Buying a home in Dallas, Plano, or Irving comes with a stack of paperwork and a few line items that raise questions. Title insurance is one of them. You want to protect your investment and avoid surprises after closing, but it is not always clear what title insurance actually covers in Texas. In this guide, you will learn what title insurance does, how premiums work in Texas, and how to review your title commitment during the option period so you can close with confidence. Let’s dive in.
What title insurance does in Texas
Title insurance protects you from covered title problems tied to past events, like liens, recording mistakes, or unknown heirs. You pay a one-time premium at closing and coverage lasts as long as you own the home for an owner’s policy. Title companies research the records, issue a title commitment, handle escrow for many deals, and deliver your final policy after closing.
Texas regulates title insurance through the state. That means policy forms and base premiums follow statewide rules, and local customs guide who pays which fees. The title company can explain requirements to clear issues, but it does not provide legal advice.
Owner’s vs lender’s policy
An owner’s policy protects your ownership interest and equity up to the policy amount, which is often the purchase price. A lender’s policy protects the lender’s mortgage interest up to the loan amount. Most lenders require a lender’s policy if you finance the purchase, but the lender’s policy does not protect your equity.
In Central DFW, it is common for the seller to pay for the owner’s policy and for the buyer to pay for the lender’s policy. This is custom, not law, and it is negotiable in your contract. Always confirm who pays what in writing.
What is and is not covered
Typical owner’s policy protections include:
- Forged or improper signatures on past deeds.
- Unreleased or undiscovered liens that predate closing, like tax or judgment liens.
- Unknown heirs or probate issues that cloud the chain of title.
- Recording errors or incorrect legal descriptions.
- Some restrictive covenant or easement disputes, depending on exceptions and endorsements.
Common exclusions and limits include:
- Items listed as exceptions in Schedule B, such as recorded easements, covenants, and mineral reservations.
- Problems that arise after the policy date unless you add specific endorsements.
- Zoning or building code issues, and most survey matters, unless an endorsement provides coverage.
Endorsements add optional protections for an extra fee. In DFW, buyers often consider survey-related endorsements, access coverage, HOA covenant endorsements, or a gap endorsement. Your needs depend on what appears in the title commitment and survey.
How Texas sets premiums
Texas sets base title premiums by statewide rate schedules. The basic premium for an owner’s policy is tied to the purchase price, and the lender’s policy premium is tied to the loan amount. You pay the premium once at closing.
Total closing costs can include endorsements, escrow or closing fees, search and recording charges, and notary or courier fees. When both owner’s and lender’s policies are issued at the same time, simultaneous issue pricing or other regulated discounts may apply. Because rates are regulated, base premiums are similar across providers, but total settlement costs can still vary based on endorsements and fee structures.
Who pays what in Central DFW
Custom in many Dallas–Plano–Irving transactions is for the seller to pay the owner’s policy and for the buyer to pay the lender’s policy and loan-related title costs. Recording fees, escrow fees, and endorsement charges are split per contract. These terms are negotiable, so make sure your contract clearly states who covers each item and review the Closing Disclosure before you sign.
Title commitment: what to look for
A title commitment outlines the conditions for issuing your policy. It typically includes:
- Schedule A: Parties, property description, and policy amounts.
- Schedule B-1: Requirements the seller must meet to close and insure, like lien payoffs or releases.
- Schedule B-2: Exceptions that will remain on your policy, like easements, covenants, and reservations.
The title company usually issues the commitment soon after your contract is signed and will update it as items are cleared. Treat this document as essential reading.
Your option period game plan
Use your option period to review the commitment and act fast if you see concerns.
- Verify Schedule A: Confirm your names, the seller’s name, legal description, and policy amounts.
- Review Schedule B-2 exceptions: Note easements, HOA covenants, mineral reservations, and any unrecorded matters referenced. Decide what is acceptable.
- Check Schedule B-1 requirements: Identify payoffs, releases, affidavits, or any curative documents needed.
- Watch for red flags: Tax or judgment liens, unreleased mortgages, breaks in chain of title, probate issues, or missing spouse signatures under Texas homestead or community property rules.
- Confirm survey status: If the commitment shows a standard survey exception, decide whether to order a new survey and request survey-related endorsements.
- Consider minerals: In Texas, mineral rights can be separate from surface rights. Look for recorded reservations or leases and assess how they affect your plans.
If you find a problem, you can object in writing, request the seller cure, negotiate credits, or terminate during the option period if your contract allows. Some cures require recording releases, which can take time, so start early.
Local title issues in Dallas–Plano–Irving
- Mineral rights and oil or gas leases may be reserved by prior owners and can affect surface use.
- HOA covenants often appear as exceptions and govern property use and assessments.
- Easements for utilities, access, drainage, or alleyways are common, especially in older neighborhoods.
- Unreleased mortgages, tax liens, or judgment liens can appear in the search and must be paid off to close.
- Probate or heirship issues occasionally cloud title when estates are involved.
- Survey concerns or encroachments can surface and may require a new survey or endorsements.
- Special districts and assessments, such as MUDs in some suburbs, can create lien exposure if unpaid.
- Homestead or community property rules may require specific signatures for clear conveyance.
Smart moves for DFW buyers
- Get an owner’s title policy. The lender’s policy does not protect your equity.
- Read the title commitment as soon as you receive it. Focus on Schedules B-1 and B-2.
- Ask about who pays for the owner’s policy in your area and write the terms into your contract.
- Consider endorsements that fit the property’s risks, such as survey coverage or access.
- Compare total settlement costs, not just the base premium, if you shop title companies.
- Use your option period to deliver written objections and negotiate cures or credits.
- If complex issues appear, such as probate or mineral title problems, consider speaking with a Texas real estate attorney.
Ready to move forward?
Title insurance is a small one-time cost for a lot of peace of mind. When you understand what it covers and how to use the option period to your advantage, you protect your investment and keep your closing on track. If you want a clear plan for title review, survey decisions, and contract negotiation in Central DFW, connect with Andrew Bradshaw for buyer representation.
FAQs
What is title insurance in Texas and why do I need it?
- It is a one-time policy paid at closing that protects you from covered title defects tied to past events, such as liens, recording errors, or unknown heirs.
What is the difference between owner’s and lender’s title policies?
- The owner’s policy protects your equity and ownership rights, while the lender’s policy protects the lender’s mortgage interest and does not cover your equity.
How are title insurance premiums set in Texas?
- Texas regulates base rates statewide, so premiums follow a published schedule, with extra costs for endorsements, escrow fees, and recording charges.
Who typically pays for title insurance in Central DFW?
- It is common for the seller to pay for the owner’s policy and the buyer to pay for the lender’s policy, but this is negotiable in your contract.
What should I review in a Texas title commitment during the option period?
- Confirm Schedule A details, read B-2 exceptions, check B-1 requirements, and look for red flags like liens, probate issues, or survey exceptions.
Does title insurance cover survey, zoning, or code issues in Dallas?
- Standard policies often exclude zoning, code compliance, and many survey issues unless you add endorsements tailored to those risks.
How long does owner’s title insurance coverage last in Texas?
- An owner’s policy typically lasts as long as you own the property, while a lender’s policy ends when the loan is paid off.
