What to Know About Your Montana Title Commitment

Key Takeaways

• A Montana title commitment outlines the terms under which a title insurance company is prepared to issue a policy; it is not a guarantee that the title is free from defects or other matters impacting the property.

• Schedule A identifies key information about the policy and property interest to be insured, while  Schedule B lists the requirements that must be satisfied before the policy is issued and matters that will be excluded from coverage.

• An exception on a title commitment does not necessarily signal a problem. What matters is whether an exception affects your intended use, ownership, financing, or other expectations for the transaction.

• Some exceptions may warrant further review by a real estate attorney before moving forward.

What Is a Title Commitment?

If you're buying property in Montana, or helping a client through the process, you'll typically receive a Montana title commitment before closing. A title commitment sets out the terms and conditions under which the title insurance company is willing to issue a title insurance policy. The commitment reflects the title company’s review of the property’s title and identifies, among other things, the requirements that must be satisfied before the policy will be issued and the matters that will be excluded from coverage. While the commitment contains additional provisions and conditions, two of its most important components for a transaction are Schedule A and Schedule B. Understanding what each schedule contains makes the document easier to navigate and may flag potential issues. 

Understanding Schedule A

Schedule A provides key information about the proposed title insurance and interest in the property. Depending on the transaction, it generally identifies information such as who is being insured, the person or entity to whom the title is currently vested, the legal description of the property involved, and the amount of insurance.

A few things worth confirming here:

• Are names or entities in the commitment consistent with the other transaction documents? 

• Is the legal description of the property accurate?

• Does the proposed amount of insurance match the expected coverage?

If something looks incorrect or inconsistent in Schedule A, it's worth flagging early. These are foundational details, and a mismatch here can require clarification or correction before closing.

Understanding Schedule B

Schedule B is where many of the issues that may require closer attention appear. A standard ALTA commitment, this is split into two distinct parts.

Schedule B-I: Requirements

This section lists the requirements that must be satisfied, in other words, what has to happen, before the title company is obligated to issue the proposed policy. Depending on the transaction, these may include properly executing and recording documents, satisfying a lien, or other matters.

These requirements should not be confused with exceptions. Requirements generally identify matters that must be completed or resolved for the policy to be issued as described in the commitment.

Schedule B-II: Exceptions

This section lists matters that will be excluded from coverage, unless the title company agrees to remove or modify an exception.  Exceptions may include easements, restrictions, leases, rights-of-way, or other recorded documents impacting the property. 

Schedule B-II can raise questions for buyers and agents alike. Not every exception is cause for concern, but every exception deserves a closer look.

Title Commitment Exceptions to Look Out For

Some title commitment exceptions come up more often than others in Montana transactions. Here are a few worth understanding:

• Easements: rights held by another person or entity to use a portion of the property for a specific purpose.

• Access and rights-of-way issues: questions about whether the property has legal, usable access or recorded documents about how the property is accessed or granting access across the property to others.

• Covenants and restrictions: recorded provisions tied to the property that govern or restrict the use or development of the property.

• Mineral reservations: recorded documents that have separated mineral interests from ownership of the surface estate.

• Water-related matters: water rights are a common and often complex issue in Montana, although their relationship to a particular property requires analysis beyond the title commitment. 

• Boundary or survey matters: surveys, boundary agreements, or encroachments that may impact the property. 

• Liens: claims attached to the property that may need to be satisfied or addressed in the transaction.

• Unreleased interests: a prior mortgage or claim that was never formally cleared.

• Leases: existing tenants or leasehold interests that may affect the property

• Other unusual exceptions: anything that doesn't fit a standard category and warrants a closer read

A title commitment exception isn’t necessarily a problem. Montana title commitments almost always include some exceptions. The real question is whether a given exception affects your intended use of the property, ownership, financing, or expectations going forward.

When reviewing exceptions, consider questions such as: What does this document create? Does this exception affect the intended use of the property? Does it impact access, boundaries, or ownership interest? Is this something the title company can address, or is it worth a conversation with a real estate attorney?

Common Title Problems in Montana Real Estate

For real estate agents, most title issues in Montana aren't one-off surprises. Certain title issues recur across transactions, and recognizing them early helps you, your client, and your legal counsel keep the deal moving smoothly.

A few of the most common title problems include:

• Unreleased mortgages or liens that remain of record.

• Boundary, survey, and easement issues.

• Questions involving deeds, ownership interests, or the chain or title.

• Water and mineral rights issues, a distinctly Montana concern that often catches out-of-state buyers off guard.

How a title issue is resolved can vary depending on the nature of the issue. Some can be addressed through a payoff, a corrective document, or a change to the title commitment. Others may require more complex solutions, negotiations, further research, or, at times, legal proceedings. 

The earlier an issue is identified, the more time you have to fix it before it affects closing.

Staying Ahead of the Title Review Window

Most purchase agreements include a title review window, a contingency period during which the buyer can review the title commitment and flag concerns or issues. Staying on top of this deadline is an important part of the process. Buyers should take the time to review the commitment, pay attention to anything that seems unusual or unclear, and involve their agent or an attorney when additional guidance is needed.

Getting Help With Your Montana Title Commitment

A title commitment can contain documents with significant consequences. In general, we recommend having a real estate attorney review your title commitment, especially if anything on it is unfamiliar or unclear. If you're working with a real estate agent, it's worth remembering what their role is, and isn't. An agent should identify issues that may need additional attention and help ensure legal counsel gets involved at the right time.

If something on your Montana title commitment raises questions, KLH Advisors PLLC is happy to help you work through it. If you’d like to see how we can help, learn more about our real estate law services.

FAQs

• What's the difference between a title commitment and a title policy? 

  A title commitment is a document issued prior to closing outlining the terms under which the title company is prepared to offer insurance. A title policy is the actual insurance issued once the commitment's requirements are met.

• Does every exception on a title commitment mean there's a problem?

  No. Most title commitments include some exceptions. What matters is whether a specific exception affects your intended use, ownership, or financing.

• Who should review a title commitment?

  You, your agent, and your legal counsel should review your title commitment. An agent can help flag anything unusual, and a real estate attorney is positioned to interpret how an exception may affect the transaction, or how to address an issue made visible by the commitment.

• When should I get a real estate attorney involved?

  It's worth a conversation with a real estate attorney anytime a commitment includes unfamiliar easements, access issues, restrictive covenants, ownership issues, boundary questions, or any other matters that may impact the property. An attorney can review and interpret the underlying documents, and advise you on your options. 

Disclaimer: This content is provided for educational and informational purposes only and does not constitute legal advice. Viewing or accessing this content does not create an attorney-client relationship. Because every legal matter is different, you should consult with a qualified attorney regarding your specific circumstances.