Texas Title policy

Title insurance provides protection against title defects that were unknown at the time the policy was purchased.  Before writing a policy, a title company will check for defects in the 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 the policy, subject to certain limitations.  If the company loses, it will pay for covered losses up to the amount of the 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 money to buy a house or other property unless the buyer purchases a mortgagee policy.  This policy will repay the balance of the mortgage if a claim against the property voids the title.  Mortgagee policies remain in effect until the loan is repaid.  Most lenders will require a buyer to buy a new mortgagee title policy if they refinance the 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 the owner or the owners heirs own the property or are liable for any title warranties made when the property is sold.  Seller's should keep their owner policy, even if they transfer the 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. Pay special attention to “Schedule B” of the policy which explains any limitations, exclusions, exceptions and special.  Schedules C shows the requirements that must be satisfied for the title policy to be issued. It may require information on marital status of one of the parties; if there have been any probates or bankruptcies they will be here also.  This is also where you will find the descriptions of mortgages.  If there are any mechanics liens, tax liens, judgments (you get the idea) this is where they will be found.  This is the part of the title commitment that the seller must resolve before the closing occurs.

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.  New home builders will typically NOT pay for the title policy and it becomes a buyer’s expense.

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 here.

Title and Escrow

 

© 2017 Houston Association of Realtors All rights reserved. Information deemed to be reliable but not guaranteed. The data relating to real estate for sale on this website comes in part from the Broker Reciprocity Program. Real estate listings held by brokerage firms other than Results Realty are marked with the BR logo and detailed information about them includes the name of the listing brokers. Listing broker has attempted to offer accurate data, but buyers are advised to confirm all items. Information last updated on 2017-05-25.

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