Home Buying > How to Read a Title Commitment

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In the process of your home purchase, a title insurance is to give protection to the How to read a title commitment buyers and lender in the real estate transaction. It insures you CLEAN TITLE and offers protection from risks such as:

Clerical error
Forgery, fraud, incompetency & incapacity
Lack of legal access to property
Missing chain of title
Unknown heirs to property due to successions, improper owner identification, etc.
Surveyor errors

The title insurance must be purchase for the property, especially if there will be a mortgage on the property. This title insurance must be purchase every time there is a change or ownership, or even the same property owner looking to refinance on the property. A buyer or seller may pay for the title insurance subject to negotiations. Under the RESPA Section 9 guidelines, a Seller may not require the buyer to use any particular title insurance company, either directly or indirectly as a condition of sale.

In order to provide a title insurance, the Title Company provides a Title Commitment as a promise to issue the title insurance policy. The title commitment policy is made up of 4 parts: Schedule A, Schedule B, Schedule C and Schedule D. Here's some of the things to look for in a title commitment policy:

Schedule A

Names (correct spellings) of buyers
Owner Policy Amount (usually sales price)
Mortgagee Policy Amount (usually loan amount)
Legal Description of property
Current owners (ie Sellers) - Make sure you are buying from these people who signed your contract

Schedule B

Exceptions to the policy
Setbacks
Easements
Exceptions not to insure oil, gas and mineral titles are almost common in Texas.
Miscellaneous exceptions - the title insurance usually does not cover any unusual findings typically pointed out by title attorney.

Schedule C

To-do lists for satisfaction of both sides of the transaction in order to complete the real estate transaction.
Satisfaction of all liens on the property
Satisfaction of all unpaid property taxes and/or HOA dues, if applicable.

Schedule D

Information about the Title Insurance company and agent, listing its officers
Title insurance premiums

If you have any questions or concerns about the title commitment or policy, please contact your escrow officer for further explanations.

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