what is title insurance?
title insurance policy is a contract between the owner of a
parcel of land and the title company, which guarantees the owner
a particular set of facts concerning the land described.
The primary facts insured are described below:
the homeowner is in fact the owner of the land described and
his title is good against every other claim except as stated
in the policy.
the title to the land insured is clear of all encumbrances
to the title, such as mortgages or liens, servitudes,
easements, restrictions, oil and gas leases, outstanding
mineral interests or leases for other uses of the land,
including pasture leases, crop leases of other tenancies of
third parties, except as stated in the policy.
all property taxes (including state ad valorem, city and
school taxes) have been paid against the subject property,
except for the year in which the property is purchased and
most requested policies are:
Title Policy: Protects the owner of the property
while he/she is the owner and after the property is sold.
The policy will be issued in the amount of the current
If there is no sale, the policy must be issued for the
fair market value of the property.
Title Policy: Protects lenders from loss if it is
determined that its lien is not valid or is inferior to another
lien not shown as an exception to coverage on the policy.
The policy will be issued in an amount equal to the
current outstanding loan balance.
insurance is different from other insurance in that it insures
against events that happened in the past that effect title to
the property. Other
types of insurance protect against events in the future.
does a title company determine if it will insure the property?
issuing a title policy a search is made of the county real
property records where the property is located.
This search is done by using the company abstract plant,
which maintains references to deeds, mortgages, liens, deaths,
divorces, etc., which might affect the property.
title company examines these instruments and the results of the
examination determine whether the title company will issue a
policy and what exceptions to coverage will be taken in the
The search and the commitment are not representations as
to title but are done for title insuring purposes.
Title insurance is not intended for titles known to be
bad or defective.
buy a title policy if an attorney has carefully searched the
records and title is found to be good?
are many hidden defects, which may affect title to real estate.
Some examples are:
Mistakes in Descriptions
may not appear in the records and may not be picked up by even
is the cost for title insurance?
is a one-time premium for coverage.
These are no annual renewals.
TITLE INSURANCE RATES ARE FIXED BY THE TEXAS DEPARTMENT
OF INSURANCE. This
information is provided to help you understand title insurance.
For exact coverage offered, you must rely on your policy.
pays for the title insurance policy?
the seller/owner pays for owner policy coverage; however, the
payment of the premium is a negotiable matter.
A borrower is usually required to provide the Mortgagee
policy to the lender as a part of the loan agreement.
The premium for a Mortgagee policy is normally $100.00
when issued simultaneously with an owner policy.
is a settlement?
the parties to the transaction by having a neutral party seeing
that their agreement is implemented.
the seller to use part of the purchase money to pay his liens
and to pass title to the purchaser subject only to the liens
agreed to in the sales agreement.
in the settlement of multiple property transactions.
in a transaction involving a sale and simultaneous release.
the real estate broker to devote more time to selling other
properties by turning over to the settlement agent the
time-consuming details of settlement.
confidence in buyers and seller of real estate that the
appropriate documents have been signed and recorded and that
taxes and prior liens against the property have been paid.
lenders that the disbursement of their loan proceeds has been
is the duty of the Settlement Agent to the parties?
settlement or escrow agent is a neutral third party who
disburses funds in accordance with the agreement of the parties.
TITLE INSURANCE POLICY IS A CONTRACT BETWEEN YOU AND US INSURING
YOU AGAINST LOSS IN THE EVENT A TITLE DEFECT OCCURS RESULTING
FROM A COVERED RISK.