Texas Title Insurance Explained: What It Covers and Who Pays
What Is Title Insurance and Why Does It Matter in Texas?
When you buy a home in Texas, you're not just buying the property — you're buying the history of that property. Title insurance protects you from financial loss due to defects in the title that may have occurred before you owned the home: things like unpaid liens, forged documents, undisclosed heirs, or clerical errors in public records.
Without title insurance, you could technically own a home and still face a legal claim against it from a previous owner, creditor, or heir — and be responsible for defending that claim out of pocket.
Two Types of Title Insurance in Texas
Lender's Policy (Loan Policy)
If you're getting a mortgage, your lender will require a lender's title insurance policy. This protects the lender — not you — for the amount of the loan. The coverage decreases as you pay down the mortgage.
Owner's Policy
This policy protects you, the buyer, for the full purchase price of the home. It covers you for as long as you or your heirs own the property. In Texas, it's customary (though not required) for the seller to pay for the owner's title policy — a significant buyer benefit unique to most Texas markets.
What Does Title Insurance Cover in Texas?
Texas title insurance protects against covered losses arising from:
Unpaid property taxes, mortgages, or contractor liens from prior owners
Forged signatures or fraudulent documents in the chain of title
Errors or omissions in deeds, surveys, or public records
Undisclosed or missing heirs who claim ownership
Boundary disputes and encroachments
Violations of restrictive covenants
What Doesn't It Cover?
Title insurance does NOT cover:
Issues that arise after the policy date (that's what homeowner's insurance is for)
Zoning ordinances and government regulations
Issues you knew about and didn't disclose
Environmental hazards
How Much Does Title Insurance Cost in Texas?
Texas is one of the few states where title insurance rates are set by the state (promulgated rates), so every title company charges the same base premium. The rate is based on the purchase price:
$200,000 purchase: ~$1,195 owner's policy premium
$350,000 purchase: ~$1,703 owner's policy premium
$500,000 purchase: ~$2,215 owner's policy premium
There's a simultaneous issue discount when both the owner's and lender's policies are issued together at closing, which reduces the total cost.
Who Pays for Title Insurance in Texas?
In Texas, it depends on the county and local custom, but the most common arrangement is:
Seller pays the owner's title policy (this is the Texas custom in most markets)
Buyer pays the lender's title policy (required by your mortgage lender)
This is negotiable in the TREC contract — buyers in a strong position sometimes negotiate for the seller to pay both policies.
How to Choose a Title Company in Texas
Since rates are the same everywhere, focus on:
Responsiveness and communication quality
Experience with your specific transaction type (new construction, short sale, etc.)
Location (many Texas closings happen at the title company's office)
Relationships with lenders and agents that keep the process smooth
How KAT Realty Works With Title Companies
At KAT Realty, we work with trusted title companies across Texas and coordinate directly with them on your behalf — from opening title to tracking down any title issues that come up before closing. Our flat fee of $4,999 covers everything, and we make sure closing goes smoothly.
Ready to buy in Texas with a team that handles every detail? Contact KAT Realty today.
