Title insurance in Texas, as in most other states, is a form of insurance that protects real estate owners and lenders against any losses that may occur due to defects in the property’s title. When a property is bought or refinanced, a title search is conducted to examine the history of the property’s ownership and determine if there are any outstanding liens, claims, or other issues that could affect the title. Texas is considered a “title theory” state, which means that the lender holds the legal title to the property until the mortgage is fully paid off. In this context, there are two types of title insurance policies commonly used in Texas:
- Owner’s Title Insurance: This type of policy protects the buyer of the property and lasts for as long as they own the property. It helps safeguard the owner’s investment by providing coverage for potential losses due to title defects, such as undisclosed heirs, forged documents, or mistakes in public records.
- Lender’s Title Insurance: When a mortgage is obtained to finance the purchase of a property, the lender typically requires a lender’s title insurance policy. This policy protects the lender’s interest in the property and is usually required until the mortgage is paid off. The lender’s policy covers the outstanding loan amount and helps ensure that the lender has a valid lien against the property.
In Texas, the premium for title insurance is regulated by the Texas Department of Insurance, and the rates are generally based on the property’s sale price or the loan amount. It’s important to note that while the lender will typically require the borrower to purchase a lender’s policy, the owner’s policy is optional but strongly recommended. To obtain title insurance in Texas, a title company or an attorney is usually involved in conducting the title search, examining public records, and issuing the title insurance policies. The title company or attorney works to clear any issues discovered during the search and provides coverage for any future claims that may arise.
It’s always advisable to consult with a qualified real estate professional, such as a real estate attorney or a title insurance company, to understand the specific details and requirements related to title insurance in Texas as laws and practices may vary.