Title Commitment Explained

The title commitment also referred to as a binder is a summary of pertinent information discovered in the search process that is used as the basis for clearing title and issuing a clear or marketable title policy to an owner and or lender. The title commitment is made up of 3 sections.

Schedule A – This part of the title commitment shows the following:

Effective Date – This is the date the searchers were able to search recorded documents thru at the courthouse
Name of proposed insured(s) – Buyer name(s) and Lender names(s)
$ Amounts to be insured - Amount of insurance for buyer’s policy and amount of insurance for lender’s policy
How the estate or interest in the land is held. Most times it is fee simple meaning complete ownership as opposed to a possible lease hold estate
Current Owner(s) of property – This section shows the current owner of record and often indicates the deed book and page of the owners deed
Legal Description – This reflects the legal description of the property and should match the last deed of record.

Schedule B, Section 1 – This is also known as the Requirements Page, these are items that need to be addressed at or before closing in order to clear title and issue a policy. Examples of some requirements

  • Proof of identity, legal age, competency and marital status of all parties to the transaction
  • Payment in full consideration of the purchase price to the seller
  • Payment of all taxes, water, sewer, etc. bills which are due and payable
  • Satisfactory evidence that all improvements and/or repairs made to the property and complete and paid for in full
  • Proof that no parties to the transaction are involved in bankruptcy proceedings; if bankruptcy has been filed, same to be examined; possible additional requirements/exceptions to be added
  • Proof that there are no overdue support obligations of record for the parties to the transaction
  • Proof that no mortgage, judgments, home equity loans or any other type of liens or encumbrances have been filed against the property which is not reflected in this title commitment
  • Instruments to be insured in this transaction must be properly executed and delivered
  • The existing liens of record (i.e. seller’s mortgage) to be satisfied and/or released of record

Schedule B, Section II – This is also known as the exceptions page. The title policy is issued with the exceptions listed in this section unless the same are disposed of to the satisfaction of the Company:

Exceptions are comprised of both standard exceptions (state specific exceptions) as well as specific exceptions. Exceptions are deficiencies in the title such as deed restrictions, easements and right of ways. These items are excepted from the legal title conveyed because they are not part of the fee simple title the grantor holds. By excepting these matters on a title commitment or policy, the underwriter is saying that they are insuring or willing to insure good and marketable title to the property except for these matters.

Examples of standard exceptions:

  • Rights or claims by parties in possession or under the terms of any unrecorded lease or agreement of sale
  • Any encroachments, easements, measurements, variations in area or content, party walls or other facts which a correct survey of the premises would show
  • Road ways, streams or easements, if any, not shown by the public records, riparian rights and the title to any filled in lands
  • Possible additional tax assessment by reason of new construction or improvements pursuant to the provisions of the Acts of Assembly relating thereto, not yet due and payable

Examples of specific exceptions:

  • Rights granted to Utility Company in Deed Book 1000 page 95
  • Land Developer Agreement as in Deed Book 2000 page 96
  • Deed of Easement as shown in Deed Book 3000 page 97
  • Declaration of Covenants, Restrictions, Easements and Conditions for the Meadows at Pine Knoll as shown in Deed Book 4000 page 98
  • Record Plan Book A-50 pages 100 to 105 discloses the following:
    • Building set back lines
    • Notes