Introduction
Title commitments play a crucial role in every real estate transaction, yet many buyers, sellers, and even real estate professionals may not fully understand what they entail. A title commitment is essentially an offer from a title insurance underwriter to issue a title insurance policy, provided that all conditions listed in the document are met.
For real estate agents, understanding how title commitments work—and what to watch for—can help ensure smoother closings, fewer legal complications, and better protection for buyers. In this article, we’ll break down what a title commitment is, why it matters, and what key elements real estate professionals should be aware of.
What is a Title Commitment?
A title commitment is a legal document issued by a title insurance company that outlines the conditions under which it will issue a title insurance policy. It does not guarantee a clean title at the moment of issuance, but rather a commitment to provide title insurance once all listed requirements are fulfilled.
This document ensures that a buyer is receiving marketable title—a title that is free from undisclosed liens or defects and can be legally transferred or sold in the future. Title commitments provide real estate agents and buyers with a roadmap for clearing any title issues before closing.
Key Components of a Title Commitment
Title commitments are divided into three main sections:
1. Schedule A: Basic Transaction Information
Schedule A provides an overview of the transaction details, including:
- Effective Date – The date the title search was conducted.
- Proposed Insured – The name of the buyer(s) who will be insured.
- Policy Amount – The dollar amount for which the title is insured (usually the purchase price for an owner’s policy and the loan amount for a lender’s policy).
- Estate or Interest in the Land – Typically “fee simple,” which is the highest form of ownership.
- Legal Description – The property’s formal legal description.
This section is essentially a summary of the transaction and sets the foundation for the title insurance policy.
2. Schedule B-1: Title Requirements
Schedule B-1 outlines the specific conditions that must be met before title insurance can be issued. These requirements typically include:
- Payment of Purchase Price & Closing Costs – Ensures the buyer pays the agreed purchase price and title insurance premiums.
- Recording of the Warranty Deed & Mortgage – The new deed and any mortgage documents must be properly recorded.
- Payoff & Satisfaction of Existing Liens – Any outstanding mortgages or liens must be cleared before the policy is issued.
- Homeowner’s Association (HOA) Estoppel Letter – Confirms that all association dues are paid and whether any special assessments exist.
- Tax Status Verification – Ensures that all property taxes are current.
- Affidavits & Certifications from Seller – Often includes an affidavit confirming no undisclosed liens or title defects exist.
If these requirements are not met before closing, the title insurance company will not issue the policy.
3. Schedule B-2: Title Exceptions
Schedule B-2 lists exceptions—items that will not be covered by the title insurance policy. These include:
- Restrictive Covenants & Easements – Any pre-existing community rules, restrictions, or easements (e.g., utility access).
- Rights of Others – Public or private rights-of-way, such as sidewalks or shared driveways.
- Unrecorded Matters – Any claims or encumbrances that are not recorded in public records.
For buyers and their real estate agents, understanding these exceptions is crucial because they determine what risks are not covered by the title insurance policy.
Common Title Issues That Can Delay a Closing
Understanding what can go wrong in a title search helps real estate professionals take proactive steps to resolve issues before they cause delays. Some of the most common title problems include:
1. Unpaid Liens
Liens from previous owners, unpaid property taxes, or contractor work that has not been paid for can cloud the title. If these aren’t cleared, the transaction cannot move forward.
2. HOA Issues
Many properties in Florida are part of a homeowners’ or condominium association, which means additional title requirements must be met. Some HOAs require board approval for buyers, and missing estoppel letters can lead to delays.
3. Ownership Discrepancies
Issues arise when there are errors in public records, missing signatures on past deeds, or complications related to trusts and estates. For example, if a seller is married but the spouse is not listed on the title, Florida homestead laws may require spousal consent to transfer the property.
4. Survey Discrepancies
A survey identifies the exact boundaries of a property. If the survey reveals encroachments (e.g., a neighbor’s fence is on the property), this can become a problem for the new owner. Buyers who do not obtain a survey risk unforeseen boundary disputes down the line.
5. Unrecorded Agreements
Verbal agreements, unrecorded easements, or unresolved disputes over shared property access can complicate a closing. These types of issues often do not appear in a title search but can create future legal challenges for the buyer.
How Real Estate Agents Can Protect Their Clients
Realtors play a vital role in ensuring a smooth closing by staying informed about title commitments and potential issues. Here’s how you can help your buyers and sellers navigate the process:
- Review the Title Commitment Early – Work with the title company to review Schedule B-1 requirements and Schedule B-2 exceptions as soon as possible.
- Encourage Buyers to Get Title Insurance – Some buyers consider waiving an owner’s title insurance policy, but this can be a costly mistake. Title defects can be expensive to fix, and insurance provides long-term protection.
- Verify HOA & Condo Association Requirements – Make sure buyers understand their HOA’s estoppel letter process and any transfer fees or special assessments before closing.
- Recommend a Survey – Even though a lender may not require a new survey, having one ensures the buyer knows exactly what they are purchasing.
- Communicate with the Title Agent – If any issues arise, work closely with the title agent or attorney to resolve them as quickly as possible.
By taking these proactive steps, real estate agents can help prevent closing delays and ensure their clients get clear, marketable title to their new home.
Conclusion
Title commitments are one of the most important documents in a real estate transaction. They outline what needs to happen before closing, what exceptions exist, and what protections the buyer will receive under their title insurance policy.
As a real estate professional, understanding how title commitments work—and what potential title issues to watch for—will help you provide exceptional service to your clients.
If you have any questions about title commitments or need assistance with a closing, contact our office. Our team is here to help you and your clients navigate the process with confidence.