What a Title Commitment is & When You Need One

A title commitment is a document from a title company that says the property you are buying will be able to have a title insurance policy after you close the sale.  The document you are provided with contains the same information that will be include in the actual title insurance policy, but it is not underwritten or ratified so it is not official or legally binding.  That is the main difference between a title commitment and title insurance policy.

A title commitment is also a bit different than a marketable title in that it does not guarantee there will be zero issues with the deed to the property you are buying.  It just says that you will be able to have an insurance policy on the property.  This also does not mean that the title insurance policy will cover everything, but we cover that in a minute.

Now that you know what a title commitment is, you may be wondering if there are other differences between this document and your actual insurance policy.  Maybe you want to know if a title commitment is required by law, or just for a peace of mind when you’re going through the stressful home buying process.  Don’t worry, we’re ready to help with the frequently asked questions and answers about title commitments below.

Is a Title Commitment Required By Law?

No, title commitments are not required by law, but if you are buying a home, your agreement will probably require that the seller provides you with their title insurance policy.  Also, if you are taking out a mortgage, the lender may require you get a title commitment before they sign the final documents to give you the loan.

The document will also contain all of them items that your insurance policy will not cover, which is another reason why title commitments are important for you to have in order to have a successful and easy closing.  As a bonus tip, having the commitment show exactly what is not going to be covered can also help you make a more informed decision on if you should buy the property or not.

Is a Title Commitment the Same as Title Insurance?

No, title insurance is the legally binding agreement that you get after the closing of a property sale.  A title commitment just says that a title insurance company will agree to provide you with a policy after you close.  There are also two types of insurance policies.  You can read about the difference between a lender’s and owner’s title insurance policy here.

What is a Title Commitment Form & What Do I Look For?

This is the form that is normally provided by ALTA.  It is a standardized document that all title insurance companies will be able to access and provide you with.

The most important things to look for on the form are what is not going to be covered by your policy, and what potential issues could arise if you move forward with your purchase.  The issues themselves are what can cause a deal to fall through, or if it is from the seller, what potential issues you may inherit.  These include encroachments, claims on your property, liens, debts owed, incorrect boundary lines, improper zoning and easements to name a few.

Title commitments are important because they give a mortgage company or bank assurance that the investment will be covered, help you feel confident in your purchase because you have more insight into potential issues with the ownership of the property, and help close the deal faster because it lets all parties know that a policy is able to be issued.