We have put together a list of questions that are often asked and provided brief answers to these questions. To view the answers click on the questions below!
Because these costs are strictly regulated, title companies can not compete by offering “lower prices” or “special rates.” Instead, Texas title companies can only compete with each other based on quality of service. As a result, providing service that sets us apart from other title companies, is our number one priority.
There are two types of title insurance policies: a lender’s policy (also called a loan policy) and an owner’s policy. The lender’s policy financially covers the amount of a loan and provides protection to the lender. A lender’s policy does not usually represent the full property value. An owner’s policy protects the landowner and can financially cover the full property value. While a loan policy is often required as a part of a real estate transaction, an owner’s policy is generally considered optional. With an owner’s policy, the landowner is protected against any title loss, which ensures the value of the property. Because a title policy is considered insurance, if a claim is made against the title, the title insurer must pay any and all costs associated with defense against the challenge, and if unsuccessful in that defense, reimburse the landowner for any reduction in the value of the land.
Answer: Sometimes. Depending on the nature of the title defects, they may be corrected with the assistance of an attorney of the seller’s choice.
A title insurance policy does not insure against known title problems; neither does it create or cure title defects, liens or encumbrances or any of the problems which are found in the chain of title.
Sometimes an affidavit, deed or other instrument will allow the title company to assume the risk. Other times a court order will be required. Title companies do not provide legal advice or draw legal papers.
Many times the commitment for title insurance will list what items or actions would be necessary to remove the matter in question as an exception to coverage. Documents required by the title company are not meant to cure a title defect, they are required to satisfy the title company that the property is insurable.
Answer: This depends on the terms of your agreement. The Seller typically pays for the Title Policy to pass the property to the new buyer with a clear title, however, this is negotiable between the parties, and the Buyer is sometimes required to pay for his own Title Policy.
The Buyer is almost always responsible for paying for the Mortgagee’s Title Policy if one is required.
This is probably THE question we are asked the most! Usually this is asked as soon as the order is brought in and sometimes even before the contract is delivered to our office and the order is opened.
It is nearly impossible to give a definitive answer to this question. Each transaction has too many variables that prevent us from providing definite time tables.
For starters, once the order is opened, we must first complete a title search. The title search can sometimes be completed rather quickly, especially in cases where title work has previously been done on the property in question. In these cases, if you can provide us with the prior title policy, or if we have a prior file on the property, we can come forward from that date and significantly reduce the time required for a title search.
In other cases, when no previous title work has been done, we may have to search all the way back to the 1800s. This requires us to search through hundreds of thousands of documents which have been recorded in the Deed Records, Deed of Trust Records, Real Property Records, Judgment Records, and Probate Records of Grimes County.
Once all of the documents affecting your property and the parties to the transaction have been located, they are all provided to the Title Examiner who reviews each document very carefully to determine their effect on the property. The Title Examiner then provides your Title Commitment which sets forth the matters the title company will not insure against, as well as other matters that must be cleared up prior to closing.
At this point, the buyer may require the seller to address some of the matters set out in the title commitment. If either party is represented by an attorney, the attorney may have additional requirements at this time.
Also, in cases where the buyer is borrowing money, we can not close the transaction until the buyer’s lender is ready to close. Often times the lender has their own set of requirements for closing, and the title company has no control over whether these requirements are met. When the lender is ready to close, they provide the title company with their closing instructions and loan documents to be signed at closing. These MUST be provided to the title company at least 24 hours prior to the scheduled closing.
Sometimes surveys are required, and when a survey is part of the transaction, the title company can not close the transaction until the survey has been prepared and presented to the title company for review. When a transaction involves a survey, the title commitment will be updated to reflect matters found on the survey, and the legal description set forth in the survey will also be used.
So as you can see, the title company is often just one small piece of a multi-party transaction, and even though everyone will ultimately end up here signing documents at a closing, we do not have the capability of forcing the other parties to close by a certain date or within a certain time period. What we can and will do is handle our parts of the transaction as quickly and effeciently as we possibly can based on the circumstances, so that your closing can take place in a timely manner.
Answer: Title insurance is an insurance policy that protects against future loss, should the title condition be any different than when the policy was written.
Answer: The lender’s policy of title insurance lasts until the mortgage is paid in full. An owner’s policy of title insurance lasts for as long as you or your heirs retain an interest in the property.
Answer: Yes and no. While the lender will likely require a loan policy of title insurance, the purchaser can choose what type of owner’s protection, if any, to use with regard to title. It’s important to remember, however, that only title insurance protects the owner against hidden hazards, and only title insurance reimburses the owner for legal expenses for defense or claims that affect the value of the property.
Answer: An Earnest Money Contract is an agreement between a Seller and a Buyer, which establishes the guidelines for the transaction, setting forth the sales price, the term or duration of the contract and specifies what charges will be paid by each party. An Earnest Money Contract is very important to any sales transaction and is often required by any Lender.
The Earnest Money Contract is often used to set up the title order at the title company, and the contract will be relied on by the title company in preparing the closing statement.
Answer: A title defect is something missing from the title, for example, an undisclosed heir from a previous owner who could potentially make a claim on the land.
Answer: The Owner’s Policy insures the owner up to the full purchase price of the property for as long as he or his heirs own the property. The Mortgagee’s Policy insures that the lender has a valid lien on the property up to the unpaid balance of the loan. The hazards may be the same, but the “insured party”… and the coverage amount… is different with each type of policy.
Answer: Land is permanent, and the usage of land can change over the years. A landowner can transfer numerous rights from the title such as mineral, water or utility rights. Even if the land is vacant when you buy it, it may have a history you (and possibly even the seller) know nothing about, so it is first necessary to search the title to determine if any defects or encumbrances are outstanding, and to clear those that you or your lender do not accept.
Answer: No. In Texas the title insurance premium rates, and the rate rules for applying them, are adopted by the Insurance Commission of the State of Texas. The rate rules are quite specific and violations can result in suspension of licenses.
Answer: Title insurance will pay for defending against any lawsuit attacking your title as insured, and will either clear up title problems or pay the insured’s losses up to the policy amount. For a one time premium, an owner’s title insurance policy remains in effect as long as you, or your heirs, retain an interest in the property, or have any obligation under warranty in any conveyance of it.
Answer: A title insurance policy provides coverage from the time of its effective date back to the origin of the title. After the property has passed to your heirs, if any defect prior to the policy should arise, the title insurance company would defend the title for your heirs as it would for you if you were alive.
Answer: Absolutely. Homeowner’s insurance typically provides protection against theft, accidental damage, or natural disaster such as a tornado, earthquake or hurricane. While these types of loss can certainly be substantial, losses from a defective title could be devastating. If a fire destroys your home, you can rebuild and buy new possessions. If the title to the land fails, you could lose the right to inhabit your home as well as the land it occupies.
Answer: Most insurance tries to protect against losses arising out of possible future events. The primary purpose of title insurance is to prevent losses from defects in title arising out of past events.
A policy of title insurance insures a state of facts that exist as of the policy date. It does not cover subsequent events. Such insurance is sometimes called “retrospective” insurance since it insures against matters that occurred in the past.
Also, in most cases, title insurance is only purchased once for a one time premium, and your policy will protect you for as long as you and your heirs own the property. There are no monthly or annual premiums for your title coverage.
Answer: You can obtain title insurance from any licensed title insurance company in Texas. When choosing a title insurer, it is important that you look for a company with expertise and experience, as well as the financial strength to protect you should a claim arise. Your real estate broker or attorney can recommend such a company.
Answer: Yes; each title policy is purchased separately. However, in most cases, when purchased simultaneously with an Owner’s Title Policy, the Mortgagee’s Policy can be purchase for only an additional $100.00.