The Building Blocks of a Title Commitment
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A Commitment for title insurance is an Underwriter’s offer to issue a title policy to the proposed insured upon payment of the premium and other charges due, subject to the exceptions and requirements in Schedule “B” and Schedule “C” and subject to the Policy’s Conditions and Stipulations. For the Commitment to be valid, the proposed insured’s name and the policy amount must be shown in Schedule “A,” and an authorized representative must countersign the jacket. The Commitment expires ninety (90) days from the effective date of the commitment unless the Policy is issued or should have been issued sooner, and the Company’s liability and obligations end when the commitment expires.
Before issuing a Commitment for Title Insurance, a determination of the titles insurability is made by the title agent. Part of that determination involves Schedule “B” exceptions for certain risk that will not be covered by the Policy. Another part of the determination involves whether the Commitment is conditioned upon certain requirements being met. Schedule “C” of the Commitment lists requirements that must be satisfied in order for those matters to be covered by the Policy.
Schedule “A” of the Title Commitment reflects all of the information that identifies the specifics of the proposed transaction. Information contained on Schedule “A” includes the effective date of the commitment, proposed amount of insurance, type of policy(ies) to be issued, the name of the proposed insured(s), the person(s) in whom title is currently vested, the estate of interest in land to be covered, and the legal description of the property to be insured.
Schedule “B” of the Title Commitment sets out the proposed exceptions from coverage. There are two types of exceptions: standard exceptions and special exceptions. Standard exceptions appear in every commitment, because they are part of the form promulgated by the Texas Department of Insurance. Special exceptions appear in commitments on an individual basis indicating specific matters that affect the particular property.
Standard Exceptions are in Schedule “B,” Items 1-8 which include:
B-1 Restrictive Covenants
B-2 Area and Boundaries
B-3 Community Property
B-4 Water Rights
B-5 Ad Valorem Taxes
B-6 Terms of documents creating Insured interest
B-7 Homestead Construction
B-8 Subordinate Liens & Leases
Schedule B, item 9 sets out the specific exceptions from coverage affecting the proposed transaction.
Schedule “C” of the Title Commitment sets out the requirements that must be met in order for the title agent to issue the title policy(ies), or they will be placed on Schedule “B” as exceptions to coverage on the title policy(ies). There are two types of requirements: standard requirements that are a part of the policy promulgated by the Texas Department of Insurance; and any additional requirements specifically added by the title company in order to insure the transaction.
Schedule “D” discloses three categories of information to all of the parties involved in the transaction:
Disclosure of ownership and officers of the Underwriter and Agent.
Disclosure of the estimated premium charges for the proposed transaction.
Disclosure of any party receiving a portion of the premium for furnishing title evidence, examination, and/or closing the transaction.
In order for a title commitment to be considered complete, it must include the commitment jacket countersigned by the title agent, completed schedule A, B, C and D, as well as the Conditions and Stipulations. You should review your commitment carefully before your closing. You may wish to have an attorney review it for you.