We thought it might be appropriate to review the standard ALTA Commitment and embark on a brief discussion of what it says and means. It would be helpful to have a copy of one of our Commitments at hand as you read through this.

An analysis of the general format of the ALTA Commitment clearly demonstrates that it is both a guide and an information source for your closing. Using it as your checklist will not only get your final policies issued more quickly but will also help you avoid having to endure our Final Department's letters and phone calls for additional information.

This section gives us an overview of the upcoming transaction.

• A-1 tells us who is to be insured and for what amount. It also tells us what endorsements are required by the lender. If any portion of this section is incorrect, notify us immediately and we will issue a corrective endorsement.
• A-2 tells us what type of ownership interest the Commitment is dealing with. In most cases this will read "Fee Simple," although it could for instance read "Leasehold" if that were appropriate to the transaction.
• A-3 tells us specifically who is in title to the subject premises as shown on the public records. If, for instance, the title is held by a husband and wife as shown on the public records but the husband has subsequently died, A-3 would still indicate both names. This section should correspond exactly to the grantees in the previous deed.
• A-4 shows the legal description of the property to be insured. It is mandatory that the legal specifically identifies this particular piece of property as distinct from all others. We therefore look for a specific lot number and subdivision recording information in the case of plotted land. In the case of a metes and bounds description, we look for a specific point of beginning and boundary lines that can be readily determined. The legal description insured does not include amount of acreage and does not typically include the tax identification number or address.

Section B-I (Requirements) is the key section in the issuance of the final policy because it provides you with a checklist for closing the transaction and obtaining your final policy. Section B-II (Exceptions) provides you with a preview of what exceptions will appear on the final policy unless paid, satisfied, resolved, or otherwise removed.

• B-I is the requirements section and arguably one of the most important sections of the Commitment. It provides a checklist for the closing that, when followed meticulously, allows the final policy to be issued. Many of the requirements are fairly standard, e.g., Buyers' and Sellers' Closing Certification. Occasionally something out of the ordinary will appear due to an anomaly in either the chain of title or in the nature of the transaction. It is important to note that these requirements are carefully thought out and tailored to your specific transaction, and the final policy cannot be issued until all requirements have been complied with.

• B-II is a section that is most often referred to as "Standard Exceptions."
  • B-II-1 states that the Commitment only covers matters up to the effective date of the Commitment (your bringdown date). Your bringdown date in the Final Certificate covering the time of recordation of the insured instrument removes this as an exception.
  • B-II-2a "Parties in Possession" is removed by answering "owner occupied" on the final certificate. If "tenant occupied" is checked, an exception will appear on the final policy as follows: "Rights of parties in possession of the subject premises by virtue of leases."
  • B-II-2b and 2c are commonly referred to as the survey exceptions and are removed by submission of either the Attorneys Certification with a Survey or the Buyers' and Sellers' Closing Certification or in the case of a refinance a Mortgagors' Closing Certification. The appropriate form to use is indicated in the Requirements section.
  • B-II-2d is referred to as the mechanics lien exception. This is typically removed by the Attorney's Certification that no construction is in progress or contemplated in the case of an existing structure. In the case of new construction, other requirements will be indicated. In both situations, the appropriate method for removal is specified in the Requirements Section (BI).
  • B-II-3 is a section that is most often referred to as "Special Exceptions." This section deals with the exceptions to fee simple title that are particular to the specific piece of property. Some of these exceptions may be removed in the course of the transaction (e.g., prior mortgages) and some will remain on the final policy (e.g., easements and protective covenants). The only rule of thumb we can provide for this section is that if you see an exception you don't understand, give us a call.