What is title insurance?
It is protection against loss if a covered defect is found in the chain of title to your property.
To get loans, people often use property as collateral (security against nonpayment). If someone doesn't pay back their loan, the lien holding lender has a legal right to sell off the property to get their money back, even if the property has since sold to a new owner. This is because the lien (claim to a property as payment on a debt) is on the property. Unless the debt is paid off and the lien released, the lien stays with the property even when it changes ownership.
With today's booming refinance and home equity markets, lenders' interest in properties has increased exponentially and both lenders and county recorders are challenged to keep up with the documentation. So it's more likely than ever that an unrecorded or unreleased interest in your property could be out there, making title insurance more important now than ever.
What are "covered defects"?
Errors and information contained in deeds, mortgages, public records, etc.
Liens – claims against the property, or prior owner, that affect the property and have not been paid or released. Examples include prior mortgages, judgments against prior owners and taxes.
Claims to Ownership – someone claiming that they had an ownership interest in the property that was not accounted for in a prior transfer, such as the spouse of a former owner or heir of a deceased former owner.
Invalid Deeds – such as a purported transfer by someone who did not own the property or who was not mentally competent.
What is not covered?
• Limitations on the use of the property
• Mechanic's liens
• Easements, right of way, and other legal obligations noted in the deed or public records
• Restrictive covenants limiting certain types of use of the property
How much does title insurance cost?
In Texas, title insurance rates are set by the Texas Department of Insurance and are based on the sales price of the property or amount of the policy being issued. Please refer to our resources page to calculate the current Texas title insurance premium rates.
If the insurance cost is the same, how do I choose a title company?
Title companies can charge fees other than for the insurance itself, such as an escrow fee and courier fees. You should ask any perspective title insurance company for a list of fees. Title companies, even offices of the same company, vary greatly in the quality of customer service they provide. Recommendations from friends, realtors and other advisors are invaluable in finding a title company location that provides excellent customer service. It is your home and your money, so you deserve to be kept "in the loop" on your transaction.