FAQ in Title & Escrow
Q: What is Title Insurance?
A: Title insurance protects your ownership in real property, insuring against financial lost caused by past errors or defects, when purchasing real estate.
Q: What is the difference between a Title Commitment and a Title Policy?
A: A Title Commitment comes before closing stating all items that need to be satisfied before a title company is willing to issue title insurance. A Title Policy is issued after closing providing coverage for the property.
Q: Are there different types of Title Policies?
A: Yes, there are two types of title policies: (1) Owner’s Policy and (2) Loan Policy.
An owner’s policy protects you against losses from potential ownership issues prior to when you bought the property, but that weren’t known at the time of purchasing. For example, you could lose title to your property because of fraud, errors or omissions in previous deeds, or forgery of a previous deed. The owner’s policy protects the buyer from the covered risks listed in the policy.
The loan policy protects your lender’s interest in the property until the mortgage is paid off. The covered risks in your policy depend on whether you purchase a loan or owner’s policy.
Q: What does Title Insurance Cost?
A: In the state of Texas, title insurance rates are regulated and set by the Texas Department of Insurance (TDI). All title companies must charge the same premium for a policy; prices are based on a property’s sale and loan amount. Use Independence Title’s Calculator to check what a title insurance premium will currently cost.
Q: Who pays for the title policy?
A: Although, who pays for the title policy is negotiable, in the state of Texas, it is customary for the seller to pay for the owner’s title policy while the buyer pays for the loan policy.
Q: Does my title policy expire?
A: An Owner’s Title Policy lasts for as long as YOU (or your heirs) own the property. A Loan Policy lasts until your mortgage is paid in full.
Title Tip: If you transfer title to your business, LLC, trust, etc., your title policy may not continue to provide coverage depending on the type of title policy you have. To determine what type of coverage you have, read your policy, or just reach out to us and we will be happy to talk with you.