A title commitment is a title insurer’s offer to issue a policy of title insurance, subject to title matters What is a title insurance commitment? By carefully reviewing documents prior to closing, buyers can avoid legal headaches later affecting the property and other requirements. Not to be confused with other title-related documents a buyer may encounter at closing, a title commitment is simply the insurer’s promise to issue a title insurance policy, provided that the required premium is paid; the necessary documents are executed, delivered and recorded; and certain requirements are met.
“Commitments report the current record ownership of the subject property — also known as vesting — the estate to be insured (fee simple or leasehold), the legal description of the property and the exceptions from coverage that must appear in final title insurance policy,” explained Kent Pelt, NATIC’s vice president and regional underwriting counsel for California and Hawaii. “In addition, commitments list requirements that must be satisfied before the insurer becomes contractually obligated to issue policies to the proposed insureds.”
Depending on the state in which the property is located, the title commitment can vary slightly, but it typically contains the following five components:
- A commitment jacket, which serves as a notice to issue a title policy to the buyer. The commitment jacket must always be included with any validly issued commitment.
- Transaction identification data, which provides factual information regarding the transaction, including the title insurer, the issuing title agent, the proposed insureds, the purchase price, loan amount, address, etc.