How to Read a Title Report in Washington: Schedule B Is the Whole Document

What is a preliminary title commitment, and what is it not?

Washington's insurance code answers that directly. A preliminary report, commitment, or binder is a report furnished in connection with an application for title insurance, and it is an offer to issue a title policy subject to the stated exceptions. Then comes the sentence that surprises everyone: the report is not a representation as to the condition of the title to real property, but is a statement of terms and conditions upon which the issuer is willing to issue its title policy, if the offer is accepted. RCW 48.29.010(3)(f).

The commitment does not tell you your title is good. It tells you what the title company is willing to insure and what it refuses to insure.

It is also not an abstract of title. An abstract lists all recorded conveyances, instruments, or documents that impart constructive notice with respect to the chain of title. RCW 48.29.010(3)(a). A commitment is shorter and more selective: the items listed are the ones the title company's examination concluded affect its coverage, not every document of record touching your parcel. The same statute says expressly that preliminary reports are not abstracts and that the duties applicable to preparing an abstract do not apply to them.

That has a practical edge. Something can be recorded against your property, be fully enforceable against you, and still not appear in the commitment, because the title company did not consider it relevant to the risk it was underwriting.

Schedule A versus Schedule B: what each part tells you

The current standard form is the 2021 ALTA commitment, built from a Notice, a Commitment to Issue Policy, Commitment Conditions, Schedule A, Schedule B Part I, Schedule B Part II, and a counter-signature. All of those sections must be present for the commitment to be effective.

Schedule A is the identification page: the proposed amount of insurance, the name of the proposed insured, the estate or interest involved, who currently holds title, and the legal description. Read the legal description against what you believe you are buying, and the vesting against the name of the person signing your purchase agreement. Mismatches at this stage are common and fixable; after closing they are neither.

Schedule B, Part I, Requirements lists what must happen before a policy issues, typically an executed deed and mortgage, excise tax forms and payment, payoff information for mortgages being cleared, an owner's affidavit, entity authority documents, and payment of the premium.

Schedule B, Part II, Exceptions is the substance: the matters recorded against title that the title company determined affect its coverage, usually identified by recorded document number. The company ordinarily delivers copies of those instruments along with the commitment, plus the vesting deed and any available tax maps. Those attachments are the actual due diligence material, and the part most buyers never open.

The commitment also expires, commonly six months from its effective date if its conditions are not satisfied.

What does a title exception actually mean?

An exception is not an accusation that something is wrong. It is a statement that the insurer will not cover this item. Non-delinquent property taxes, utility easements, plat restrictions, and recorded covenants appear as exceptions in ordinary transactions where nothing has gone wrong.

The useful move is to separate two questions the commitment deliberately blurs.

Does this item cloud ownership? That is a title question, and the one title insurance is designed to answer.

Does this item prevent what I intend to do with the land? That is a use question, and the policy is largely indifferent to it.

A recorded covenant limiting the parcel to one single-family residence is a perfectly ordinary exception. It is not a title defect. It is also fatal to a buyer who bought the lot to build a duplex, and the title company has no obligation to mention that, because the restriction is disclosed and excepted exactly as the form contemplates.

Recorded easements work the same way. An easement appearing as an exception tells you a document exists. It does not tell you where on your land it runs, how wide it is, who may use it, or who maintains it. Those answers live in the recorded instrument and sometimes only in a survey, and the difference can be the difference between a driveway and a lawsuit. I wrote separately about easements and boundary disputes, because scope is where those matters are won.

What are the standard exceptions, and why do they matter?

Exceptions come in two kinds. Special exceptions are specific to your property, appear in the public records, and carry a recording number. Standard exceptions are specific to nothing; they appear verbatim in every commitment and describe risks no record search can find.

In Washington the four standard exceptions commonly seen are:

rights or claims of parties in possession not shown by the public records;

encroachments, encumbrances, and other matters adversely affecting title that would be disclosed by an accurate survey of the land;

easements, prescriptive rights, and rights-of-way not shown by the public records; and

mechanics' lien claims not shown by the public records.

Read those four together and you have an honest list of what a standard policy leaves on your side of the line. That list reaches an unrecorded driveway easement a neighbor has used for twenty years, a fence eight feet onto your lot, a contractor who has not been paid, and a tenant nobody mentioned.

A policy leaving those in place is standard coverage. An extended coverage policy insures against them by deletion: the exceptions are raised in the commitment and then intentionally removed from the final policy. Title companies generally underwrite that by requiring a seller's affidavit of title and a current ALTA/NSPS Land Title Survey, and they charge a surcharge. Whether to buy extended coverage, and who pays, is negotiable, and most residential buyers never learn it was available.

What does title insurance actually insure?

A title policy is a contract of indemnity, paid for with a single premium, and its coverage is retrospective rather than prospective. It insures against things that already happened before the Date of Policy, which is when the insured acquired its interest, and under current forms that date is generally the outside limit of coverage. The core coverages carried into the 2021 forms protect against title vesting other than as stated in Schedule A, any defect, lien, or encumbrance on title, unmarketability of title, and lack of a right of access to and from the land.

What it does not insure matters just as much. Exclusion 1.a. of the current forms excludes coverage for any law or governmental regulation that regulates, restricts, or prohibits the use and occupancy of the land, the character, dimensions, or location of any improvement, a subdivision of the land, or environmental remediation or protection. Zoning, building codes, setbacks, short-plat eligibility, critical-areas rules, and septic permitting are, with narrow exceptions, outside the policy. The forms reinforce this by defining Public Records as the recording system that imparts constructive notice, expressly excluding building, zoning, planning, licensing, health, public safety, and environmental protection records.

So the policy will not tell you whether you can build, or whether the existing garage was permitted. And a matter listed as an exception in Schedule B, Part II is excluded from the policy's coverage, which is a different thing from the requirements in Part I.

Owner's policy or lender's policy?

Two policies normally issue in a financed purchase, and buyers routinely confuse them. Both cover proper vesting, absence of title defects, marketability, and access, and the lender's policy adds coverage specific to the mortgage, including the validity and priority of the lien.

But the insured under a lender's policy is the lender. An insured owner can recover its actual monetary loss when a covered matter causes damage; an insured lender generally accrues a right of recovery only after declaring a default, accelerating the debt, and acquiring title, which makes a loan policy claim much less likely to be paid. Paying for the lender's policy at closing buys you nothing. If you want coverage for yourself, you buy an owner's policy.

Where this goes wrong

The buyer who never opens Schedule B. This is the ordinary case and the costly one. The commitment arrives, the objection window runs, closing happens. Two years later the owner learns the recorded access easement serving the parcel crosses land the seller never owned, or that the covenant at exception 7 prohibits the use the property was bought for. Neither is a title defect, and neither is covered.

Treating an exception as a description. An exception identifies a document. Where the easement lies, how wide it is, and whether the gravel road you drove in on is even inside it are questions a legal description and a survey answer.

Buying standard coverage without a survey. The survey exception and the unrecorded-easement exception are precisely the two problems that become neighbor litigation. Declining both the survey and the extended coverage leaves no one carrying that risk except you.

Assuming silence means safety. A commitment is selective by design. An item can be absent from Schedule B and still bind you.

What a lawyer does here that you cannot do yourself

Reading a title report well is less about insurance law than about reading the underlying recorded documents against a specific plan for the property. The commitment flags that a document exists; the work is pulling it, reading its legal description, locating it on the ground, and deciding whether it matters to you.

In practice that means separating boilerplate exceptions from substantive ones, reading the easement and covenant instruments rather than their one-line summaries, confirming the insured legal description matches the parcel and that access to a public road is actually insured, deciding whether extended coverage and a survey are worth their cost, and drafting a title objection that preserves your position before the contractual window closes. It also means saying when an exception is a genuine problem and when it is the ordinary furniture of a recorded chain of title, because treating every exception as an emergency is its own expensive mistake.

That is the work I do. I am an independent attorney in downtown Spokane, and real estate is the largest part of my practice. Title and survey review is routine in it, both for parties in a pending transaction and for owners who found the problem afterward. I also handle easement and access disputes, boundary and encroachment matters, and quiet title actions in superior courts across Washington, most often in Spokane, Klickitat, Kittitas, Benton, Franklin and Yakima counties. Instruments for property in this county are recorded with the Spokane County Auditor.

If the objection deadline is close

If you are holding a commitment you do not understand and a contract deadline is running, that is a short conversation worth having now. I offer a free initial consultation by appointment at my downtown Spokane office.

Disclaimer

This article is general information about Washington law, not legal advice, and reading it does not create an attorney-client relationship. Law changes, and how it applies depends on facts specific to your situation. If you have a question about your own circumstances, speak with a lawyer.