A title commitment is a detailed document that outlines the terms under which a title insurance company agrees to issue a title insurance policy for a real estate transaction. Understanding this document is crucial for buyers, sellers, and lenders, as it reveals potential issues with the property's ownership history and specifies the conditions that must be met before closing.

Most homebuyers receive their title commitment during the due diligence period and feel overwhelmed by the legal terminology and dense formatting. This guide breaks down each section of a title commitment and explains the associated fees you'll encounter.

What Is a Title Commitment?

A title commitment is issued by a title company after conducting a title search on the property. It serves as a promise to issue title insurance once certain requirements are satisfied. The document protects all parties in the transaction by identifying:

  • Current ownership status and property description
  • Existing liens, mortgages, or encumbrances
  • Easements and restrictions affecting the property
  • Conditions that must be resolved before closing
  • Exceptions to coverage that won't be insured

The commitment differs from the actual title insurance policy, which is issued after closing once all requirements have been met.

The Three Schedules of a Title Commitment

Most title commitments are organized into three main sections called schedules. Each schedule contains specific information about the property and the proposed insurance coverage.

Schedule A: Basic Transaction Information

Schedule A contains the fundamental details of your transaction:

  • Effective date: The date through which the title search was conducted
  • Policy amount: The coverage amount, typically matching the purchase price or loan amount
  • Proposed insured: Names of the buyer and lender who will receive coverage
  • Title interest: The type of ownership being conveyed (usually "fee simple")
  • Property description: Legal description including lot numbers, subdivision name, and county records

Verify that all names are spelled correctly and the property address matches your contract. Any discrepancies should be addressed immediately with the title company.

Schedule B-I: Requirements to Issue the Policy

Schedule B-I lists conditions that must be satisfied before the title company will issue insurance. Common requirements include:

  • Payment of the purchase price to the seller
  • Execution and recording of the deed transferring ownership
  • Recording of the new mortgage or deed of trust
  • Payment of existing mortgages and liens
  • Payment of outstanding property taxes
  • Recording of required affidavits or releases
  • Correction of ownership or legal description errors

Example: If Schedule B-I shows "Payment of the mortgage in the original amount of $285,000 held by ABC Bank," this means the seller's existing mortgage must be paid off at closing before clear title can transfer to you.

Review this section carefully with your attorney or real estate agent. Some requirements may need attention before closing day, while others are handled simultaneously during the closing process.

Schedule B-II: Exceptions to Coverage

Schedule B-II identifies issues that will not be covered by the title insurance policy. These are matters the title company discovered but considers acceptable risks that won't be insured against.

Standard exceptions typically include:

  • Rights of parties in possession: Claims by tenants currently occupying the property
  • Easements not of record: Access rights that may exist but aren't officially recorded
  • Encroachments and boundary disputes: Issues that would be revealed by a current survey
  • Mechanic's liens: Claims for unpaid construction or repair work
  • Taxes and assessments: Future property taxes not yet due

Specific exceptions reference recorded documents that affect your property:

  • Utility easements allowing power or water companies access to portions of your lot
  • HOA covenants, conditions, and restrictions (CC&Rs)
  • Recorded easements for shared driveways or drainage
  • Mineral rights reservations
  • Building or use restrictions

Example: An exception stating "Easement for utilities recorded in Book 1234, Page 567" means a utility company has legal right to access part of your property. Request copies of referenced documents to understand the extent of these easements.

Some exceptions can be removed through endorsements or by providing additional documentation, such as a current survey or mechanic's lien waivers.

Understanding Title Fees and Charges

Title-related expenses appear on your closing disclosure and can total several thousand dollars. Understanding each fee helps you budget accurately and identify any unusual charges.

Title Search Fee

The title search fee covers the cost of examining public records to verify ownership and identify liens. This typically ranges from $200 to $400 depending on your location and property complexity. The title company reviews decades of ownership transfers, recorded mortgages, judgments, tax liens, and other documents.

Title Examination Fee

After the search is complete, an attorney or title expert reviews the findings and prepares the title commitment. This examination fee generally costs $150 to $300 and may be bundled with the search fee by some companies.

Title Insurance Premiums

Title insurance is typically purchased through two separate policies:

Owner's Policy: Protects your ownership rights for as long as you or your heirs have an interest in the property. In many states, the seller pays this premium as part of their contractual obligations, though this varies by local custom. Premiums are based on the purchase price and range from $500 to $3,500 depending on property value and state regulations.

Lender's Policy: Protects the lender's interest up to the loan amount. Buyers almost always pay this premium, which is required by mortgage lenders. The cost ranges from $400 to $2,500 based on the loan amount.

Title insurance is a one-time premium paid at closing, providing coverage without annual renewals.

Closing or Settlement Fee

The title company charges $300 to $600 to conduct the closing, prepare documents, facilitate signing, and disburse funds to the appropriate parties. This fee covers the closing agent's time and administrative costs.

Recording Fees

County recorder's offices charge fees to officially record your deed and mortgage. These government fees typically total $100 to $250 and vary by jurisdiction. Some counties charge per page while others have flat fees per document.

Endorsements

Title insurance endorsements provide additional coverage beyond the standard policy. Common endorsements include:

  • Survey endorsement: Removes the survey exception after providing a current property survey ($25-$100)
  • Zoning endorsement: Confirms property complies with current zoning regulations ($50-$150)
  • Access endorsement: Insures legal access to public roads ($25-$75)
  • Condominium endorsement: Addresses specific condo ownership issues ($50-$100)

Your lender may require certain endorsements as part of loan approval.

Wire Transfer Fees

Title companies typically charge $25 to $50 to wire funds to payoff existing mortgages or disburse proceeds to sellers. Multiple wires increase this cost.

How to Review Your Title Commitment Effectively

Title commitments arrive early in the transaction process, usually within 7-10 days after opening escrow. Follow these steps to review it thoroughly:

Verify Property Information

Confirm the property address and legal description match your purchase agreement. Check that the current owner's name is listed correctly and matches the seller on your contract.

Examine Required Documents

Request copies of all documents referenced in Schedule B-II. Review HOA restrictions, easements, and deed restrictions to ensure you can use the property as intended. If you plan to add a fence or outbuilding, verify no restrictions prohibit these improvements.

Identify Liens and Encumbrances

Schedule B-I should list all existing mortgages, tax liens, or judgments that will be paid at closing. Verify the payoff amounts appear reasonable and confirm these obligations will be satisfied before you take ownership.

Question Unusual Items

If you see unfamiliar terms or unexpected requirements, ask your title company for clarification. Common red flags include:

  • Liens or judgments that aren't the seller's responsibility
  • Restrictive covenants that limit property use significantly
  • Easements covering large portions of the property
  • Outstanding taxes beyond the current year
  • Claims by parties other than the seller

Review Within Your Contingency Period

Most purchase contracts include a title review contingency allowing you to cancel if title issues can't be resolved. This period typically lasts 5-7 days after receiving the commitment. Don't let this deadline pass without careful review.

Negotiating Title Fees

While title insurance premiums are often regulated by state insurance departments, some fees remain negotiable:

Shop for title companies: In states without rate regulation, premiums and fees vary significantly between companies. Request quotes from at least three providers.

Bundle services: Some companies discount fees when you use them for both owner's and lender's policies.

Negotiate unnecessary endorsements: Review each endorsement with your lender to determine which are required versus recommended.

Question duplicate fees: Ensure you're not paying separately for services that should be bundled, such as title search and examination.

Common Title Issues and Resolutions

Even properties that appear to have clear ownership can harbor title problems. Understanding common issues helps you respond appropriately:

Outstanding Liens

Unpaid contractor bills, tax liens, or judgment liens attach to the property rather than the individual. These must be paid or negotiated before closing. The seller typically pays these from sale proceeds, but confirm this responsibility in your purchase agreement.

Estate and Probate Issues

If the previous owner died without properly transferring the property through probate, the title may be clouded. Resolution requires court proceedings to establish clear ownership, which can delay closing by several months.

Boundary Disputes

Disagreements about property lines may appear in Schedule B-II. A current survey identifies encroachments where structures cross boundary lines. Significant encroachments may require boundary line adjustments or legal action.

Clerical Errors

Misspelled names, incorrect legal descriptions, or recording errors in historical documents can complicate title transfer. These issues often require affidavits or corrective deeds to resolve.

Missing Heirs

If previous owners have passed away and potential heirs haven't been located, these parties may have legal claims to the property. Title companies may require heirship affidavits or additional research to clear these issues.

When to Consult a Real Estate Attorney

While title companies handle routine transactions smoothly, certain situations warrant legal counsel:

  • Complex ownership structures involving trusts, LLCs, or partnerships
  • Significant easements that may impact your intended property use
  • Unresolved liens or legal judgments against the property
  • Boundary disputes or encroachments revealed by survey
  • Seller's inability to meet title commitment requirements
  • Properties involved in divorce, probate, or bankruptcy proceedings

An attorney reviews the title commitment with your interests as the priority, unlike the title company whose primary obligation is to the insurance underwriter.

Title Commitment vs. Title Insurance Policy

The title commitment is not your final insurance policy. After closing, you'll receive the actual title insurance policy, which typically arrives 30-90 days later. This policy documents the final state of title and confirms all Schedule B-I requirements were satisfied.

Keep your owner's title insurance policy permanently with your property records. You may need it years later if ownership questions arise, during refinancing, or when eventually selling the property.

State-Specific Variations

Title practices and fees vary significantly by state. Some jurisdictions use attorneys for closings instead of title companies. Others require both parties to purchase separate title insurance policies. Understanding your state's customs helps you anticipate costs and procedures:

  • Attorney states: Massachusetts, New York, and several northeastern states require attorney involvement in closings
  • Escrow states: California and other western states use escrow companies for closing
  • Buyer-pay states: In some markets, buyers traditionally pay for the owner's policy
  • Seller-pay states: Most of the country follows the custom of sellers paying for owner's coverage

Your real estate agent or lender can explain local customs and who typically pays which fees in your market.

Protecting Yourself During the Title Process

Beyond reviewing the commitment itself, take these steps to protect your interests:

Respond quickly to title issues: Delaying resolution of title problems can jeopardize your closing date and contractual deadlines.

Maintain documentation: Keep copies of all title-related documents, including the commitment, survey, closing disclosure, and final policy.

Verify wire instructions: Title and escrow companies are frequent targets of wire fraud. Confirm wire transfer instructions by phone using a number you independently verify, never one provided only via email.

Understand your policy coverage: Review what your owner's policy covers and doesn't cover. Standard coverage differs from enhanced or extended coverage, which provides additional protection.

Report issues promptly: If you discover title issues after closing, notify your title insurance company immediately. Most policies require prompt reporting of claims.

Final Checklist Before Closing

Before signing closing documents, confirm these title-related items:

  • All Schedule B-I requirements have been satisfied or will be handled at closing
  • You've received and reviewed copies of all documents referenced in Schedule B-II
  • Your lender has approved the title commitment and any exceptions
  • All names and property descriptions are accurate throughout the documents
  • You understand which exceptions will remain on your policy
  • Your closing disclosure matches the title fee estimates you received earlier
  • You know when to expect your final title insurance policy

A thorough understanding of your title commitment protects you from purchasing property with hidden ownership defects, undisclosed liens, or use restrictions that conflict with your plans. While the document appears complex initially, breaking it into sections and addressing each systematically ensures you're making an informed decision about one of your largest financial investments.