How to Read a Title Commitment in Texas: A Guide for Buyers & Sellers

When buying or selling your house in Texas, one crucial document in the real estate transaction is the title commitment. This document plays a significant role in ensuring that the property's title is clear and can be legally transferred from the seller to the buyer. Understanding what a title commitment is and how it impacts your real estate transaction can help both buyers and sellers navigate the process smoothly.

What is a Title Commitment?

A title commitment is a formal document issued by a title company that outlines the conditions under which it will issue a title insurance policy. Essentially, it is a promise from the title company to provide title insurance after certain conditions are met. This document is critical in real estate transactions because it provides a detailed history of the property’s title and identifies any potential issues that could prevent a smooth transfer of ownership.

Why is a Title Commitment Important?

When buying a house, you want to ensure that you are receiving a clear title—meaning that no one else has a legal claim to the property. Likewise, when selling your house, providing a clear title helps ensure a smooth closing process. The title commitment helps identify and resolve any potential title defects before the transaction is finalized.

The Key Sections of a Title Commitment

A Texas title commitment is divided into several key sections, each providing important information regarding the property’s title:

Schedule A: Basic Information

This section includes essential details such as:

• The name of the proposed insured (the buyer and the lender, if applicable)

• The legal description of the property

• The effective date of the title commitment

• The name of the current owner (seller)

Schedule B: Exceptions to Coverage

This section lists the matters that the title insurance policy will not cover. These exceptions can include:

• Restrictions and covenants that apply to the property

• Existing leases or easements

• Liens or unpaid property taxes

It is crucial for both buyers and sellers to review these exceptions carefully. If there are concerns, they may need to be addressed before closing.

Schedule C: Requirements to be Met

Schedule C lists the actions that must be completed before the title company will issue the final title policy. Common requirements include:

• Paying off any outstanding liens or mortgages

• Providing necessary legal documents (such as a death certificate in the case of inherited property)

• Resolving ownership disputes, if any

If these requirements are not met, the title insurance policy may not be issued, which can delay or even prevent the sale from closing.

Schedule D: Disclosure of Fees and Entities Involved

Schedule D provides transparency about who benefits financially from the title policy, including:

• The underwriter providing the title insurance

• The title company issuing the policy

• The premiums being charged for the policy

This section ensures that buyers and sellers understand the costs and parties involved in securing title insurance.

How Does Title Commitment Affect Buyers?

For buyers, a title commitment is a critical safeguard. It helps them:

• Identify any title issues before closing

• Ensure that they will receive a clear title

• Understand what their title insurance will and will not cover

If a title search uncovers problems such as undisclosed liens or ownership disputes, the buyer may request that the seller resolve these issues before moving forward with the transaction.

How Does Title Commitment Affect Sellers?

For sellers, the title commitment is equally important because it helps ensure a smooth sale. A title company will conduct a search to verify the seller’s legal ownership and identify any potential problems. If issues arise, the seller must work to resolve them before closing.

If selling your house, it’s a good idea to obtain a preliminary title report early in the process. This allows time to address any issues, such as unpaid property taxes or old liens, before a buyer is involved.

Common Title Issues Found in a Title Commitment

Some of the most common title issues that can arise include:

1. Unpaid Property Taxes – If previous owners have unpaid property taxes, the title cannot be transferred until these debts are settled.

2. Liens – A lien is a legal claim against a property due to unpaid debts, such as contractor fees or unpaid loans.

3. Boundary Disputes – Property surveys can sometimes reveal discrepancies in boundary lines, which can lead to legal conflicts.

4. Unknown Heirs – If a previous owner passed away without a clear will, there may be unknown heirs who could claim ownership.

5. Forgery or Fraud – Sometimes, fraudulent documents are recorded in public records, complicating ownership claims.

How to Resolve Title Issues

If a title commitment reveals any title issues, they must be resolved before closing. Solutions can include:

• Paying off liens or unpaid taxes – Ensuring that all debts tied to the property are cleared.

• Obtaining a quitclaim deed – If there is a dispute over ownership, a quitclaim deed can transfer interest from one party to another.

• Correcting public records – If there is a clerical error in property records, the title company can work with the appropriate authorities to fix it.

Finalizing the Title Insurance Policy

Once all requirements outlined in Schedule C are met and any issues are resolved, the title company will issue the final title insurance policy. This policy protects the buyer and lender (if applicable) against any future claims or disputes over ownership.

Your Realtor is Here to Help

Although a title commitment can be an overwhelming document, your realtor is there to look over it, handle any issues, and communicate what is needed with you. If you’re looking for someone to handle the hard bits in a transaction, call me at 469-744-5309.

Conclusion

Understanding the title commitment process is essential for both buyers and sellers in Texas real estate transactions. This document provides transparency about the property’s history, identifies potential issues, and outlines the steps needed to ensure a smooth transfer of ownership.

For buyers, reviewing the title commitment carefully can prevent costly surprises after closing. For sellers, ensuring a clear title ahead of time can help avoid delays and keep the sale on track. Working with an experienced realtor and a reputable title company is key to navigating this process efficiently.

If you’re considering buying or selling your house in Texas, make sure you fully understand the title commitment and its role in protecting your real estate investment.