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What is a title policy? Who pays for it? Do I need one when I buy a home?

Title-Insurance-ImageA title policy is an insurance policy issued by a title company to a home owner when they purchase a home.  There are numerous ways that the title to a property can have defects, known as “clouds” on the title, and the title policy insures that the owner has good and marketable title to the property.  Before issuing the title policy, the title company will run a search on the history of the ownership of the property to make sure that the person you are purchasing the property from has good and marketable title to sell to you.  They will ensure at closing that all liens are paid off, that all necessary parties sign off on the sale and that all documentation is in order.

In the San Antonio market it is typical for the seller to pay for the title policy for the buyer’s benefit, but as with any fees in a real estate transaction, it is negotiable.  The costs of a title policy are set by the State of Texas so all title companies will charge the same amount for a title policy.

You absolutely need a title policy when buying a home in Texas, and 99% of lenders will require it if you are taking out a mortgage to purchase the home.  Lenders do that because they know that clouds on the title can result in additional costs to remedy the title and, in extreme circumstances, can result in loss of the property altogether.  You have no idea what the seller did with the property before they sold it to you, who else they promised it to, or who else may be entitled to partial ownership.  One common title defect is when a previous owner passed away without a will, and some but not all of the heirs then sold the property.  Those heirs who were not a part of the sale have an ownership claim that exists even after the sale because they did not consent to sell. To correct that situation the current owner must then negotiate to purchase the interests of the other heirs.

Click here for a Title Policy Premium Calculator

Here are some of the largest Title Companies in the US

First American Title Insurance Company 
Fidelity National Financial 
Stewart Title Insurance Guaranty 
Old Republic Title Insurance Company 
North American Title Insurance Company
Chicago Title Insurance Company

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