How to read a title commitment fast.
Four schedules, ten minutes, and a clear answer on whether this closing is in trouble.
The commitment is a promise to insure the property on stated terms, once stated conditions are met. Read in the right order, it tells you three things quickly: what has to happen before closing, whether the basic facts are right, and what your buyer is going to be stuck with forever.
Read the schedules out of order. Everyone starts at A and gives up somewhere in B. Start at C, because C is the only schedule with a deadline attached to it.
Schedule C first. This is the to-do list.
Schedule C sets out what must be resolved before a policy can issue. Liens to release, heirship to establish, signatures to obtain, a power of attorney to approve, entity documents to produce, taxes to bring current.
Everything on this list has a clock on it. Some items take an afternoon and some take six weeks, and you cannot tell which by looking at the length of the list. Three items that clear in two days is a fine file. One item involving the IRS is not.
Three things here should have you calling the same day: anything involving a deceased owner, anything involving a federal tax lien, and anything that requires a signature from a person who is not your seller.
Schedule A next. Check the facts.
Schedule A is the short one, and it is where quiet errors hide. Four things to confirm:
- Who owns it. Record title should match the seller on your contract, exactly. A name that is close but not identical is worth a phone call.
- The legal description. Compare it to the contract and the survey. A mismatch caught now is a correction. Caught later it is a problem.
- The policy amounts. The owner's policy should reflect the sales price.
- The effective date. Anything recorded after that date is not reflected, which is why a commitment issued weeks ago is not the same document as one issued yesterday.
Schedule B. What the policy will not cover.
These are the exceptions, and unlike Schedule C they do not go away before closing. They follow the property. Your buyer lives with them.
- The area and boundary exception. Item 2, the survey exception. Whether it gets amended is a decision your buyer makes in the contract, and it is the single most valuable item on this page.
- Easements. Where they sit determines whether that pool, shop, or addition your buyer described at the showing is actually possible.
- Restrictive covenants. Your buyer is entitled to copies. If they plan to run a business, park an RV, or build a casita, read them before the option period ends.
- Mineral reservations. Someone else may own what is under the property, along with rights to reach it. On acreage this deserves a real conversation.
- Setbacks and building lines. They constrain what can be built and where.
Some Schedule B items can be softened with endorsements. That is worth asking about rather than assuming, and the answer depends on the property and the underwriter.
Schedule D. Read it once.
Schedule D discloses ownership of the title company and how the premium is divided. It rarely changes anything you do, but it is part of the document and a client may ask what it is.
The ten minute version
- Minutes 1 to 3: Schedule C. What has to happen, and does anything on it need more runway than the contract allows?
- Minutes 4 to 5: Schedule A. Right owner, right legal description, right amounts, current effective date.
- Minutes 6 to 9: Schedule B. Easements and restrictions against what your buyer told you they want to do with the property.
- Minute 10: The calls. Your escrow officer about anything on C, your buyer about anything on B that affects their plans.
Two deadlines people miss
Your contract gives the buyer a limited window to object to items disclosed in the commitment, the survey, and the exception documents. That window runs while everyone is busy with inspections. Objections raised after it closes are a negotiation rather than a right, so calendar it the day the commitment arrives.
And the exception documents themselves are frequently never read. The commitment names the restrictive covenants; it does not contain them. Ask for the documents, and read them if your buyer has any plans for the property beyond living in it as it sits.
What to tell a buyer who asks what this is
"This is the title company's report on the property. One section is their to-do list before closing, one confirms the basic facts, and one lists what the policy will not cover. That last part is the one that matters to you long term, because those items stay with the property. Let's go through anything on it that affects what you want to do here."
Every file is different, and underwriters can view the same facts differently depending on the details. Whether a particular exception can be amended or an endorsement issued is a conversation for your escrow officer. Title and Lender requirements are separate as well, so clearing one does not mean you have cleared the other.