He was one of the guys that were here when the started.