FAQ'S

What is Title Insurance?

Title is a term that describes your legal rights to own, possess, use, control, and dispose of real property. Title takes into account all previous ownership, uses, and transfers. Title insurance provides protection against title defects already existing in the title of the real property. Clear title provides protection against claims from other parties concerning ownership and outstanding liens.

Title companies check for defects in your title by examining public records before issuing a policy. Such public records include deeds, mortgages, wills, divorce decrees, court judgments, tax records, liens, and encumbrances. The title search reveals the rightful owner of the property, any outstanding debts against the property, any easements, restrictions, or encroachments against the property, and any other issues that may exist against the property.

Once insured, the title company must defend your title, subject to certain limitations. If the title company loses the court case, the title company pays covered losses up to the face amount of the policy.

Types of Policies

The most common types of title policies are the owner’s title policy (“OTP”) and the mortgagee title policy (“MTP”). The OTP protects the buyer of the property and the MTP protects the lender.

The OTP protects you as the buyer of a property for as long as you or your heirs own the property. In addition, the OTP will protect you for any title warranties given when the property is sold. The MTP expires when the loan is paid in full. If you refinance your property or take equity out of your property within seven years of the last MTP, you are entitled to a discount on your MTP. Please contact the closing or assistant closing officer if you have any questions regarding your OTP or MTP coverage.

Cost of Title Insurance

It is customary, although negotiated in the contract, for the seller to pay for the OTP and the buyer to pay for the MTP. The premium for a title policy is set by the Texas Department of Insurance. The premium for an OTP or MTP is a one-time payment. The premium for an OTP is based on the property’s sale value and the premium for an MTP is based on the loan amount. For example, the basic premium for a property with a value of $100,00 is $843. In addition, the title company may charge an escrow fee, a tax certificate fee, and recording fees. Verify all fees before the day of closing to avoid any delay.

What to bring to closing

The Buyer and Seller must bring picture identification to the closing. If either party is required to bring funds to closing they must provide a cashiers or certified check made payable to the title company. The amount due at closing should be available 24 hours before closing (provided the title company timely receives closing instructions from the lender). If you have any questions regarding the closing, please contact the closing or assistant closing officer.