Buying a home involves a lot of paperwork. Between the purchase agreement, mortgage documents, inspection reports, disclosures, and closing paperwork, it’s understandable if one more document arriving in your inbox doesn’t immediately get your attention.
But your title commitment Minnesota home buyers receive before closing deserves more than a quick glance.
A title commitment provides important information about the property you’re preparing to purchase and the title insurance that is expected to be issued after certain requirements are satisfied. It can identify ownership information, the legal description, requirements that must be completed before the policy is issued, and exceptions that may affect title insurance coverage.
For Minnesota home buyers, reviewing this document before closing can help answer an important question: Are there any title matters I should understand before I become the owner?
You don’t need to be a real estate attorney or title professional to perform a useful review.
Additionally, you can review the title commitment using these seven areas and ask questions when something doesn’t match your expectations.
A Minnesota title commitment is issued in connection with title insurance after title research and examination have been performed. It outlines the terms under which the title insurer is prepared to issue a title insurance policy once specified requirements have been satisfied.
A title commitment is not the same thing as the final title insurance policy.
Think of it as a road map for what needs to happen before the final policy can be issued.
Depending on the commitment and transaction, it identifies information such as:
That information makes the real estate title commitment an important document for both home buyers and mortgage lenders.
The title company has already completed significant research before preparing the commitment. Your job as the buyer isn’t to redo that research. Instead, review the information that has been provided and ask questions about anything you don’t understand.
Start with something simple: verify that the commitment actually describes the property you intend to purchase.
The commitment’s Schedule A generally contains basic transaction and policy information.
Review details such as the property information, proposed insured parties, estate or interest being insured, and policy amounts shown on your particular commitment.
Pay particular attention to your name.
Does it appear correctly?
If you’re purchasing with another person, is that information consistent with the proposed transaction?
Also look at the property information and legal description.
Most buyers think about their new property using its street address:
“123 Main Street.”
Real estate records, however, rely on a legal description to identify the land.
Depending on the property, that description may reference a lot and block, subdivision, government lot, section, township, range, or another legally recognized description.
This becomes particularly important in Minnesota, where transactions can involve everything from subdivision homes to rural acreage, cabins, lake properties, and parcels with lengthy ownership histories.
If something in the property information doesn’t look right, ask about it before closing.
Another important part of your title commitment explained in practical terms is determining who currently holds the ownership interest the title company found in its examination.
That matters because the person or entity selling the property needs to have the appropriate ownership interest to complete the proposed transfer.
Ownership isn’t always as straightforward as one person’s name.
Properties can be owned by:
Ownership can also change over time through marriage, divorce, death, estate planning, previous sales, or other transfers.
If the ownership information is different from what you expected, that doesn’t automatically mean something is wrong. There may be a perfectly ordinary explanation.
But it is something worth understanding.
The title and closing process helps make sure the appropriate parties and documents are involved so ownership can transfer according to the transaction.
One of the most useful sections of a typical title insurance commitment is Schedule B, Part I.
This section identifies requirements that must be satisfied before the title insurer will issue the proposed policy.
Requirements vary from transaction to transaction.
They can involve matters such as:
Some requirements are completely routine.
For example, if the seller has a mortgage, that mortgage generally needs to be appropriately paid and released as part of transferring title.
Other requirements may involve an issue discovered during the title examination.
Seeing several requirements on a commitment can make first-time home buyers nervous.
Don’t assume every requirement represents a serious title problem.
A title commitment is designed to identify what must happen before the title policy can be issued as proposed. Many of those steps are normal components of a Minnesota home closing.
What matters is whether the appropriate parties can satisfy those requirements before or as part of closing.
If a requirement is unfamiliar, ask the title company what it means and whether anything is needed from you.
Requirements tell you what needs to happen.
Exceptions tell you something different.
Schedule B, Part II generally identifies matters that will be excluded or excepted from the proposed title insurance coverage.
That distinction is important.
An exception doesn’t automatically mean the property has defective title or that you shouldn’t purchase it.
Many properties have valid, long-standing matters affecting them.
Examples may include:
Imagine that an electric utility has a recorded easement running along one side of the property.
That easement may be entirely normal. But if you plan to build a detached garage in that exact location, it suddenly becomes much more relevant to you.
The question isn’t simply, “Does my title commitment contain exceptions?”
A more useful question is:
“Do any of these exceptions affect how I intend to use the property?”
Easements deserve special attention because they can affect how portions of the property are used.
An easement generally gives another party certain rights involving land owned by someone else.
Common examples can include:
An easement doesn’t necessarily make a property less desirable.
However, buyers should understand where significant easements are located and what rights they provide.
Minnesota home buyers frequently purchase properties where access and land-use issues can be particularly important.
Consider a rural home reached by a private road.
Who has the legal right to use that road?
Or consider a lake property advertised with water access.
Is the shoreline actually part of the property? Is access shared? Is there a recorded easement affecting it?
A property can look one way during a showing while the recorded legal rights tell a more detailed story.
Your Minnesota title commitment can help bring some of those recorded interests to your attention before closing.
A title search can reveal financial claims associated with real estate.
These might include:
Finding an existing mortgage on a property being sold is not unusual.
Many sellers still owe money on their homes.
As part of the closing process, the existing mortgage can generally be paid from the seller’s proceeds, with the appropriate payoff and release documentation handled according to the transaction requirements.
Other liens may require additional attention.
A lien doesn’t necessarily mean your purchase can’t close. It means the claim may need to be investigated and addressed before the title can be insured as proposed.
This is one of the reasons title research happens before closing rather than afterward.
Discovering an issue early gives the parties time to determine what needs to happen.
Finally, don’t make the mistake of thinking your real estate title commitment is your final title insurance policy.
They serve different purposes.
The commitment comes before closing and describes the conditions under which the insurer is prepared to issue coverage.
The actual title insurance policy is issued in connection with the completed transaction once the applicable requirements have been satisfied.
Home buyers should also understand that there are two different types of title insurance commonly discussed during a financed purchase.
Lender’s title insurance protects the mortgage lender’s insured financial interest.
Owner’s title insurance protects the homeowner’s insured ownership interest against covered title problems, subject to the policy’s terms, conditions, exclusions, and exceptions.
A lender requiring a lender’s policy does not mean the homeowner receives the same protection from that policy.
Understanding this distinction can help buyers make more informed decisions when reviewing title insurance information before their Minnesota home closing.
Ask.
A title commitment isn’t intended to be a test of how much real estate terminology you know.
You may encounter references to documents recorded decades ago or descriptions that make little sense without additional context.
Questions might include:
Title professionals can explain the title process and commitment information. Questions requiring a legal interpretation of property rights may be appropriate for a qualified real estate attorney.
The important thing is not to ignore something simply because the terminology is unfamiliar.
Review your title commitment when you receive it—not for the first time at closing.
Earlier review provides more time to ask questions and, when necessary, investigate something unexpected.
The final days before a home closing are already busy.
You may be coordinating:
Trying to understand a complicated title matter for the first time while managing all of those details creates unnecessary pressure.
Give yourself time to read the commitment before closing day.
A title company Minnesota home buyers work with has an important role between the accepted purchase agreement and completed closing.
The Minnesota Department of Commerce explains that title companies search public records to develop and document a property’s chain of ownership and can identify liens and encumbrances that may need to be addressed before a title policy is issued.
All Seasons Title provides title services for residential and commercial real estate transactions throughout Minnesota and works with home buyers, sellers, REALTORS®, attorneys, mortgage lenders, builders, developers, and investors.
Its services include title-related research, title insurance, escrow and closing coordination, and document-related services associated with real estate transactions.
That work helps transform the information uncovered during the title examination into the documents and requirements necessary for closing.
When your commitment arrives, use this quick checklist:
You don’t need to solve every issue yourself.
The checklist simply helps you identify where questions may be useful.
Title commitments aren’t written like magazine articles. The terminology can be technical because the document serves a specific insurance and real estate purpose.
That doesn’t mean home buyers should ignore it.
Focus on the practical information.
Who owns the property now?
What has to happen before the policy can be issued?
What recorded matters will remain as exceptions?
Do any of those matters affect how you intend to use the property?
Those questions can turn a complicated document into a much more understandable part of buying a home.
A title commitment Minnesota home buyers receive is much more useful when viewed as a preview of the title insurance coverage and a road map toward closing.
It tells you what the title examination found, identifies requirements that must be satisfied, and shows exceptions that may remain outside the proposed coverage.
Most importantly, it gives you an opportunity to understand those matters before you become the owner.
Buying a home comes with enough surprises. Taking a little time to review the title commitment can help make the legal side of your purchase more understandable and your Minnesota home closing more predictable.
All Seasons Title provides professional title services for residential and commercial real estate transactions throughout Minnesota.
All Seasons Title
100 Forest Avenue East
Mora, MN 55051
Phone: (320) 209-7145
Email: orders@allseasonstitle.com
Hours: Monday-Friday, 8:00 a.m.-5:00 p.m.