What the Title Commitment Is Actually Telling You

The law assumes you know what it says, whether you read it or not.

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The title commitment arrives in your inbox as a PDF attachment. It’s 30 to 50 pages. The cover email says “please review and let us know if you have any questions.” Most buyers forward it to their attorney. That is the right call — but if you’ve never understood what you are looking at, you won’t know what your attorney finds, what needs to be cleared before closing, or what you are stuck with afterward.

The title commitment has three parts. Schedule A is the easy part. Schedule B-I is the action list. Schedule B-II is where problems live.

What Title Insurance Actually Covers

Title insurance insures against losses from defects in title that existed before the policy date but were unknown at closing. You pay once at closing. The coverage runs for as long as you own the property.

What it covers: errors in the public record, forged or defective deeds in the chain of title, undisclosed heirs with a claim to the property, certain liens and encumbrances not disclosed before closing.

What it does not cover: conditions that arise after closing, physical conditions of the property, zoning violations, building code issues, and — critically — anything specifically listed in Schedule B-II as an exception to coverage. Understanding this last point is the whole game.

Schedule A: What You’re Insuring

Schedule A is the foundation of the policy. It tells you the effective date of the commitment, the insurance amount, who is insured, how title is being vested (LLC, individual, trust, or tenancy in common), and a legal description of the property being insured.

Read the legal description carefully and compare it to the survey. Errors in legal descriptions are more common than they should be in commercial transactions and can affect what you actually own. If the description does not match the survey boundary, that discrepancy needs to be resolved before closing, not after.

The vesting instructions in Schedule A also matter from an ownership structure standpoint. How you take title has implications for estate planning, future financing, and ownership exit — not just for this transaction.

Schedule B-I: Requirements — The Action List

Schedule B-I lists conditions that must be satisfied before the title company will issue the policy. These are not optional suggestions. They are requirements. Common items include:

Payment and release of the seller’s existing mortgage. The seller’s lender must be paid off at closing and a release or payoff letter obtained. The title company coordinates this through the closing process, but it should be tracked.

Payment of property taxes through the closing date. Indiana property taxes are assessed and paid in arrears, which means the closing settlement statement will include a prorated credit from seller to buyer for taxes accrued but not yet due.

Release of judgment liens against the seller. Judgments in Indiana attach to real property in the county where they are docketed. Any judgment against the seller needs to be released before insurable title can pass. If there are judgments, expect them to be paid from closing proceeds.

Corporate or entity authority documents. If the seller is an LLC or corporation, the title company will require evidence that the person signing the deed is authorized to do so — typically an operating agreement excerpt or a corporate resolution.

Assign every B-I item to a responsible party and confirm they are on track during the pre-closing period. A missed requirement discovered the week of closing can delay or derail the deal.

Schedule B-II: Exceptions — What the Policy Won’t Cover

This is where you need to pay attention. Schedule B-II lists encumbrances, restrictions, easements, and other matters that are specifically excluded from coverage. If a loss arises from anything listed in Schedule B-II, the title company will not pay.

Utility and drainage easements. These are usually recorded in the chain of title and permit utility companies or adjacent landowners to cross the property for specified purposes. The question is where they run and what they prohibit. An easement across the rear 20 feet of a parking lot is different from one that bisects the buildable area.

Declarations of covenants and restrictions. Subdivision or development declarations recorded in the chain of title can restrict use, require architectural review board approval for improvements, prohibit certain signage, or impose maintenance obligations on the property owner. Pull the declaration and read it.

Mechanic’s liens. Under Indiana law, contractors, subcontractors, and material suppliers who have not been paid for work or materials have a lien right that can attach to the property — even if the property owner paid the general contractor. If the property has had recent construction or renovation, get a mechanic’s lien waiver and affidavit from the seller as part of closing.

Rights of tenants in possession. If tenants occupy the property, their leases are binding on the buyer. The title policy does not insure against claims arising from tenant rights. This is why reviewing leases and obtaining estoppel certificates is critical due diligence.

Survey exception. If a current survey has not been provided, the title company will typically include a broad exception for all matters a current, accurate survey would disclose. This exception can cover a significant range of problems — encroachments, boundary issues, unmarked easements. Provide a current survey and ask the title company to remove or narrow the survey exception.

Indiana-Specific Issues to Watch

Indiana’s mechanic’s lien statute is pro-claimant. Subcontractors and suppliers have lien rights even without direct contact with the owner, and the statutory timeframes for filing are generous enough that liens can appear after closing on a property where work was recently completed. In commercial transactions with recent construction, a mechanic’s lien search and pre-closing waivers are essential — not optional.

Access easements in Indiana must generally be recorded to be enforceable against future owners, but prescriptive easements — rights acquired by long, open, continuous use without permission — can arise by operation of law without any recorded instrument. If your property’s only vehicle access crosses another parcel, verify that the access right is recorded, that it is broad enough to cover your intended use, and that the easement is insured.

What to Actually Do With the Title Commitment

First: make sure one arrives early. Title commitments should be provided during the first half of the due diligence period. If you’re two weeks from closing and haven’t seen one, ask immediately.

Second: read Schedule B-I and confirm each item is assigned and being handled. Your closing attorney coordinates most of this, but you should know what’s on the list.

Third: read Schedule B-II and flag anything that affects use, access, development potential, or future financing. Ask your attorney to pull and review every recorded document referenced — easements, declarations, and restrictions are often incorporated by reference and need to be read separately.

Finally: ask about an extended coverage endorsement. For a modest additional premium, the title company can remove or narrow the survey exception and provide broader coverage against matters that a survey would disclose. In most commercial transactions, it is worth the cost.

Bottom Line

The title commitment is the most important disclosure in your transaction. Schedule A tells you what you’re insuring. Schedule B-I tells you what needs to be done before closing. Schedule B-II tells you what you’re permanently stuck with. Most buyer problems that surface post-closing trace back to something that was in the title commitment and nobody caught in time.

If you are buying commercial real estate, get the title commitment early, read Schedule B-II carefully, and get the underlying documents. The title policy insures everything except what’s listed in B-II. What’s in B-II is yours.

Mike Lang is a transactional lawyer who writes weekly for founders and family business owners navigating the deals that define their companies. Questions or topics you want covered? Email Mike