Texas contracts require a title commitment be provided by the title company within 20 days of receipt of an executed contract to both the buyer and seller of the transaction. The title commitment is basically the title company’s commitment to issue a title insurance policy given certain conditions. Let’s break down the four parts or schedules that make up the title commitment.
Schedule A
Schedule A of the commitment identifies the specifics of the proposed transaction. This information can include the effective date of the commitment, the proposed amount of insurance, the type of policy to be issues, the name of the proposed insured(s), whom the title is currently vested in, the interest in land to be covered and the legal description of the property to be insured.
Schedule B
Schedule B sets out the proposed exceptions from coverage. There are two types of exceptions – standard exceptions and special exceptions. Standard exceptions appear in every commitment, because they are part of the form promulgated by the Texas Department of Insurance (TDI), the agency tasked with regulating insurance in Texas. Special exceptions, on the other hand, are more individualized to matters that may affect the specific transaction property.
Standard exceptions are the items in 1-9, and include restrictive covenants, area and boundaries, community property, water rights, ad valorem taxed, terms of documents creating insured interest, homestead construction, subordinate liens and leases and exceptions applicable to short form mortgagee policies.
Item 10 identifies exceptions from coverage specific to the property, like easements and encroachments that may be corrected and removed from the policy with proper documentation and procedure.
Schedule C
Schedule C identifies the requirements that must be met in order for the title company to issue the policy, or they will be added to Schedule B as exceptions to coverage. There are two types of requirements – standard and additional. Standard requirements are part of the policy promulgated by TDI, and additional requirements are added by the title company specific to the proposed transaction.
Schedule D
Schedule D specifies three categories of information to all of the parties involved in the transaction. These include disclosure of ownership and offices of the underwriter and agent, disclosure of estimated premium charges, and disclosure of any party receiving a portion of the premium for furnishing title evidence, examination, and/or closing the transaction.
You should review the title commitment you receive for any inaccurate information. Failure to identified inaccuracies could compromise your future coverage in the event of an issue.