Home > Home Buying > How to Read a Title Commitment Policy

In the process of your home purchase, a title insurance is to give protection to the 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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