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what is title insurance?
Title insurance protects against financial loss caused by defects in the property title. title insurance companies defend against lawsuits attacking the title or, in the case of a covered loss, reimburse the insured up to the policy limit.
What type of defects does title insurance protect you from?
protects you against loss due to defects in title, liens or other similar matters. Title insurance protects you from property claims by other parties. It protects you against losses from problems that arose before you purchased the property. The title company will defend you in court if there is a claim against your property and will pay for covered losses.
is it mandatory?
texas does not require title insurance. The lender will require you to purchase a title insurance loan policy to protect their interests.
how long does it last?
A loan policy lasts until the loan is paid off. A homeowners policy lasts as long as you or your heirs own the land. it may also provide guarantor coverage after you no longer own the property, depending on the provisions of your policy. Policy language has changed over time, so read the continuation coverage provisions in your policy carefully to determine the terms of coverage.
do you have to renew your policy?
You pay for title insurance only once, when you buy the policy, unless you later decide to add more coverage. keep your policy, even if you transfer your title or sell the property. coverage lasts as long as you or your heirs own the land, and can last forever for any title collateral made when you sell the property.
what happens if i transfer my title to my business, my trust, my llc or my children?
Depending on the type of policy you have, it may not provide coverage when you transfer your title to your company or someone else who is considered uninsured. To determine what type of coverage you have, read your policy, check with your title agent, or speak with an attorney.
Is it like home insurance?
no, title insurance is different from other types of insurance. does not insure against fire, flood, theft or any other type of property damage or loss. protects against losses from property problems that arose before you purchased the property, but were not known at the time you purchased the property. does not guarantee that you will be able to sell your property or borrow money on it.
what is the difference between a title commitment and a title policy?
title commit comes before closing; the title policy is issued after closing. The commitment says that a title company is willing to issue title insurance under certain conditions and if the seller fixes certain problems. the policy provides coverage for the property.
what does the title commit do?
the title commitment lists the possible problems, exclusions or exceptions. alerts the buyer to problems that exist and could cause problems in the future. does not guarantee that there will be no current or future problems. you should discuss how to fix possible problems with the title agent. you may want to review potential issues with an attorney.
Please read the title commitment carefully, as these items may become exclusions or exceptions under Schedule B of your policy. exceptions and exclusions are items not covered by the policy.
what types of policies are there?
There are two types of policies, homeowners policies and loan policies.
- owner’s policy
owner’s policy protects you against losses from property problems that arose before you purchased the property, but were not known at the time you bought the property. for example, he could lose title to his property due to fraud, errors or omissions in a previous deed, or forgery of a previous deed. The owner’s policy protects the buyer from the covered risks listed in the policy.
There are different types of policies for commercial and residential properties. the t-1 is commonly used for commercial properties and undeveloped land. the t-1r is for most residential properties.
For a complete list of perils covered under the t-1 policy, please refer to the covered perils section of the homeowner’s policy.
For a complete list of perils covered under the t-1r policy, see the Covered Title Perils section of the Residential Owner’s Policy.
- loan policy
the loan policy is issued to the mortgage lender. protects the lender’s interest in the property until the borrower pays off the mortgage. For a full list of covered risks, see the covered risks section of the loan policy.
why do I need a loan policy?
Most lenders will require a loan policy as a condition of the mortgage. the policy will pay off your mortgage balance if a claim against your property voids your title. A loan policy covers up to the principal amount of your loan.
How long does the loan policy last?
Loan policies remain in effect until you pay off the loan. Most lenders will require you to purchase a new loan policy if you refinance your home. when the new loan pays off the existing loan, the old loan policy expires.
why does my owner’s policy cost more than the loan policy?
When you purchase an owner policy and a loan policy at the same time, the loan policy is issued at a discounted price of $100. if you decide not to buy an owner’s policy, you will pay the full price of the loan policy.
Do I get a discount if I refinance?
yes, if you refinance within eight years. the premium discount varies based on the number of years that have passed since your current loan began. if your current loan was within four years of your new loan, you get a 50% discount on the base premium. if your current loan was between four and eight years before the new loan, you get a 25% discount. after eight years, you don’t get any discount.
what happens if my house increases in value? Am I still covered?
is covered for the value of your policy. If you add improvements to your home, or if your home increases in value over time, you can purchase a higher value endorsement to cover the increase in your property’s value.
Can I get a discount on the price of my policy?
not. The premium rate is set by the Texas Department of Insurance. each title agent must charge the same premium for a policy.
in texas, the premium includes charges for additional services such as title search, title examination and closing of the transaction. You only pay the title policy premium once, at the closing of the sale. the buyer and seller can negotiate who pays the premium.
Is there a way to save money on my closing?
You can search for cheaper escrow rates or closing costs. these differ between agents.
Some title companies add additional charges for things like tax certificates and escrow fees, registration fees, and shipping costs. Please review any additional charges carefully. request documentation of the actual cost of these services. you can request to see your closing documents in advance. You can also have an attorney attend the closing with you.
do the title companies charge the same policy premiums?
yes. Title insurance rates in Texas are regulated. all title companies will charge the same premium for a policy. rates are based on the sale value of the property. for example, the base premium for a $50,000 property is $496 and the base premium for a $100,000 property is $832.
Who do I buy a title policy from?
You should always buy from a licensed company. It is illegal to sell title insurance without a license in Texas. If you buy from an unlicensed company, your claims may not be paid.
To verify that a business is licensed, call the tdi consumer help line at 800-252-3439. you can also check online.
can I choose my own title company?
you can choose the title company you want; you don’t have to use a company selected by a realtor, builder, or lender.
Section 9 of the Real Estate Settlement Procedures Act (RESPA) prohibits sellers from conditioning the sale of the home on the use of a specific title insurance company. You can contact the Consumer Financial Protection Bureau, which regulates the respa, if you have a complaint.
if there is something you don’t like about the policy, can you change the language of the policy?
title policy forms are promulgated or standardized in texas. this means that most of the policy language is the same regardless of the company selling the policy. Title agents are required to use the standardized forms. the parts of the policy that can be changed are the description of the property in schedule a, the exceptions in schedule b and the exclusions. you should review those sections carefully. you can request corrections if you notice an error. the agent can remove an exception, if a title problem is fixed or if you purchase additional coverage.
Check the legal land description of the policy against your survey to confirm that what is conveyed in your contract is accurate. title insurance does not protect against boundary disputes with your neighbor, unless you purchase additional coverage.
what is a title defect?
A title defect is anything that could cause a title to be considered invalid or defective in any way. some examples are:
- invalid documents due to forgery, fraud, undue influence, duress, incompetence, incapacity, or identity theft.
- the failure of any person or entity to authorize a transfer or transportation.
- a document affecting title that is not properly executed, signed, witnessed, notarized, or delivered.
- Undisclosed or unrecorded easements that are not evident on your land.
- no rights of access to and from the land.
- a document executed under a forged, expired, or invalid power of attorney.
- a document not properly filed, registered or indexed in the public records.
- ownership claims by undisclosed or missing heirs.
- defect arising from a prior improper foreclosure.
- Undisclosed restrictive covenants affecting your property.
- any statutory or constitutional lien of a contractor, mechanic or materialist for labor or materials that commenced on or before the date of the policy. talk to a lawyer about his rights.
- lien for labor or materials provided by a contractor without your consent.
- a previous owner failed to pay
- a mortgage or deed of trust
- a sentence, tax or special assessment
- a fee from a homeowners or condominium association.
- other liens or claims that may exist against your title that are not listed in the policy.
- defects that are created after the policy is issued.
- defects that you believe, or were aware of.
- Problems arising from your failure to pay your mortgage, or failure to obey applicable laws or restrictive covenants disclosed to you.
- certain taxes and assessments.
- losses resulting from rights claimed by another person occupying the land. the title company may need to inspect the property. there may be a charge for the inspection.
- rights of residence, community property or rights of survivorship of the policyholder’s spouse. texas homestead laws address the rights of a spouse or survivors of a property owner.
- claims from others that they may have certain rights if your property is near a body of water or has a river or stream flowing through it.
- land taken, unless a notice of taking appears in the public record on the policy date or the taking occurred before the policy date.
- Violations of building and zoning ordinances and other laws and regulations relating to land use, land improvements, land division, and environmental protection.
- disclosed restrictive covenants that limit how you can use the property. Request copies of the restrictions and ask your attorney to explain them to you.
Notify your title company immediately if someone files a lien or claims an interest in your property. failure to do so could jeopardize your claim. contact the insurer listed on the policy and follow their claim filing procedures.
what does a title policy not cover?
A title policy will generally not cover errors or defects, financial problems, or rights problems.
complaints against agents or title companies
If you have a dispute about your premium or a claim, contact your title insurance agent or the title insurance company. item no. 10 of your policy conditions must include the company’s toll-free telephone number.
if you can’t resolve your problem with the agent or company, you can file a complaint with tdi. For more information, call the helpline at 800-252-3439 between 8 a.m. and 5 p.m. m. and 5 p.m. m Central time, Monday through Friday.
Lien issues can also cause title defects. Some examples of lien problems are:
