A title commitment is a title insurer's written promise to issue a title insurance policy once stated conditions are met. Also called a preliminary title report or title binder, it reflects the current state of title, lists the requirements a buyer must clear before closing, and lists the exceptions that the final policy will not cover.
How Does a Title Commitment Work?
A title commitment works by reporting what a search of public records found and telling the buyer exactly what must happen before a policy can issue. It is organized into schedules: Schedule A states the deal facts, Schedule B-I lists requirements to clear before closing, and Schedule B-II lists the exceptions the policy will not insure against. Clear the requirements and the policy follows at closing.
Per Pioneer Title Agency and PropLogix, an ALTA title commitment has three core schedules. Schedule A reflects the purchase contract and record search: legal description, sales price, loan amount, and the names of buyer and seller. Schedule B-I lists matters the examiner found that must be addressed before closing. Schedule B-II lists items that run with the land and will remain after transfer.
Schedule | What it contains |
Schedule A | Legal description, price, loan amount, buyer and seller names |
Schedule B-I | Requirements to clear before closing, such as payoffs and releases |
Schedule B-II | Exceptions the policy will not cover, such as easements and CC&Rs |
When the requirements in Schedule B-I are performed, related exceptions in Schedule B-II are deleted and coverage broadens once the deal closes. This is the mechanism a buyer uses to negotiate title down to an acceptable condition.
Why the Title Commitment Matters
A title commitment matters because it is the buyer's map of every title problem the insurer found and every risk the policy will refuse to cover. Reading it is how a buyer learns, before spending closing funds, whether an undisclosed lien, an easement across the loading dock, or a boundary issue affects the asset it is about to buy.
The stakes sit in Schedule B-II. Every exception listed there is a risk the buyer keeps rather than transfers to the insurer, so the negotiation over title is largely a negotiation to convert exceptions into cleared requirements. Standard exceptions, such as matters an accurate survey would disclose, can often be removed by delivering a current ALTA survey and owner affidavits. The quotable point for an operator: the value of a title commitment is not what it insures but what it refuses to insure, because those exceptions are the risks the buyer keeps.
Example
A buyer under contract on a $6,000,000 retail center receives the title commitment during due diligence and reviews Schedule B-I and Schedule B-II line by line.
Schedule | Item found | Buyer's action |
B-I requirement | Existing $2,400,000 mortgage on the property | Require seller payoff and release at closing |
B-I requirement | Open $35,000 mechanic's lien from prior tenant work | Require seller to satisfy before closing |
B-II exception | Standard survey exception | Deliver current ALTA survey to remove |
B-II exception | Recorded utility easement along the east boundary | Accept as a permitted exception |
The buyer clears both Schedule B-I requirements by making seller payoff and lien satisfaction conditions of closing, worth $2,435,000 in encumbrances removed from title. Delivering a current ALTA survey removes the standard survey exception, broadening coverage. The buyer accepts the utility easement as permitted because it does not impair use. When the requirements are met, the insurer issues the policy free of those matters, and the buyer closes on clean, insured title.
Variations and Edge Cases
A title commitment goes by different names and behaves differently depending on jurisdiction and how the schedules are drafted. The table below covers the variants an operator should recognize.
Variant | Treatment |
Preliminary title report | Common name for the same document, especially in western states |
Title binder | Another name emphasizing the commitment to insure |
Standard exceptions | Boilerplate exclusions applied to all properties, often removable |
Special exceptions | Property-specific items found in the record search |
Expired commitment | Lapses if closing is delayed; the insurer reissues after an updated search |
The common mistake is treating the commitment as a clean bill of title. It is the opposite: a list of problems and non-covered risks. A buyer who skims Schedule B-II can close subject to an exception, such as an access easement, that it never priced.
Title Commitment vs Title Insurance
A title commitment is often confused with title insurance, but they are sequential stages of one transaction. A title commitment is the insurer's conditional promise to issue a policy, listing what must be cleared and what will be excepted. Title insurance is the final policy issued after closing, once the commitment's requirements are met.
The practical difference is timing and enforceability. The commitment governs the deal before closing: it is a preview that tells the buyer what to fix and what it will keep as risk. The policy is the executed contract that pays claims after closing, carrying the same requirements, exceptions, and exclusions the commitment set out. Same terms, different stages: the commitment offers, the policy insures.
Frequently Asked Questions
What is a title commitment in commercial real estate?A title commitment is a title insurer's written promise to issue a policy once stated conditions are met. It reflects the current state of title, lists the requirements a buyer must clear before closing in Schedule B-I, and lists the exceptions the final policy will not cover in Schedule B-II. It is also called a preliminary title report.
What is the difference between Schedule B-I and Schedule B-II?Schedule B-I lists requirements that must be met before closing, such as paying off liens or correcting the legal description. Schedule B-II lists exceptions the policy will not cover, such as easements and recorded restrictions. Clearing Schedule B-I requirements often removes related Schedule B-II exceptions once the deal closes.
Is a title commitment the same as title insurance?No. A title commitment is the insurer's conditional promise to issue a policy, listing requirements and exceptions before closing. Title insurance is the final policy issued after closing, once the commitment's requirements are met. The policy carries the same terms, requirements, and exceptions the commitment set out.
Related Terms
Title Insurance
Escrow
Due Diligence
Ground Lease
Estoppel Certificate