Why It Matters
What is a title commitment? It translates a title search into actionable closing requirements with three parts: Schedule A identifies the property and deal terms; Schedule B-I lists every condition that must be satisfied before the policy issues; and Schedule B-II lists the exceptions that survive closing permanently. Investors who read all three catch liens the seller was supposed to clear, easements that limit development plans, and CC&Rs that restrict intended use — before the deed records.
At a Glance
- Issued by the title company after the title search, before closing
- Promises to issue title insurance once all listed conditions are satisfied
- Schedule A: property description, parties, purchase price, loan amount, vesting
- Schedule B-I: requirements to clear before the policy issues (unpaid liens, judgments, existing mortgages)
- Schedule B-II: permanent exceptions NOT covered by the policy (easements, CC&Rs, zoning)
- Usually expires after 6 months — a delayed closing triggers a new search
- Buyers must raise objections within the contract's title review period (typically 5–15 days)
- Lender's policy covers only the lender; buyers need a separate owner's policy
How It Works
After contract signing, the escrow officer orders a title search. The title company examines public records — deeds, mortgages, court judgments, tax records, mechanic's liens — then converts the findings into a commitment organized into three schedules.
Schedule A states the basics: effective date, insured parties, coverage amounts, legal description, and vesting (individual, LLC, or trust).
Schedule B-I — Requirements is the action list. Every item must be resolved before the policy issues: the seller's mortgage must be paid off and released; judgment liens satisfied; property taxes brought current. Uncleared requirements mean no policy and no closing.
Schedule B-II — Exceptions are permanent. These are matters the title company knows about but will not insure against — recorded easements, HOA CC&Rs, zoning regulations, survey encroachments. They survive closing and bind future owners.
The title review period — typically 5–15 days in the purchase contract — is the window to raise objections. If an exception is unacceptable, the buyer demands the seller cure it or exits the deal. Once the window closes without objection, the buyer accepts every exception as-is.
Real-World Example
Lori is under contract on a four-unit rental in Phoenix for $620,000. Ten days after signing, her escrow officer sends the title commitment.
Schedule B-I shows two items: the seller's $380,000 mortgage must be released at closing, and a $4,200 judgment lien from a 2022 contractor dispute must be satisfied. Both will clear from closing proceeds — standard.
Schedule B-II is where Lori slows down. A 15-foot utility easement runs along the back of the lot — exactly where she planned a storage structure for tenants. She pulls the recorded document: no permanent structures within the easement. She adjusts her capital improvement budget before closing, not after. She also spots a CC&R limiting the property to residential use — no conflict with rental, but worth confirming before the review period expires.
Both B-I items clear at closing. The easement and CC&R remain as exceptions in her owner's policy. She knew about both before the deed recorded.
Pros & Cons
- Reveals liens, judgments, and encumbrances before closing — not after
- Schedule B-I creates an unambiguous checklist of what the seller must resolve
- Schedule B-II discloses permanent exceptions while exit rights are still available
- Required by virtually all lenders before funding
- Doesn't cover matters outside public records — unrecorded liens or boundary disputes require a survey
- B-II exceptions become the buyer's permanent problem if accepted without careful review
- The review period is short; investors who delay lose objection rights
- Doesn't guarantee clean title — only promises to insure within the stated exceptions
Watch Out
- Missing the title review deadline. Once the review period closes, the buyer is deemed to have accepted every exception. Read the commitment the day it arrives.
- Confusing the commitment with the policy. The commitment is a promise; the policy is the actual insurance contract. The commitment expires; the policy is permanent.
- B-II exceptions that kill your plans. An easement may block a planned addition; a CC&R may prohibit short-term rentals. Confirm every exception against your intended use before the review window closes.
- Lender's policy vs. owner's policy. The lender's policy protects only the loan balance. An owner's policy — optional but advisable — protects your equity for the full hold period.
Ask an Investor
The Takeaway
The title commitment is the most important document to read before closing. Schedule B-I tells you what must be fixed; Schedule B-II tells you what you're permanently accepting. Reading both during the review period — not at the closing table — is the difference between catching a judgment lien before it's yours and inheriting it the moment the deed records.