Q: What is title insurance?
A: Title insurance is a very unique insurance policy that protects your ownership in real property — in most cases, your home. Unlike other policies, title insurance protects the owner from past errors related to ownership history rather than future risks such as fire, flood or other physical damages. Title coverage is based on the careful research of past ownership records and is designed to address any overlooked or outstanding issues prior to your taking possession of your property.
Q: Why should you have title insurance?
A: The behind-the-scenes work of the title company promotes and ensures an efficient and secure transfer of real estate from the seller to the buyer. Title insurance doesn’t guarantee that you will never have a problem, but it does give you the assurance and peace of mind that the title company will be there to address a problem if there is one. Unlike other types of insurance, the premium for your title policy is paid only once, and your policy remains in effect as long as you own the property. A title policy is your guarantee that the home you are buying is protected from covered title problems.
Q: What's different about title insurance in Texas?
A: Like all lines of insurance, 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 language of the policy 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 rates, terms and coverages are set by the Texas Department of Insurance, and 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.
Q: May I choose the title agent or the insurer that underwrites my title policy?
A: Yes. In Texas, the premium rates for title insurance are set by the commissioner of the Texas Department of Insurance. Because these rates are the same for all policies, agents do not compete on price, but on service.
Q: Who is responsible for payment of the owner's policy?
A: Although negotiable, it is customary for the property seller to pay for the owner's policy.
Q: Who is responsible for payment of the loan policy?
A: As with the owner's title policy, responsibility for payment is negotiable, though it is usually the borrower/buyer who pays for the loan policy.
Q: What items are included in the title insurance premium rate in Texas?
A: 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, as well as closing the title insurance transaction.
Q: What is the average fee for the search, exam and title insurance policy in Texas?
A: Premium rates are established by the commissioner of the Texas Department of Insurance 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. The cost of title insurance has decreased by almost 20% over the past 30 years.
Additionally, there may be discounts and other savings 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), refinancing of prior insured liens, etc.
Q: Who may conduct a real estate closing in Texas?
A: In Texas, there is a legal distinction between closing the real estate transaction and closing the title insurance transaction. For the real estate closing, either the parties to the transaction or their attorneys are required. However, in order to close 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.
Q: Is there a mortgage, transfer or other tax imposed on Texas real estate transactions?
A: No.
Q: Are the cost of added endorsements included in the premium?
A: No. You may have the option to purchase additional endorsements with your policy.
Q: What kind of issues could affect title and my rights?