What is a Title Commitment?
A title insurance commitment is essentially an offer to issue a title insurance policy. The title commitment will describe the various conditions, exclusions and exceptions that will apply to that particular policy.
The title insurance commitment form used in Pennsylvania is a modified version of the American Land Title Association (ALTA) commitment form. This modified form has been adopted by the Title Insurance Rating Bureau of Pennsylvania and approved for use by the Pennsylvania Insurance Department. The commitment primarily consists of five parts: Schedule A; Schedule B-Section I; Schedule B-Section II; Schedule C, and the commitment jacket.
Once a title commitment is issued, the title insurance company has promised the proposed insured that if all the requirements set forth in Schedule B-Section I of the commitment are satisfied, the company will issue a policy of title insurance for the property described in Schedule C according to the terms described in both Schedule A and the commitment jacket. Schedule B-Section II of the commitment lists the risks that the underwriter proposes to exclude from coverage.
Liberty Bell Agency, as agent for the title insurance underwriter, will issue a title commitment after a thorough review and examination of a title search performed on the property to be insured. This examination of title will comply with the underwriting guidelines of the particular title insurance underwriter selected to insure the transaction. Each underwriter has variations in their underwriting guidelines which could complicate the ability to insure the transaction. Liberty Bell Agency is an independent agent representing multiple underwriters, and is therefore better positioned to suggest the appropriate underwriter for the specific transaction to be insured.
Typically a commitment does not entail a comprehensive title search back to the original grant of the land, and therefore is not a complete abstract of title. As such, the title commitment may not necessarily list every arguable cloud on title. In Pennsylvania, the standard period for searching public records is only sixty (60) years for conveyancing transactions (a property being sold), and much less for other types of insured transactions (such as mortgage refinancing). As a matter of business judgment, the underwriter may decide to insure certain known risks without disclosing them. Consequently, a clear title commitment does not necessarily indicate that the buyer will never have title problems; however, the title policy will provide coverage if problems do arise.
The title insurance commitment will terminate six months after the effective date shown on Schedule A of the commitment. This effective date is usually the date to which the title company is able to evaluate the public records. Information that may be found in the public records after this date is excluded from coverage unless a further title search of the property (called a bring-down search) is completed prior to closing and a title affidavit is obtained from the owner of the property.
For a sample and some additional details of the various parts of the commitment form, click on the appropriate link listed below:
The Commitment Jacket
Schedule B-Section I – Requirements
Schedule B-Section II – Exceptions