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How do you read and understand a title commitment report?

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If you are buying or selling a property, you may encounter a title commitment report. This document is issued by a title company after they perform a title search on the property. It shows the current status of the title, any defects or liens that may affect it, and the conditions for issuing a title insurance policy. A title insurance policy protects you from any claims or disputes that may arise regarding the ownership or use of the property. In this article, we will explain how to read and understand a title commitment report and what to look for before closing the deal.

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1 What is a title commitment report?

A title commitment report is a preliminary document that outlines the terms and conditions of a title insurance policy. It is divided into three main sections: Schedule A, Schedule B-I, and Schedule B-II. Schedule A contains the basic information about the transaction, such as the names of the parties, the property description, the amount of coverage, and the effective date. Schedule B-I lists the requirements that must be met before the title company issues the policy, such as paying off any existing mortgages, taxes, or judgments. Schedule B-II lists the exceptions that are not covered by the policy, such as easements, restrictions, or encroachments.

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Tim House

President at Team Southwest CRE
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The title policy covers only title issues that are of public record. In some instances, you can purchase additional coverage to cover defects or claims that are not in the public record. You can also have some of the standard exceptions removed by choosing certain options and others by paying additional premiums.

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Greg Aguirre

"Empowering Your Commercial Real Estate Strategy with Capital Rivers' Proven Expertise, Diverse Experience, and Creative Solutions - So You Can Reach Your Goals!"
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It’s important to designate between commercial property vs. residential property as well and understand any lender requirements. A detailed review of the title report is critical to identify potential issues such as encroachments, liens, restrictions, etc. Its also important to understand the types of title insurance and endorsements available.

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2 Why is a title commitment report important?

A title commitment report is important because it reveals the current state of the title and any potential issues that may affect your rights or interests in the property. It also gives you an opportunity to review and verify the accuracy of the information and to request any corrections or clarifications. By reading and understanding a title commitment report, you can avoid any surprises or problems at closing or in the future. You can also negotiate with the seller or the title company to resolve any defects or liens or to obtain additional coverage or endorsements.

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Patrick Scherer

Legacy Builder ?? Difference Maker ???? Think & Grow Podcast ???? YouTuber Think & Grow Show ?? Tell us your story!??
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In my experience a clouded title which is a title that is not free of some sort of discrepancy creates the possibility of being a deal killer. Typically the seller needs to provide a clear title in order for the transaction to go through. Buyers aren’t gonna want to take on the risk of typical title issues such as liens , back taxes, foreclosure proceedings, probate issues, etc.

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Curtis C J.

Exploring
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Some Sellers will sell the property to you using a Quit Claim Deed. It’s just as it sounds quits all claim the seller had. Now if you haven’t looked into the full background of the property also known as a Tittle search it’s possible you just took responsibility/ liability for anything wrong with the property. Then trying to get a Warranty Deed so you can try and get Title insurance becomes another possibility expensive process. POINT IS DO YOUR DUE DILIGENCE/RESEARCH BEFORE YOU BUY!

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3 How to read a title commitment report?

To read a title commitment report, beginning with Schedule A, you should check the names of the buyer and seller, their marital status, the property description and address, the amount of coverage and premium, the effective date and commitment number. Then you should review Schedule B-I to check the requirements for issuing the policy and any documents attached or referenced. Finally, examine Schedule B-II to be aware of any exceptions that are not covered by the policy and any endorsements that are included or available. Make sure you understand and comply with all requirements before closing, read and understand all documents, and be comfortable with any exceptions and endorsements.

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Doug Cochrane

Consultant | Senior Executive | Real Estate Finance | Operations | Underwriting | Risk Management | Team Building | Culture Champion
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Always request a hyperlinked Title report and be sure to click on the hyperlinks to review the documentation so you have a full understanding of the item being referenced.

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4 What to do after reading a title commitment report?

After reading a title commitment report, you should compare it to your contract and lender instructions to make sure there are no discrepancies or conflicts. If you have any questions or concerns, contact the title company or attorney for explanations and clarifications. Request changes or corrections if any errors or omissions are found, and ask for a revised report if necessary. Additionally, resolve any defects or liens that may affect the title by negotiating with the seller or title company to clear them or obtain a waiver or indemnity. Finally, confirm your closing date and time, and prepare your closing documents and funds.

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5 How to prepare for closing?

Prior to closing, it is important to review your final closing disclosure and compare it with your loan estimate, ensuring that you understand and agree with the fees and charges. Additionally, you should arrange for a final walk-through of the property to check for any damages or repairs. On the day of closing, gather your identification documents, cashier's check or wire transfer confirmation, and keys and remotes. At the closing meeting, verify the accuracy of the information and calculations before signing all the required documents. Lastly, receive your title insurance policy and deed and store them in a safe place; be sure to update your records.

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Creig Andreasen

Business Law Attorney
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Be sure to ask for a marked up commitment, or a proforma title policy at closing so you know your proposed changes were accepted, issues resolved, and endorsements issued.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Mark Ford

Attorney in the general practice of law
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Title insurance doesn't cover all claims and disputes. In Massachusetts, it covers the 50 years prior to ownership. Mainly, Title insurance covers fraud in the chain of title or negligence of attorney in missing something in chain. ( ie, Defective deed( notary ) abutter claim, Etc. Existing prior to ownership

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Greg Aguirre

"Empowering Your Commercial Real Estate Strategy with Capital Rivers' Proven Expertise, Diverse Experience, and Creative Solutions - So You Can Reach Your Goals!"
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You might want to get an ALTA title policy so if your considering additional coverage it’s important to know in advance so you have time to order an ALTA survey. This is particularly important commercial acquisitions.

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How do you read and understand a title commitment report?

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1 What is a title commitment report?

2 Why is a title commitment report important?

3 How to read a title commitment report?

4 What to do after reading a title commitment report?

5 How to prepare for closing?

6 Here’s what else to consider

Real Estate

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How do you read and understand a title commitment report?

1

2

3

4

5

6

1 What is a title commitment report?

2 Why is a title commitment report important?

3 How to read a title commitment report?

4 What to do after reading a title commitment report?

5 How to prepare for closing?

6 Here’s what else to consider

Real Estate

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