Underwriting Manual: Commitments

A properly completed commitment for issuance of title insurance (Commitment) is a formal and legally binding contract to insure title to real property. Subject to its terms and expiration, the Commitment can be relied upon by the insured to obtain a policy of title insurance subject only to the exceptions and requirements set out therein.

The only Commitment form to be used is the form approved by Stewart Title Guaranty Company (Company) for use in the applicable state or area. The Commitment is comprised of the cover or jacket and the schedules. The cover or jacket contains the insuring provisions along with conditions and stipulations. In many cases, prior state approval to use the form is necessary; the Company files the form for approval in those states. Any alterations or modifications to these approved forms requires prior approval from the Company’s Chief Underwriting Counsel.

As a reminder, title reports, preliminary reports and Commitments are different forms that contain varying degrees of liability for the Company and thus, are not interchangeable.

Also, as a reminder, prior written approval from the Company’s Chief Underwriting Counsel is required before issuing any email, correspondence, letters, or memoranda that explains, modifies, or expands coverage provided by a Commitment.

The Commitment form is composed of the cover or jacket and the schedules, typically A and B, Parts I and II.
The cover or jacket contains the insuring provisions along with the conditions and stipulations describing coverage.

For Commitment to be effective:

• Schedule A must identify the proposed insured and the amount of insurance for each described policy.
• The Commitment must contain an authorized signature of the Company.
• The Commitment must set out the number of days the Commitment is in effect and by which the requirements must be satisfied. In certain states, the Commitment may be extended through Company approval. 

The Commitment should be written for a specified amount (usually based on the sales price of the Land for an owner’s policy and/or the loan amount for a loan policy) and generally not be accepted or issued for an amount less than the actual value of the Land or security interest. A reasonable effort should be made to determine the value of the Land prior to the issuance of the Commitment.

If the information necessary to determine the actual value of the Land is not provided, and unless otherwise approved by a Stewart Title Guaranty Company Underwriter, “To Be Agreed Upon” must be inserted into the space assigned for the Proposed Amount of Insurance.

The conditions and stipulations relate to:

• The definitions and meanings of the various terms.
• The Company’s obligation to insure based upon the named insured and the specified amount, subject to the notice, the requirements shown in Schedule B Part I and exceptions shown in Schedule B Part II of the Commitment and further subject to the conditions and stipulations in the cover or jacket.
• Whether the proposed insured has actual knowledge or actual notice of any defect, lien, encumbrance, adverse claim, etc. that has not been disclosed to the Company prior to recording and/or closing.
• The liability of the Company based upon the Policy Amount.
• The effective date of the Commitment; when the Commitment expires and if a policy of title insurance has not been issued, the Company’s liability and obligations end.
• The nature of any proposed insured's action(s) against the Company.

With respect to Commitment schedules, continuation sheets are available when the materials to be included in that particular schedule extends beyond the available space.

Schedule A

Schedule A must be completed accurately and in its entirety. Schedule A provides for:

• The optional inclusion for reference purposes only of Transaction Identification Data which includes the issuing title agent information, the loan ID number, the Commitment Number, the issuing office file number, the property address and the revision number.
• The commitment date (Commitment Date).
• The specific form of policy to be issued. Because states may use different policy forms for owners and lenders coverage, and the Company’s liability may differ under the different policy forms, a thorough understanding of the coverages and limitations of each policy form and version is imperative.
• The proposed Insured and the proposed Policy Amount. If the information is not provided or available, the phrase “To Be Agreed Upon” must be typed in these spaces.
• The type of estate or interest described in the Commitment. In the event the estate or interest to be insured is other than “Fee Simple”, the section will need to be modified and the phrase “Fee Simple” shall be deleted. If different interests are to be insured in the same policy, those interests must be separately defined. If a leasehold estate is to be insured, a leasehold endorsement shall be included when applicable in that state. See below for examples of Estates and Interests.
• The name of who title is vested in as of the Commitment Date.
• The description of the Land which often is set forth in an attached exhibit to the Commitment and the title policy, when issued. The legal description originates from the record and typically is included in the instrument creating the estate or interest to be insured.

Sample Estates:

• Fee Simple as to Parcel (Tract) No. 1
• Easement Estate as to Parcel (Tract) No. 2
• Leasehold Estate as to Parcel (Tract) No. 3

Schedule B, Parts I and II

Schedule B, Part I - Requirements
Contains requirements that must be satisfied before a policy of title insurance may be issued.  These requirements may include, but are not limited to, any or all of the following: releases of security instruments (deeds of trust, mortgages, etc.); releases, satisfactions or dismissals of encumbrances, judgments and liens; permitting, abatement and zoning matters; vesting corrections and spousal deeds; submission for review of entity, estate and trust documents; and correction, clarification and resolution of title impediments or defects.  

Schedule B, Part II - Exceptions
Contains exceptions to the committed policy coverage set forth in the policy form contemplated to be issued in connection with the Commitment. These exceptions include, but are not limited to, any and all liens, encumbrances, defects or other title matters existing in the Public Record and, as disclosed through a date down/bring down prior to recording/closing, those title matters arising subsequent to the effective date of the Commitment but prior to the recordation of the instrument(s) to be insured.

Standard Exceptions
General, generic and/or standard exceptions (Standard Exceptions) may vary by state, county, and local rules of practice. These exceptions may be completely deleted or partially removed from the final title policy in accordance with the Company’s Underwriting Bulletins and Guidelines. Deletion of any or all Standard Exceptions extends policy coverage and thus, necessitates compliance with certain requirements. See Underwriting Manual Guideline, Extended Coverage, Section 5.32 and Stewart’s Underwriting Bulletins and applicable state bulletins.

Specific Exceptions

Special or specific exceptions (Specific Exceptions) are those specifically attach or encumber the Land described in the Commitment and the committed policy of title insurance. These Specific Exceptions include, but are not limited to, taxes, assessments, mortgages, liens, easements, conditions, covenants and restrictions, defects and other matters existing in the Public Record. These Specific Exceptions may also relate to unsatisfied requirements in Schedule B, Part I of the Commitment.

Some Specific Exceptions may be deleted from the final title policy upon confirmation of their full and absolute payment, release, satisfaction, termination, cancellation, etc. Also, unless specifically obligated by the closing or lenders instructions, title insurance companies do not have any duty or obligation to demand or require the payment or satisfaction of any tax, lien, judgment, or charge that affects the title, provided these items are shown as Specific Exceptions in the applicable final title policy(ies).
In some geographic areas, Special Exceptions may be contained in a third Schedule, known as Schedule C, in which all the requirements, as properly differentiated from the exceptions, are set forth. In many other geographical areas, exceptions and requirements may be shown together (or separate) in Schedule B, Part I or Part II.