Navigating a title commitment in Texas is one of the most critical steps in securing a residential property. Acting as a blueprint of the transaction, the commitment reveals who truly owns the home, outstanding debts tied to the property, and specific usage restrictions. Understanding its core schedules—especially Schedule B exceptions and Schedule C requirements—empowers buyers and attorneys to spot major legal obstacles early.
A title commitment is not a title policy; rather, it is a preliminary offer from the title company to issue a title insurance policy under specific terms. In Texas, commitments follow promulgated forms regulated by the Texas Department of Insurance. To protect a real estate investment, legal professionals and buyers must carefully scrutinize these four distinct sections:
- Schedule A (The Deal Details): Outlines the proposed insured, sales price, and the current legal owner of record.
- Schedule B (The Exceptions): Lists the restrictions, easements, and items the title policy will not cover.
- Schedule C (The Requirements): Acts as the “to-do” list of issues the title company must clear before closing.
- Schedule D (The Parties): Discloses the title insurance underwriters and the distribution of the premium.
Ignoring or misinterpreting the language within this document can lead to severe legal and financial consequences. Below are the top title commitment red flags to watch for when purchasing residential real estate in Texas.
- Discrepancies in Schedule A (Ownership and Legal Description)
The foundational step in any residential real estate deal is ensuring that the people selling the property have the legal right to do so.
- Vesting Issues: If the name on Schedule A under “who title is vested in” does not perfectly match the seller on the contract, you may not have a binding agreement. This often happens if the property was recently inherited or if there has been an unrecorded death or divorce.
- Mismatched Legal Descriptions: Always compare the legal description on the commitment to the purchase and sale agreement. Missing a lot number or block can mean you are buying less property than you agreed to purchase.
- Burdensome Exceptions in Schedule B
Schedule B details conditions, easements, and restrictions that remain attached to the property. While standard, harmless exceptions exist (like typical utility easements), you should look out for:
- The Survey Exception (Shortages in Area): A standard title policy typically includes an exception for boundary conflicts, shortages in area, or encroachments. Savvy buyers should request “survey deletion” (often called Area and Boundary Coverage) to insure against these risks. This requires providing the title company with an acceptable, up-to-date survey.
- Restrictive Covenants and CC&Rs: If the property is governed by a Homeowners’ Association (HOA) or Property Owners’ Association (POA), Schedule B will list the governing documents. Read these thoroughly for restrictions that could interfere with your plans—such as rules against short-term rentals, restrictions on outbuildings, or architectural approval requirements.
- Mineral Reservations: It is incredibly common in Texas for previous owners to have reserved the oil, gas, and mineral rights beneath the property. While you might not care about drilling, some mineral reservations grant the owner of those rights the authority to drill from or use the surface of your land.
- Unresolved Obstacles in Schedule C
Schedule C represents the checklist of items that must be resolved or “cured” before the title company issues a policy. An extensive or alarming list of liens is a primary red flag. Watch out for:
- Unreleased Mortgages: If the current seller paid off a previous mortgage, but the title company cannot locate a recorded release, the old mortgage still technically clouds the title. The title company will require a Release of Lien from the previous lender.
- Judgment Liens and Tax Liens: Any outstanding debts attached to the seller—such as Abstracts of Judgment, federal tax liens, or child support liens—must be paid off at or before closing. If the seller has massive judgments that exceed their equity in the home, a short sale may be triggered, which can drastically delay or derail closing.
- Lis Pendens (Notices of Pending Action): If you see a lis pendens, it means there is an active, unresolved lawsuit involving the property or the owner’s title to it. This is a massive red flag that can halt a transaction dead in its tracks.
- Mechanics’ and Materialmen’s Liens
In Texas, contractors, laborers, or material suppliers who perform work on a residential home have the right to file a lien against the property if they are not paid. If a seller recently undertook extensive renovations or a major addition, check Schedule C closely for these liens. Unpaid mechanic’s liens must be bonded around or paid off at closing so the new buyer doesn’t inherit the contractor’s debt.
What Should You Do When You See Red Flags?
Time is of the essence when addressing title defects in Texas. Under the standard Texas Real Estate Commission (TREC) residential sales contract, buyers usually have a designated timeframe to object to title commitments and surveys in writing. Once an objection is made, the seller generally has 15 days to cure the defect.
If you encounter confusing exceptions in Schedule B, complicated mineral reservations, or a Schedule C filled with judgment liens, do not attempt to navigate the legal complexities alone. Consulting with a licensed Texas real estate attorney early on ensures your earnest money remains protected and any title defects are properly cleared.