How to Read a Title Commitment: A Complete Guide
A title commitment is a crucial document in your real estate transaction. Learn how to read and understand every section to protect your interests.
How to Read a Title Commitment: A Complete Guide
A real estate transaction is often described as a complex dance involving dozens of documents, multiple parties, and significant financial stakes. Among the most crucial documents you will encounter is the Title Commitment.
If you are buying or refinancing property in the highly competitive DMV market—whether in Washington D.C., suburban Maryland, or Northern Virginia—understanding this document is not just helpful; it is essential for protecting your investment.
At Pruitt Title, a leading woman-owned title insurance company serving the DMV, we believe that informed clients are empowered clients. This comprehensive guide will walk you through every section of the Title Commitment, ensuring you know exactly what you are agreeing to and what protections you are receiving.
We’re here to ensure your journey to the closing table is smooth and secure. Let’s get your title commitment explained.
What is a Title Commitment?
Before a title insurance policy can be issued, the title company must conduct an extensive search of public records to determine the property's legal ownership and identify any existing liens, encumbrances, or defects.
The Title Commitment is the document issued before closing that summarizes the findings of this title search. It is essentially a promise—a commitment—to issue a final title insurance policy, provided certain requirements are met and subject to specific exceptions.
Think of the Title Commitment as the blueprint for the final policy. It tells you three critical things:
- Who currently owns the property.
- What defects or issues the title company has found (e.g., old mortgages, easements, tax liens).
- What steps must be taken (by the buyer, seller, or lender) before the insurance policy will be issued.
Understanding how to read and interpret this document is the best way to catch potential problems before closing, saving you significant time and money.
The Standard Structure of a Title Commitment
While the format may vary slightly depending on the underwriter—such as our partners at First American Title Insurance Company—most Title Commitments follow a standardized structure, typically divided into four main parts: The Schedules A, B-I, and B-II, and the Conditions and Stipulations.
Schedule A: The Basic Facts of the Transaction
Schedule A is the easiest section to digest, as it contains the fundamental facts of the proposed transaction. When reviewing Schedule A, ensure every detail is 100% accurate.
Key Items to Verify in Schedule A:
| Item | Description | Why It Matters |
|---|---|---|
| 1. Effective Date | The date the title search was completed. | Any activity recorded after this date is not covered by the search. |
| 2. Policy Amounts | The dollar amount of the proposed Owner’s Policy and Loan Policy. | The Owner’s Policy amount should equal the purchase price. The Loan Policy amount should equal the loan amount. |
| 3. Type of Policy | Whether the commitment is for an Owner’s Policy, a Loan Policy (Lender’s Policy), or both. | Buyers should always obtain an Owner’s Policy for long-term protection. |
| 4. Current Owner | The name(s) of the current vested owners (the sellers). | Ensure these names match the names on your sales contract. Discrepancies can indicate probate issues or unrecorded deeds. |
| 5. Proposed Insured | The name(s) of the buyer(s) who will receive the policy. | Verify your name is spelled correctly and listed exactly as you intend to take title (e.g., John Doe and Jane Doe, Husband and Wife). |
| 6. Legal Description | The formal, technical description of the property (lot and block numbers, metes and bounds). | This must precisely match the deed and survey. If you are unsure, consult your Pruitt Title representative. |
Expert Tip from Pruitt Title: If you are buying a condo in D.C. or a townhome in Arlington, pay close attention to the legal description. It defines the exact boundaries of what you are purchasing, which is critical in determining ownership of common areas.
Schedule B-I: Requirements to Close (The To-Do List)
Schedule B-I outlines the specific steps, documents, and payments that must be completed before the title insurance policy will be issued. Think of this as the title company’s checklist for a clear closing.
If these requirements are not met, the title company will not issue the policy, and the closing cannot proceed.
Common Requirements Found in Schedule B-I:
- Payment of the Purchase Price and Fees: Confirmation that the full purchase price, closing costs, and title insurance premiums have been paid.
- Execution and Recording of Documents: Requires the proper execution and recording of the new deed (transferring ownership to the buyer) and the Deed of Trust/Mortgage (securing the lender’s interest).
- Payoff of Existing Liens: A requirement to obtain and pay off all existing mortgages, Deeds of Trust, and judgments against the seller. The title company must receive a formal payoff statement confirming the exact amount needed to release the lien.
- Proof of Identity: Requirements for all parties to provide valid government-issued identification at closing.
- HOA/Condo Status: In the DMV, many properties are governed by associations. This requirement ensures that all necessary HOA/Condo documents are collected and that all outstanding dues or assessments are paid by the seller.
Actionable Advice: Review Schedule B-I early. If there are complex requirements—such as resolving an old estate issue or tracking down a missing spouse for a signature—early identification is key to avoiding closing delays.
Schedule B-II: Exceptions to Coverage (What is NOT Covered)
Schedule B-II is arguably the most critical section for the buyer to understand. This section lists the specific matters that the title insurance policy will not cover. These are the defects, encumbrances, and limitations the title search uncovered, and they will remain on the property after closing.
When we explain the title commitment explained to our clients, we emphasize that Schedule B-II defines the boundaries of your protection.
Schedule B-II is generally divided into two types of exceptions: Standard Exceptions and Specific Exceptions.
1. Standard Exceptions
These are general exclusions that apply to almost every policy unless special arrangements (like a property survey) are made.
- Unrecorded Easements and Claims: Issues that would only be revealed by an inspection or survey (e.g., a neighbor’s fence encroaching on your property line).
- Rights of Parties in Possession: Claims made by tenants or other parties occupying the property that are not revealed by public records.
- Taxes and Assessments Not Yet Due: Future property taxes or HOA assessments that have not yet become a lien.
- Governmental Police Power: The right of the government to regulate property use (zoning laws, building codes).
Note on Surveys: In many cases, especially for lenders, the title company can remove certain standard exceptions regarding boundaries and encroachments if a current, acceptable property survey is provided. Pruitt Title works closely with surveyors across Maryland, Virginia, and D.C. to facilitate this process when necessary.
2. Specific Exceptions
These are the issues unique to the property being purchased, found during the title search. These must be reviewed carefully.
Common Specific Exceptions to Look For:
- Easements: Rights granted to others to use a portion of the property (e.g., utility companies having the right to access underground lines). You must understand where these are located, as they can restrict where you build a fence or addition.
- Covenants, Conditions, and Restrictions (CC&Rs): These are rules governing the use of the property, often established by a developer or HOA. They dictate everything from paint colors to parking rules.
- Unreleased Mortgages or Liens: If the seller has an old mortgage that was paid off but never formally released in the public records, it will show up here. Schedule B-I will require the seller to clear this before closing, but it is the buyer’s responsibility to ensure the exception is removed or addressed.
- Mineral and Water Rights: In some parts of Virginia, mineral rights may have been severed from the surface rights decades ago. This means someone else owns the subsurface resources.
The Role of Your Title Agent: If you see an exception that concerns you—for example, an old, confusing easement—contact your Pruitt Title representative immediately. Our team, led by experts like Will Rapuano, specializes in dissecting these historical records and explaining their practical impact on your ownership. Our goal is to ensure you fully understand the limitations before you sign.
Conditions and Stipulations (General Provisions)
The final section of the Title Commitment contains the general provisions, definitions, and limitations that govern the relationship between the insured (you) and the insurer (the title company).
This section defines terms like "land," "public records," and "date of policy." It also outlines the procedures for making a claim, the title company’s right to cure a defect, and the conditions under which the commitment may be terminated (e.g., if the transaction falls through).
While often dense, this section is standard and ensures the legal framework of the commitment is sound.
Why Title Insurance is Non-Negotiable in the DMV
The DMV area is characterized by high property values and complex, often historical, property records. Title defects are surprisingly common, even in modern transactions.
According to the American Land Title Association (ALTA), about one in four residential real estate transactions involves a title defect that must be cured before closing.
Imagine purchasing a $700,000 home in Fairfax, Virginia, only to discover six months later that a previous owner failed to pay a $50,000 IRS tax lien, which is now attached to your property. Without an Owner’s Title Insurance Policy, you would be responsible for paying that lien or facing foreclosure.
Title insurance protects you against:
- Forged signatures on previous deeds.
- Errors in public records.
- Undisclosed heirs claiming ownership.
- Unpaid mortgages, liens, or judgments from prior owners.
When Pruitt Title issues a policy, backed by the financial strength of underwriters like First American Title Insurance Company, you gain peace of mind knowing that your investment is secure against claims arising from the past.
A Practical Review Checklist for Your Title Commitment
To ensure you have thoroughly reviewed your title commitment explained, use this checklist before your closing date:
| Section | Checkpoint | Status (Y/N) | Notes |
|---|---|---|---|
| Schedule A | Are the names of the buyer(s) and seller(s) correct? | ||
| Schedule A | Does the purchase price match the Owner’s Policy amount? | ||
| Schedule A | Is the legal description accurate? | ||
| Schedule B-I | Are all existing mortgages and liens listed for payoff? | ||
| Schedule B-I | Can all requirements be met by the seller before closing? | ||
| Schedule B-II | Have I reviewed all specific easements and CC&Rs? | ||
| Schedule B-II | Are there any unreleased liens that the seller must clear? | ||
| Standard Exceptions | Do I need a survey to remove any boundary exceptions? |
If you encounter any ambiguous language, particularly concerning easements or restrictions in Schedule B-II, do not hesitate to ask questions. That is the primary function of your title agent.
Pruitt Title: Your Partner in the DMV Real Estate Market
Navigating the intricacies of a Title Commitment requires expertise, diligence, and local knowledge. As a woman-owned business deeply rooted in the Washington D.C., Maryland, and Virginia communities, Pruitt Title is committed to providing transparent and thorough title services.
Our team understands the unique challenges of the DMV market—from the historic properties in Georgetown to the complex subdivision rules in Montgomery County and the rapid development in Loudoun County. We work proactively to clear title issues long before they threaten your closing date.
If you are a real estate agent, lender, or buyer seeking clarity on your title commitment explained or need assistance with a complex closing, we are here to help. Our commitment to excellence, championed by our experienced staff, ensures that your transaction is handled with the utmost care.
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Don't leave the security of your largest investment to chance. Understanding your Title Commitment is the first step toward a successful and secure closing.
Contact Pruitt Title today to discuss your upcoming real estate transaction in D.C., Maryland, or Virginia. Let us put our expertise to work for you, ensuring your title is clear and your investment is protected.
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