Title Insurance

What is title insurance and WHY do I need it?

 

A title insurance policy protects the policyholder against a loss that might occur as a result of a defect in your ownership in real property.  Without a title insurance policy, you are on your own to protect your land title.  With a title insurance policy, the title company will defend your title and will bear the burden of any expenses associated with this defense.

 

What is a “defect” in property ownership?

 

Many things can cause a “defect” in property ownership.  Just because you receive a deed to a piece of real property (without purchasing a title insurance policy), doesn’t mean that you actually own the property free of any encumbrances.  Without a title insurance policy, you are risking your investment in the property.  You could actually lose possession of the property or be forced to incur substantial legal expenses to defend your ownership in a court of law.
 

Some common defects in title are:

 

  Forged documents including, but not limited to, deeds, releases, probate documents, etc.

  Lost heirs who may show up and claim ownership, sometimes years after you acquire the property.

  Errors in public records

  Recording mistakes

  Fake deeds from non-existent entities

  Tax Liens, including property taxes, inheritance taxes, etc.

  Incorrect property tax information

 

What does title insurance cost and how often do I need to purchase it?

 

Unlike other types of insurance, an Owner’s Title Insurance Policy is purchased one time only, at the time of the real estate purchase.  It remains in effect for the life of your ownership in the property.  In most states, title insurance premiums are set and regulated by the state insurance commission.  Premiums are based on the sale price of the real property.

Texas Schedule of Basic Premium Rates for Title Insurance