A title insurance commitment is the document your title company issues before closing that lists exactly what the title policy will and will not cover. Most buyers glance at it and move on — but the real risk is in Schedule B, which lists every exception to coverage. Easements, restrictive covenants, mineral rights reservations, and unresolved liens all appear here. If you do not review Schedule B carefully, you may discover after closing that your neighbour has a driveway easement through your back garden or that the previous owner's contractor has a mechanics' lien on the property.
What is a Schedule B Exceptions and Coverage Gaps?
A title insurance commitment (also called a title binder or preliminary title report) is a document issued by a title insurance company that describes the conditions under which it will issue a title insurance policy. Schedule A identifies the property, buyer, and lender. Schedule B-I lists requirements that must be met before closing. Schedule B-II lists exceptions — matters the policy will NOT cover.
Red flags to watch for
The standard survey exception excludes claims arising from boundary disputes, encroachments, and easements not shown on a survey. You can often get this removed by providing a current ALTA/NSPS survey.
Requirements in Schedule B-I must be satisfied before closing. Outstanding tax liens, mechanics' liens, or court judgments should be cleared — not just listed.
In states like Texas, Pennsylvania, and Colorado, mineral rights may have been severed decades ago. This can allow third parties to access your property for extraction.
Historic deed restrictions may prohibit certain uses, require specific building materials, or even contain unlawful discriminatory provisions that have not been formally removed.
An easement of record may grant your neighbour or a utility company the right to cross your property. Check the exact location and scope.
This catch-all exception means the title company will not cover any boundary or encroachment issue. Push for a survey to eliminate this exception.
Your legal rights
Title insurance is regulated at the state level. The ALTA (American Land Title Association) sets standard policy forms used in most states. Buyers have the right to review the commitment before closing and to request that the title company remove or insure over specific exceptions. The Real Estate Settlement Procedures Act (RESPA, 12 USC § 2601 et seq.) requires disclosure of settlement costs including title insurance. In many states, title insurance rates are filed with and approved by the state insurance commissioner.
Questions to ask before you sign
- 1Can the standard survey exception be removed if I provide a current ALTA/NSPS survey?
- 2Are there any unresolved liens or judgments that must be cleared before closing?
- 3Have mineral rights been severed from the surface estate?
- 4What restrictive covenants apply, and do any of them affect my intended use?
- 5Are there any easements that cross the property, and where exactly are they?
- 6Can I get extended coverage (ALTA Homeowner's Policy) for additional protection?
- 7What is the process for filing a claim after closing if a covered issue arises?
Disclaimer: This guide is for educational purposes only and does not constitute legal advice. Contract law varies by jurisdiction and individual circumstances. Always consult a qualified legal professional before making decisions based on this information.