NCS News Brief: New 2016 ALTA Commitment for Title Insurance

Download MEMO below and New 2016 ALTA Commitment HERE.

As of October 15, 2017, all Chicago Title offices in the State of Illinois are now issuing the 2016 ALTA commitment form adopted by ALTA.  This is a nationwide ALTA standard.  In states where you have not already been seeing this form, you will in the near future.  The use of the commitment has not changed in any fundamental way, but does contain certain revisions and important clarification regarding the obligations of all parties. 

On the first page of the new commitment, you will see at the top of the form that a new NOTICE provision has been incorporated as part of the commitment.  This NOTICE provision sets forth in the first paragraph that this ALTA commitment is only an offer to issue a title insurance policy and nothing more.  In addition, all claims under the commitment must be based solely in contract law.  In other words, the commitment is really just the initial step in the formation of a binding contract, that being the title insurance policy.

The second paragraph of the NOTICE provision states that the “commitment is not an abstract of title, report of the condition of title, legal opinion, opinion of title, or other representation of the status of title.”  Essentially the title commitment is not to be seen as an informational product and not a reflection as to the state of title, but rather a limitation on the obligation of the Title Company to that of issuing a policy.

The next provision on the first page is the COMMITMENT TO ISSUE POLICY provision, which incorporates and clarifies some of the language on the first page of the 2006 commitment.  It is specifically, the Title Company’s commitment to issue the Policy subject to certain terms and provisions.

The commitment is effective as of the commitment date, subject to:

  1. A period of 180 days (generally 6 months) from the commitment date has not elapsed;
  2. A specified dollar amount has been entered in Schedule A of the commitment – an unknown amount is not permitted, but an actual estimated amount or minimum amount of $10,000 is acceptable and can be changed to a higher or lower amount later; and
  3. The proposed insured has been specifically identified – in other words, TBD or “To Come” can no longer be listed in place of the proposed insured. This identified party can be changed later upon request (i.e., as in the case of a newly created LLC).

Schedule A of the new commitment does not have any significant changes, but you will see a new SCHEDULE B, PART I, REQUIREMENTS section that will list some of the Title Company’s standard requirements and informational notes necessary for clearing title.  Schedule B, Part II, EXCEPTIONS section remains as the key section in the commitment which lists all of the specifically enumerated exceptions to the commitment and unless cleared will remain on the policy if issued.

Other changes with the 2016 ALTA commitment include nine (9) numbered subsections to the COMMITMENT CONDITIONS, including a new “Definitions” section, as well as more detailed language regarding the Title Company’s obligations, rights and limitation of liability for the issued commitment.

We encourage you to contact our office with any questions or concerns you may have.