Two of the more frequent questions I get asked are what is title insurance and what does it cover? The questions are a bit simpler than the answers, but, let me provide a short guide to the title process in Texas.
Title companies play an important role in transactions that are for some, one of the most special moments of their lives. As these moments can represent a significant financial and emotional investment, as well as a legal right and obligation, it is paramount that the correct steps are taken to preserve a clients interests. This is where the title company comes in.
A title companies main responsibilities are to research the history of a title on a property and clear up any known issues before a purchase. To these means, a report called a “Title Commitment”, which is like a history of the property over time, is issued declaring the status of the title, and any limitations as to the use of the property, as well
any other demands that need to be met, such as the pay off of any liens, and the amount to be collected from the buyer of the property if any.
The” Escrow Officer”, is the main contact at the title company, and usually works with an escrow assistant. Along with all the research and responsibilities described above, this team also works with all parties to help ensure that all terms of the contract are satisfied, that lenders conditions are met, that all parties get scheduled and are closed, and that all documents get properly recorded. Afterwards, the title company disburses all funds from the sale, and issues a title insurance policy to protect the new owner and their investment against any future claims.
Get this – most of this happens without much ado! If you don’t notice the title company until you get to closing, it’s probably because they did a great job. Great title companies resolve the problems without hassles to the clients, particularly buyers. While the sellers may have some things to clear up, often the title company is able to handle even seller issues that come up without much fuss. Errors can be simple, like a name change, or someone with a similar name, or not so simple, like forged identities, or invalid divorces. Whatever the issues, it is the title companies’ responsibility to resolve them if possible.
In Texas, the premium charged for title insurance is set by the state in accordance with the sale price of the property. There are some ancillary fees, courier, document preparation, escrow fees for the processing of the transaction, etc. that are set by the individual companies, but, title insurance fees are set by the state and the same price is charged by all title companies.
You will find a title company rate sheet on this site as well as a “Contract to Closing” diagram to get you more familiar with the process.
