What is a Texas Title Committment?

I have lived in states that have closed homes at attorneys offices and in states that close homes at title companies.  In Texas we close at Title companies and if you are getting a loan you will probably be required by your lender to have a title policy.  If you are paying cash you can choose whether to get a policy or not.  In my opinion you are taking a big risk that could come back to bite you later on by not acquiring a title policy but that will be your choice.  I have heard nightmare stories about people who have not bought policies and something going way back has come back to bite them.

Title insurance provides protection against title defects that were unknown to you at the time you purchased the policy.  Before writing a policy, a title company will check for defects in your title by examining public records, including deed, mortgages, wills, divorces, court judgments, tax records, liens, and encumbrances.  The company will then defend in court any claims to the property that are covered by your policy, subject to certain limitations.  If the company loses, it will pay you for covered losses up the amount of your policy.

In Texas, the two most common types of title policies are “mortgagee policies,” which protect lenders, and “owner policies,” which protect buyers.

Most lending institutions won’t loan you money to buy a house or other property unless you purchase a mortgagee policy.  This policy will repay the balance of the mortgage if a claim against your property voids your title.  Mortgagee policies remain in effect until the loan is repaid.  Most lenders will require you to buy a new mortgagee title policy if you refinance your home. 

Owner policies insure property owners against the specific kinds of claims listed in the policy.  Any owner policy remains in effect as long as you or your heirs own the property or are liable for any title warranties made when you sell the property.  You should keep your owner policy, even if you transfer your title or sell the property.

In Texas our title policy forms are standardized.  This mean the policy language is the same, regardless of the company. Here is a blank title policy from Alamo title so you can see the standardized language.  Pay special attention to “Schedule B” of the policy which explains any limitations, exclusions, exceptions and special conditions.  You may want to discuss these exceptions with an attorney before you close on a real estate deal.

The premium for a title policy is paid only once, at the closing of the sale.  The buyer and seller may negotiate who pays the premium.  Generally in Texas the title policy is paid by the seller for the new buyer but everything is negotiable so this is not always the case.  Lots of times when you are buying a new home the builder will not pay for the policy. 

Title insurance premium rates are set by the Texas Department of Insurance and are based on the property’s sale value using a sliding scale.  You can check the Texas Title Insurance  rates out here. 

If you would like more information about title policies.  I found an informative article about Texas Title Basics by Roberts & Roberts Attorneys at Law.  Texas Title policies are a good thing as they protect what is probably one of your biggest investments your home.

For all your Spring TX Real Estate needs, contact me today!
Marchel Peterson
Results Realty
Cell: 832-721-8332