What is title insurance and why do I need it?

A title insurance policy protects the policyholder against a loss that might occur because 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, your property rights will be protected and the policy provider 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 own the property free of any encumbrances.  Without an Owner’s title insurance policy, you are risking your investment in the property.  You could lose possession of the property or be forced to incur substantial legal expenses to defend your ownership in a court of law.

What are some common title defects?

• 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

• Liens, including property taxes, inheritance taxes, child support liens,

• 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 Texas, title insurance premiums are set and regulated by the Texas Department of Insurance.  Premiums are based on the sale price of the real property.