Frequently Asked Title Questions & Resources

What Is Title Insurance?

Title insurance is protection against loss arising from problems connected to the PAST title to your property. Before you purchased your home, it may have gone through several ownership changes, and the land on which it stands went through many more. There may be a weak link at any point in that chain that could emerge to cause trouble. For example, someone along the way may have forged a signature in transferring the title. Or there may be unpaid real estate taxes or other liens. Title insurance covers the insured party for any claims and legal fees that arise out of such problems.

Am I Required to Purchase Title Insurance?
If you need a mortgage, all mortgage lenders require such protection for an amount equal to the loan. It lasts until the loan is repaid. As with mortgage insurance, it protects the lender, but you pay the premium, which is a single payment made upfront.
Why Do I Need Title Insurance?
The required insurance protects the lender up to the mortgage amount, but it doesn’t protect your equity in the property. For that, you need an owner’s title policy for the full value of the home. In many areas, sellers pay for owner policies as part of their obligation to deliver good title to the buyer. In other areas, borrowers must buy it as an add-on to the lender policy. It is advisable to do this because the additional cost above the cost of the lender policy is relatively small.
Doesn't the Lender Policy Indirectly Protect Me?
No. Title policies are indemnity policies. They protect against the loss, and a lender policy would only cover the lender’s loss. Of course, the insurer issued a policy to the lender indicating that the title has been searched and nothing amiss has been found, but no search is 100% dependable. That is why an insurance policy is issued.
When Does Title Insurance Protection Begin and End?
With the exception noted later, title insurance only protects against losses arising from events that occurred before the date of the policy. Coverage ends on the day the policy is issued and extends backward in time for an indefinite period. This is in marked contrast to property or life insurance, which protects against losses resulting from events after the policy is issued for a specified period into the future.
For How Long Is the Property Owner Covered?
Indefinitely. The owner’s protection lasts as long as the owner or any heirs have an interest in or any obligation concerning the property. When they sell, however, the lender will require the purchaser to obtain a new policy. That protects the lender against any liens or other claims against the property that may have arisen since the date of the previous policy. For example, if the contractor you failed to pay for remodeling your kitchen places a lien on your home, you are not protected by your title policy; the lien was placed after the date of the policy. You will probably be required to get the lien removed before you can sell the property. But in the event, the lien hasn’t been removed and a search has failed to uncover it, a new policy will protect the new lender.
Will Title Insurance Protect Me Against False Claims That Arose After I Purchased the Property?
The standard policy does not, which is a weakness. Many events beyond your control can reduce the value of your house after you buy it. Identity theft can result in a new mortgage you know nothing about. A neighbor could build on your land without your knowledge, thereby adversely possessing and possibly eventually taking your land. Or you may suddenly be told that you must correct a zoning violation of the previous owner.
Why Do I Need to Purchase a New Policy When I Refinance?

You don’t need a new owner’s policy, but the lender will require you to purchase a new lender policy. Even if you refinance with the same lender, the existing lender’s policy terminates when you pay off the mortgage. Furthermore, the lender is concerned about title issues that may have arisen since you purchased the property, such as the lien mentioned in an earlier question. A new title search will uncover the lien, and you will have to pay it off as a condition for the refinance. In Texas, all title insurance premiums are regulated by the State Board of Insurance of the State of Texas. A title insurance company can only charge the promulgated rate, which is based on:

  • 1. The sales price of the property.
  • 2. The loan amount (in the case of a refinance).
  • 3. The value of the land + the cost of immediately contemplated improvements (in the case of an interim construction loan).
  • 4. Rate Rules allow for discounts under certain conditions.
What's Different About Title Insurance In Texas?

Like all lines of insurance, the title is highly regulated by the government. In Texas, the Department of Insurance is the state agency charged with oversight of title insurance. In fact, Texas has the most tightly regulated title insurance industry in the United States. Both rates and forms are standardized, meaning the policy’s language is the same, regardless of the title company (also known as an underwriter) issuing the policy, and the premium amount charged for the policy is the same no matter which title insurance agent you choose.

When you purchase a title policy in Texas, you should know that the Texas Department of Insurance sets the rates, terms, and coverages. All title professionals are legally bound to those requirements. Because title professionals can’t compete on price or product, they must compete on the quality of service they provide.

May I Choose The Title Agent Or The Insurer That Underwrites My Title Policy?
Yes. In Texas, the premium rates for title insurance are set by the Texas Department of Insurance commissioner. Because these rates are the same for all policies, agents do not compete on price, but on service.
Who Is Responsible For Payment Of The Owner's Policy?

Although negotiable, it is customary for the property seller to pay for the owner’s policy.

What Items Are Included In The Title Insurance Premium Rate In Texas?
Texas’ rates are considered to be “all-inclusive” premium rates. This means that in addition to the risk covered by the title insurance company, the rates also include the title search and examination and closing of the title insurance transaction.
What Is The Average Fee For The Search, Exam, And Title Insurance Policy In Texas?
The Texas Department of Insurance commissioner establishes premium rates through a public hearing process, and all title agents and companies are required to charge the same rate. The rate is based on the amount of coverage provided by the policy. For example, on a policy coverage of $150,000, the rate is $1,096. Additionally, discounts and other savings may be available in certain circumstances, such as simultaneous issuance of both owner’s and loan policies, trade-in of previously issued policies (applicable in certain construction situations), and refinancing prior insured liens, etc.
Who May Conduct A Real Estate Closing In Texas?
There is a legal distinction between closing the real estate transaction and closing the title insurance transaction in Texas. For the real estate closing, either the parties to the transaction or their attorneys are required. However, in order to complete the transaction for title insurance, an attorney or a licensed escrow officer of a licensed title agent or company is authorized.

When a title insurance policy is issued, it is customary for a licensed escrow officer to close the real estate transaction concurrently with the closing of the title transaction.

Is There A Mortgage, Transfer, Or Other Tax Imposed On Texas Real Estate Transactions?
Is The Cost Of Added Endorsements Included In The Premium?
No. You may have the option to purchase additional endorsements with your policy.
Where Can I Find Additional Information About The Regulation Of Title Insurance In Texas?
The Texas Department of Insurance publishes helpful consumer information regarding all licensed agents and title companies (also known as underwriters) through its website. Information regarding licensed escrow officers, past audits, enforcement actions, fines, and other actions that may help evaluate a company may be found there. In Texas, title companies and agents are licensed by the county; therefore, an agent may not perform title work or issue a title policy in a county in which the agent is not licensed.

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