Here's a scene that plays out more often than it should. You've got a clean-looking single-family under contract. The house checked out on the walkthrough. The numbers work. You're close to closing. Then the title commitment comes back with a docketed judgment — a court-recorded debt — against the seller that quietly attached to the property. The seller didn't volunteer it. It wasn't in the photos, the disclosure, or the walkthrough. It was sitting in one document, on one schedule, that you'd planned to skim.
That judgment doesn't go away because the house is changing hands. A recorded judgment, once attached, follows the property — not just the person. If it doesn't surface before you fund, you have two outcomes, both bad: take title subject to someone else's debt, or find out months later at your own resale closing, when your buyer's title examiner flags the cloud and your buyer walks.
The deal gets saved when someone actually reads the commitment. That's the whole article. Here's how that document works, what it's trying to tell you, and how to read it so you own the house — not the house plus someone else's debt.
What a title commitment actually is
A title commitment — also called a title binder or a preliminary report — is the title company's written promise to insure the property, on conditions. It's the output of a title search: someone pulls the recorded history of the property and the parties, then tells you, in writing, two things.
First, what has to happen before they'll issue the policy. Second, what they will not cover even after they do. Those two lists are Schedule B, and they are the most important pages in the file. Most investors flip past them to the price and the closing date. The price and the closing date won't bankrupt you. Schedule B is where the money is made or lost.
You'll get the commitment from your settlement agent or title company once you're under contract. Order it early. The fastest way to blow a close is to discover a title defect — a problem clouding ownership — three days before funding, when there's no time left to clear it.
Schedule B-I: the requirements (what must be cleared first)
Schedule B-I is the "Requirements" section. It's the to-do list that has to be satisfied before the title company will insure the property — and before a careful lender will fund.
Typical requirements include things like: the seller's existing deed of trust must be paid off and released; outstanding real estate taxes must be brought current; a recorded judgment must be satisfied or bonded; a deed conveying the property to you must be properly executed and recorded; if the seller is an entity or an estate, proof that the signer has authority to sign.
Read each line as a question: *Is this actually going to be done by the closing table, and who is responsible for doing it?* A requirement that says "release of the deed of trust recorded in favor of [a prior lender]" means there is an old loan on the property. Someone has to produce a payoff figure and a recorded release. If nobody lines that up, you can close with that old lien still legally on your property.
This is the single most common title trap for flippers: a prior deed of trust — the document that secures a mortgage in Virginia — that was paid off in real life but was never formally released in the land records. On paper, the lien still exists. The fix is routine, but only if you catch it in B-I and chase the release before you fund.
Schedule B-II: the exceptions (what the policy will not cover)
Schedule B-II is the "Exceptions" section, and this is the one investors misread most. These are the things the title policy specifically does not insure against. Whatever is listed here, you are on your own for.
Some exceptions are boilerplate — standard language that appears on nearly every commitment. Others are specific to your property and are genuine red flags. Common ones that matter to a flipper:
- Recorded easements. A utility, a neighbor, or the locality has a recorded right to use part of your land — a power-line corridor, a shared driveway, a drainage easement. If you planned to add square footage or a garage where that easement runs, your plan just shrank.
- Encroachments and boundary issues. A fence, a shed, or part of a structure sits over a property line — yours over the neighbor's, or theirs over yours. This is the kind of thing a survey catches and a desk review misses.
- HOA or condo assessment liens. Unpaid association dues can become a recorded lien against the unit. In a condo or an HOA neighborhood, ask specifically whether assessments are current.
- Rights of parties in possession. A tenant or occupant may have rights that aren't recorded anywhere. If you're buying occupied, this matters.
- Anything "not shown by the public records." This is the catch-all reminding you the policy only insures what's recorded.
The point of reading B-II isn't to panic at every line. It's to treat each property-specific exception as a question you resolve *before* you buy: What is this easement, and does it touch my renovation? Is this encroachment a problem, or do I need a survey to find out? An exception you understand is fine. An exception you ignored is the one that surfaces at your resale.
The debts that can survive a sale — and how each one bites a flipper
The reason all of this matters is simple. A property can look completely clean and still carry a recorded claim from someone else. Here's what can survive a sale and how each one lands on you:
- An old deed of trust never released. Paid off years ago, still on record. Until it's released, there's a lien ahead of yours, and your buyer's title company will refuse to insure over it.
- A docketed judgment against the seller. A creditor won a court judgment and recorded it; in Virginia a docketed judgment generally attaches to real estate the debtor owns in that jurisdiction. Buy without clearing it and the judgment can follow the property.
- Unpaid real estate taxes. Tax liens generally sit ahead of almost everything. Unpaid back taxes become the new owner's headache fast.
- A mechanic's lien from a prior rehab. A mechanic's lien — an unpaid-contractor claim on the property — works on a strict clock in Virginia. The real risk to you is an already-recorded mechanic's lien showing on the commitment, or recent unpaid work that's still inside its filing window and could be perfected. That's exactly why the commitment and the property's recent work history matter — confirm the specifics with your settlement agent. This one stings flippers because it comes out of exactly the kind of work you do every day.
- Recorded easements, encroachments, and boundary defects. Covered above — they don't expire because the deed changed hands.
- HOA or condo assessment liens. The prior owner's unpaid dues, now recorded against the unit.
- Estate, heirship, and chain-of-title gaps. A missing signature, an heir who never signed off, a probate that was never completed. A break anywhere in the chain of recorded ownership means the person selling may not have clean authority to sell — and that defect rides along until someone fixes it.
The pattern is the same in each case: you take title subject to a recorded claim, or it surfaces at *your* closing and kills your sale. The title commitment is where you see them coming.
The owner's policy versus the lender's policy
Here's the distinction that costs investors the most money, and it's small enough that people skip it to save a few hundred dollars.
There are two title policies. The lender's policy (sometimes called the loan policy) protects the lender's lien, up to the loan amount, and only the lender. The owner's policy protects *your* equity in the property as the buyer. They are not the same coverage, and one does not stand in for the other.
If a covered title defect surfaces after closing and you only bought the lender's policy, the title company defends and pays the lender. You — the owner whose money is actually in the deal — get nothing. You're left fighting the defect on your own dime to protect equity that isn't insured.
The owner's policy is a one-time premium paid at closing for coverage that lasts as long as you own the property. Relative to your purchase price and your equity, it's small. Relative to clearing a title defect through an attorney after the fact, it's a rounding error. Buy the owner's policy. The investors who skip it are betting their entire equity to save the cost of a nice dinner, and that's a bet that only ever pays off until the one time it doesn't.
A few Virginia and industry specifics worth knowing
A handful of details come up enough in Central Virginia closings to be worth naming. Confirm the particulars with your settlement attorney or title company — every file is its own animal — but in general:
- Title insurance here is typically written on the 2021 ALTA owner's and loan policy forms — the standard industry policy forms most insurers use.
- A Closing Protection Letter (CPL) is a separate assurance that protects you against fraud or error by the settlement agent who handles the money at closing. Ask whether one is being issued.
- Endorsements exist to cover specific risks an exception might otherwise carve out — survey coverage, access, and others. If a B-II exception worries you, ask your title company whether an endorsement can address it.
You don't need to memorize form numbers. You need to know these tools exist so you can ask your settlement agent the right questions instead of nodding along.
What a careful lender catches before you wire
We require a lender's title policy on every loan we fund, and we read the title commitment line by line before we wire — Schedule B-I requirements *and* Schedule B-II exceptions, every line. That isn't about protecting our lien. It's about surfacing problems before you're exposed, not after.
When we read your commitment and flag an unreleased deed of trust, a judgment, or an easement running through your build plan, that conversation happens while you can still do something about it — before you've wired your money and signed for the loan. Catching the cloud at the commitment stage costs nothing. Catching it at your resale closing costs you the deal.
How to protect yourself
You don't need a law degree. You need a short discipline you run on every deal:
- Order the commitment early — the day you're under contract, not the week of closing.
- Actually read Schedule B-I and B-II. B-I is what must be cleared before closing; B-II is what the policy won't cover. Read every line.
- Make sure every lien and old deed of trust has a payoff and a release lined up for the closing table. "It was paid off years ago" is not the same as "it's released."
- Buy the owner's policy. The lender's policy protects the lender. Yours protects you.
- Treat every property-specific easement or exception as a question to resolve before you buy, not a line to skim past.
- Use a competent settlement agent or real estate attorney. This is the cheapest place in the whole deal to have a sharp professional, and the most expensive place to cut a corner.
The cheapest title problem is the one you catch before you wire. Everything in that document is trying to tell you something. Read it.
Got a deal?
If you're buying, renovating, and reselling investment property in Central Virginia and you want a lender who reads the title commitment as carefully as you'd want it read, tell us about your deal on Discuss My Deal. A real person will get back to you on it.