A binder — also called a commitment for title insurance — is a preliminary report issued by a title company that outlines the conditions under which it will issue a title insurance policy. Think of it as a conditional promise: the title company is saying, "We will insure this property, provided these specific requirements are met and subject to these specific exceptions." The binder is one of the most important documents in the closing process because it reveals the current state of the property's title.
A binder typically contains three main sections. Schedule A identifies the proposed transaction — the current owner, the proposed buyer, the property's legal description, the proposed policy amount, and the type of policy (owner's and/or lender's). Schedule B-I lists the requirements that must be satisfied before the policy will be issued — such as paying off existing mortgages, obtaining lien releases, recording the new deed, and paying the title insurance premium. Schedule B-II lists exceptions — matters that will NOT be covered by the policy, such as existing easements, deed restrictions, and covenants.
Reviewing the binder carefully before closing is essential for all parties. Buyers should pay special attention to the Schedule B-II exceptions to understand what risks the title policy will not cover. For example, if the binder lists an exception for a utility easement running through the backyard, the buyer should understand where that easement is located and how it might affect future use of the property. An ALTA survey can help visualize these exceptions.
The binder is not the actual title insurance policy — it is the preliminary commitment that leads to the policy. The actual policy is issued after closing, once all Schedule B-I requirements have been met and the transaction has been recorded. If any requirement is not satisfied, the title company may decline to issue the policy, which could unwind the entire transaction. This is why addressing binder requirements early is critical.
At Beycome Title, we issue binders promptly after receiving a new order — typically within 3 to 5 business days — giving buyers, sellers, and their attorneys ample time to review all exceptions and requirements. Our title team explains each item in plain language and works proactively to resolve any issues. Get your free title quote and experience our transparent closing process.