A title commitment is one of the most important documents in a real estate transaction. This document is the title company’s conditional offer to issue a title insurance policy. It identifies the current owner, describes the property, lists the requirements that must be satisfied before closing, and discloses exceptions (i.e., items the policy will not cover once issued).
Three Schedules of a Title Commitment
A standard title commitment includes three schedules. Schedule A identifies several key items:
- The proposed insured
- The type of policy to be issued
- The amount of coverage
- The legal description of the property.
Schedule B-I lists the requirements that must be met before the policy will be issued, such as paying off existing liens, obtaining releases, or recording specific documents. Schedule B-II lists the items the title company will not insure against, such as easements, restrictive covenants, or survey matters.
Exceptions to Title Commitments
Schedule B-II creates exposure for insureds. Every item listed as an exception is something your title policy will not protect you against. If you close without addressing those exceptions, you own the property subject to whatever encumbrances, easements, or defects the title company excluded from coverage.
Common exceptions to title policies include:
- Easements that could restrict how you use or develop the property
- Restrictive covenants that limit what can be built or operated on the land
- Mineral rights reservations that give a third party subsurface access
- Unrecorded liens or claims that may surface after closing
- Survey exceptions, which can leave boundary disputes and encroachments uncovered
Some of these exceptions are standard and appear in nearly every commitment. Others are specific to the property and may signal an ownership risk. An attorney can help you determine which exceptions can be removed or insured with an endorsement.
The Role of Endorsements
Title endorsements modify or expand the standard policy to cover risks that would otherwise be excluded. They’re negotiated before closing and added to the policy at issuance.
Common endorsements worth requesting include:
- A survey endorsement that insures against boundary and encroachment issues shown on a current survey
- An access endorsement that confirms the property has legal access to a public road
- A zoning endorsement that confirms the property’s current zoning classification and permitted use
- A contiguity endorsement that confirms that adjacent parcels being acquired together share a common boundary
- An environmental lien endorsement that covers certain environmental liens that might not appear in a standard title search
Notably, Texas does not offer a zoning endorsement, which is a meaningful gap compared to states that follow the ALTA endorsement framework. Texas uses its own standardized T-form system regulated by the Texas Department of Insurance. The absence of zoning endorsements is particularly relevant in cities like Houston, which lacks traditional zoning ordinances. This increases the importance of independent due diligence on land use restrictions before closing on any commercial transaction in the state.
Talk to a Real Estate Attorney Before Closing
Reviewing the title commitment thoroughly before closing is one of the most basic and important risk management steps you can take in your real estate transaction. An experienced real estate attorney from Porter Law Firm can review your title commitment, identify which exceptions create risks, and negotiate the endorsements your transaction requires. If you’re approaching a closing and haven’t had your title commitment reviewed by legal counsel, contact us today for help.