Title Insurance in Texas: What It Covers and Who Pays
Title insurance in Texas protects you against problems with the ownership of a house that existed before you bought it: a forged signature in a past sale, an heir nobody knew about, a lien that never got released. You pay for it once, at closing, and an owner’s policy protects you for as long as you own the home. It is one of the least understood lines on a closing statement, so here is how it actually works.
This post replaces a 2022 version that had several things wrong. If you read that one, please disregard it. Everything below is drawn from the Texas Department of Insurance and the TREC resale contract.
What title insurance in Texas covers
The Texas Department of Insurance explains it plainly in its consumer tip on what title insurance is and why you need it: it protects you from problems with an ownership title when you buy real estate. TDI’s examples include unpaid property taxes, forged or fraudulent paperwork from an earlier sale, and a spouse or unknown heir who claims ownership.
It is not homeowners insurance. Homeowners insurance covers fire, storms and theft, and you renew it every year. Title insurance looks backward at the history of the property, and the premium is paid once.
Owner’s policy vs loan policy
There are two policies, and they protect different people:
- Owner’s policy: protects you, the buyer, for as long as you own the property. It is priced on the sales price.
- Loan policy: protects the lender’s interest until the loan is paid off. It is priced on the loan amount.
Texas does not require you to buy title insurance. But according to the TDI title insurance FAQ, your lender will require a loan policy if you finance. The owner’s policy is the one that protects your equity, which is why we treat it as non-negotiable for our buyers even when the lender’s policy is already in place.
Why title insurance in Texas costs the same everywhere
This surprises people who are used to shopping insurance. In Texas, title insurance premiums are regulated. TDI’s FAQ says all title companies will charge the same premium for a policy, and the policy language is the same from company to company.
So you are not shopping the premium. What can differ are the other closing fees a title company charges, its responsiveness, and how smoothly it runs a closing. TDI also points out that your agent, builder or lender may recommend a title company, but you can choose any company you want. You can verify that a title agent is licensed with TDI.
Who pays for title insurance in Texas
It is negotiable. TDI’s FAQ says the buyer and seller may negotiate who pays the premium, and the TREC resale contract handles it with a checkbox: in paragraph 6A, the seller furnishes an owner’s policy at either the seller’s or the buyer’s expense. Your agent fills that in when the offer is written.
The loan policy follows the loan, so it shows up on the buyer’s side. Our breakdown of closing costs in Texas shows where both lines usually land, and our guide to cash to close shows how they roll into your final number.
The title commitment: read it before you close
Before closing, the title company issues a title commitment. TDI describes it as a statement that the company is willing to issue a policy under certain conditions. It lists the issues, exclusions and exceptions the policy will not cover. It does not guarantee there are no problems.
Under the TREC resale contract, the seller must furnish the commitment within 20 days after the title company receives the contract, with an automatic extension of up to 15 days if exception documents are late. If it still does not arrive, the buyer may terminate and get the earnest money back.
The contract then gives you a window to object to problems in the commitment or survey. If you do not object in time, you waive the objection. That is the part buyers skip. Ask your agent to walk you through Schedule B, the list of exceptions, line by line.
The survey exception, and what 5 percent buys
Every standard owner’s policy includes an exception for “discrepancies, conflicts, shortages in area or boundary lines, encroachments or protrusions, or overlapping improvements.” In plain English, the policy does not cover fence-line and boundary problems unless you pay to change that. TDI’s FAQ says title insurance does not protect against boundary disputes with your neighbor unless you buy additional coverage.
The TREC contract lets the parties choose to amend that exception to read only “shortages in area,” and it names who pays. The title company will usually want an acceptable survey to do it. TDI’s rate rule for this amendment, Rule R-16 in the Basic Manual, sets the premium at 5 percent of the basic premium rate on the policy amount for residential property, with a $20 minimum.
On a lot with a fence, a pool, a detached garage or a shared driveway, that amendment is often worth it. On a newer production home in a platted subdivision, it may matter less. It is a judgment call worth making on purpose rather than by default.
What title insurance in Texas will not fix
- Problems that start after you close. The policy looks backward.
- Exceptions listed in your commitment and policy, like recorded easements and deed restrictions.
- Boundary issues, unless you amended the survey exception.
- Physical defects in the house. That is what the inspection and the option period in Texas are for.
Deed fraud after you own the home is a separate risk. Our post on the Fort Bend property fraud alert covers the free county tool that watches your deed.
New construction, refinancing and title insurance in Texas
Buying from a builder. Some builders in Fulshear, Katy and Richmond work with a preferred title company and may offer incentives tied to using it. That can be fine. Just know the premium is the same at every company, so an incentive is worth comparing against the other fees on the estimate, and the choice is still yours. On a new home, the commitment matters just as much: new subdivisions often carry utility easements, drainage easements and deed restrictions that show up as exceptions.
Refinancing later. When you refinance, your new lender will want a new loan policy to protect its loan. Your owner’s policy is a separate policy, and TDI says it protects you for as long as you own the property. Keep the policy paperwork with your deed so you can find it if you ever need it.
Selling later. When you sell, the buyer’s title company runs its own search, and the cycle starts over. Clean records on your end, like a recorded release when you pay off a loan, make that easier for everyone. If a lien release never got filed after an old payoff, title insurance in Texas is designed for exactly that kind of surprise, and the title company will usually work it out before closing.
Wire fraud at the title company
Because the title company holds the money, it is where criminals aim. TDI warns buyers to verify payment instructions directly with the title agent, to be suspicious of urgent emails about “updated payment details,” and to confirm right away that any electronic payment arrived. Call a number you looked up yourself, never one in the email.
Title insurance in Texas: a short checklist
- Confirm in the contract who pays for the owner’s policy.
- Decide whether to amend the survey exception, and who pays for it.
- Read the commitment and Schedule B as soon as it arrives.
- Raise objections inside the contract’s deadline.
- Verify all wiring instructions by phone.
- Keep your owner’s policy with your deed. It arrives after closing, usually by mail.
If you are buying in Fulshear, Katy, Richmond or anywhere in Fort Bend and want help reading a title commitment, call Terra Point Realty at (713) 766-1697.
Written by Stacy Burgin, a real estate agent with Terra Point Realty serving Fulshear, Katy and the greater Houston area, with 300+ transactions and 130+ home sales closed. This post is general information, not legal advice.