The term sheet is signed. The appraisal is in. The closing date still slips.
Often the cause is a document most investors skim: the title commitment.
Title problems are not rare. In a study the American Land Title Association announced on March 31, 2026, nearly 60% of transactions needed three to five title issues cleared before closing. An earlier ALTA study, published May 9, 2024, found that title companies estimated 36% of their 2023 transactions fell into a more difficult category needing heavier cleanup work.
A 5-10 business day close only holds if title clears inside that window. Below is how to read the commitment, plus the four items that title-industry sources keep naming as the ones that push closings back.
What a Title Commitment Actually Says
A commitment is the title company's offer to insure, with conditions attached. It is not the policy.
It has three parts that matter to you:
| Section | What it tells you | What you do with it |
|---|---|---|
| Schedule A | Proposed insured, policy amount, current vested owner, legal description | Confirm the owner and legal description match your contract |
| Schedule B-I (Requirements) | What must happen before the policy issues | Assign every item an owner and a date |
| Schedule B-II (Exceptions) | What the policy will not cover | Flag anything that blocks your plan or your lender |
Old Republic Title's training handout explains it this way: requirements sit in Schedule B-I, and the exceptions that carve out recorded matters, unreleased encumbrances and taxes from coverage sit in Schedule B-II.
Order matters. A Florida real estate attorney writing in September 2026 advises reading Schedule B Part II first for exceptions, then Schedule B Part I for outstanding requirements. The same attorney warns that the commitment only reflects records up to its effective date. Anything recorded after that date can force an updated search.
Check the effective date before anything else.
Exception 1: The Mortgage That Was Paid but Never Released
This is the most common headache, and it hits investors hard.
A prior owner paid off a loan years ago. The lender took the money but never recorded a satisfaction. On paper, the mortgage is still live. Your lender will not fund behind it.
According to HousingWire's coverage of the 2026 ALTA study, published March 31, 2026, 59% of title professionals identified securing releases for prior mortgages as the most significant curative challenge. ALTA's own release from the same date reported that mortgage payoffs occur in more than 90% of transactions. That means nearly every deal carries this risk.
Where it bites investors:
- REO and auction purchases with a long chain of prior loans. See our guide to buying foreclosures at auction with hard money.
- Properties where the original lender has merged, sold its servicing or shut down.
- Wholesale deals where nobody pulled title until the end buyer's lender ordered it.
The fix: get the seller's payoff letters early. If an old lien shows on B-I, ask the title company straight away what proof it will accept to clear it. Then track it daily.
Exception 2: Judgments, Tax Liens and the Municipal Items Title Never Sees
Recorded liens against the seller or the property land on Schedule B-I as payoff requirements. Title Resources, writing in July 2026, lists unpaid liens and judgments among the most frequent problems found during a title search.
Two traps catch investors here.
Name-match judgments. A seller with a common name can pick up judgments that belong to someone else. These are usually curable with an identity affidavit, but only if someone starts the paperwork early.
Municipal items. Some of the costliest problems never reach the county records at all. A title-and-escrow guide from Rexera, published September 2026, explains that a municipal lien search finds obligations that never appear in public records, such as utility balances, code cases, open permits and special assessments. The same guide notes that some offices return a search within five business days, while others take up to twenty.
For flips, the open permit is the real cost. Florida law firm Kelley, Grant & Tanis, writing in October 2026, points out that most Florida title agents require a municipal lien search before issuing a policy. The firm also warns that title insurance does not cover permit status. An unfinished permit from a prior owner becomes your rehab problem and your budget line.
Order the municipal lien search the day the contract is signed.
Exception 3: Mechanic's Liens, and Why Starting Early Can Cost You the Loan
Mechanic's liens appear as a standard exception on most commitments. A legal glossary from Barnes Walker, published in May 2026, lists survey, taxes, parties in possession, and mechanic's liens as the standard pre-printed exceptions.
For rehab and ground-up loans, your lender needs that exception handled. That's because work started before the mortgage records can jump ahead of it. Stewart Title, writing in April 2026, notes that many states let the lien take priority from the date work visibly began, even if the claim is recorded later.
The fix can be slow. A 2024 analysis from law firm Sheehan Phinney notes that in some states, if work started before the mortgage records, it must stop for a set number of days before a clean policy can issue.
The rule for investors is simple: no demo, no dumpster and no material drops before closing unless your lender and the title company sign off in writing.
The issue does not end at closing. Sheehan Phinney also notes that in Massachusetts lenders typically run title at each advance to confirm continued priority. Clean lien waivers keep draws moving. Our construction draw inspection checklist covers what to have ready.
If you are building from the ground up, see our new construction loans.
Exception 4: Vesting and Authority — Who Can Actually Sign
Title has to confirm that the person signing the deed can legally convey the property, and that the person signing your loan can bind your entity.
On the seller's side, watch for estates, heirs, divorces and names that do not match the vesting deed. A Texas brokerage writing in July 2026 notes that unreleased liens, probate issues, or missing deed records can take two to three weeks to clear. An inherited property sold by "the family" before probate is finished is a common example.
On your side, the problem is usually your own LLC. A 2019 Lexology overview of commitments lists, among typical B-I requirements, evidence that the seller and buyer entities are in good standing. A Texas brokerage's guide on signing as an LLC, published October 2026, tells clients to settle signing authority during the contract phase, not at the closing table.
Have these in one folder before you sign a contract:
- Articles of organization
- Operating agreement, with all amendments
- Current certificate of good standing
- A resolution or certificate naming who signs
More on setting up the entity: LLC real estate loans.
The 48-Hour Read: What to Do When the Commitment Lands
- Check the effective date. If it is weeks old, ask for an update before closing.
- Read Schedule A. Match the vested owner, the legal description and your entity name to the contract.
- Read Schedule B-II. Flag every special exception. Ask what each one means for your plan.
- Read Schedule B-I. Write an owner and a target date next to every requirement.
- Order the municipal lien search if it is not already ordered.
- Send your entity package to title and your lender the same day.
- Freeze site work until the mortgage records, or until you have written approval to start.
Who Clears What
| Item | Usually cleared by | Early warning sign |
|---|---|---|
| Unreleased prior mortgage | Seller, title company | Old lender has merged or closed |
| Judgments and tax liens | Seller, title company | Common seller name; IRS or state lien |
| Open permits and code cases | Seller (by contract) or buyer | Prior unpermitted additions; vacant property |
| Mechanic's liens | Borrower, contractor, title | Any work started before recording |
| Vesting and authority | Seller's counsel, borrower | Estate sale; new or multi-member LLC |
Title is one of several things that can stall a deal after the term sheet. The others are covered in what stalls a deal after the term sheet. Our post on how long it takes to close a hard money loan breaks down where the days go.
What This Means for Your Timeline
We lend to investors in 45 states, excluding VT, UT, OR, SD and ND. We close in 5-10 business days, deal-dependent. A clean title file is a big part of hitting that window.
As of Funded Capital's rate sheet dated September 23, 2026, starting rates are Fix & Flip from 8.75%, Ground-Up from 8.75% and DSCR from 6.75%. These are starting points within a range, not a guarantee. Terms are subject to underwriting, appraisal, title, and insurance.
Read Schedule B the day it arrives. Give every item an owner. Your closing date depends on it.
Apply Now
Got a deal with a title file already open? Send it over. Apply now or call (305) 857-5620. You can also run your numbers first on our calculator or review our fix and flip loans.
Terms are subject to underwriting, appraisal, title, and insurance.
Frequently Asked Questions
What is the difference between Schedule B-I and Schedule B-II in a title commitment?
Why does an old, paid-off mortgage still show up on my title commitment?
Can I start demolition before my rehab or construction loan closes?
Does a title search find open permits and code violations?
What entity documents does the title company usually ask for when an LLC buys or borrows?
Written by
Luis Fajardo
Senior Sales Director, Funded Capital · Lending to real estate investors nationwide — $500M+ funded across 1,200+ deals.