What a commitment is—and is not
A title commitment is an offer from the underwriter to issue a policy once stated conditions are satisfied. It is not a policy, and it is not a guarantee that title is perfect today. In New Jersey, most agencies issue commitments on the standard ALTA form, which divides the document into a short set of commitment conditions followed by Schedule A and Schedule B. Reading the schedules in order, rather than skimming for problems, is the fastest way to understand where a file really stands.
Schedule A: the five facts that must match
Schedule A states the commitment date, the policy or policies to be issued with their proposed amounts, the proposed insured for each, the estate or interest being insured (usually fee simple), and the party in whom title is currently vested. It also references the legal description. For a loan officer, the critical lines are the proposed insured lender—including its successors-and-assigns clause—and the loan amount. Both should mirror the note and your closing instructions exactly, since a later correction usually means a revised commitment.
Schedule B, Part I: requirements
Part I lists everything that must happen before the policy can be issued. Typical requirements include recording the deed from the vested owner, recording your mortgage, paying off and discharging existing mortgages, satisfying judgments found against the parties, and supplying affidavits of title. Entity borrowers often trigger a request for formation documents and a resolution authorizing the transaction. Each requirement is a task with an owner; the cleanest files are the ones where someone has been assigned to every line well before the closing date.
Schedule B, Part II: exceptions
Part II lists matters the policy will not insure against. Some are general, such as rights of parties in possession or facts an accurate survey would reveal. Others are specific to the property: recorded easements, restrictive covenants, a sewer or drainage right-of-way, or a filed subdivision map note. Your investor guidelines may prohibit certain exceptions or require that they be removed or insured over by endorsement. Review this part early so there is still time to negotiate the language with the underwriter.
Removing the standard exceptions
The general exceptions can often be removed or narrowed. A current survey reviewed by the title agency may allow the survey exception to be replaced with a specific reading of what the surveyor actually found. A seller’s and buyer’s affidavit of title addressing possession, recent work, and unrecorded agreements can support removing other standard items. Ask the agency which general exceptions will appear on the final lender’s policy, because that answer—not the commitment draft—is what your post-closing reviewer will see.
Bring-down and the marked-up commitment
Between issuance and closing, the agency runs a continuation search to confirm nothing new has recorded against the property or the parties. At the closing, the commitment is typically marked up to show satisfied requirements and final exceptions, and that marked-up version governs until the policy issues. If a late judgment or lien appears on the bring-down, it becomes a new Part I requirement, so stay in contact with the closer through funding.
This article is general information about New Jersey real estate transactions and is not legal, tax, or financial advice. Laws, regulations, and fee schedules change; confirm current requirements with your attorney. Crystal Alliance Title is a title insurance agency, not a law firm.
