Regulatory Landscape and Costs
Texas has the most heavily regulated title insurance market in the country. Unlike all but one other state, the government sets a fixed rate for title insurance, preventing competition for consumer’s business. This rate functions as a monopoly price that consumers are forced to pay.
How much does title insurance in Texas cost?
The cost of title insurance is set by the Texas Department of Insurance which regulates this industry. The basic premium for a $100,000 policy is less than a $1,000. Two available upgrades are almost always a good idea for buyers are:
- Survey Coverage
- Shortages in Area endorsements
For an additional cost, a buyer can obtain coverage for cases where the survey does not correctly delineate boundaries or easements.
Premium Factors
The actual premium paid depends on the property value and other factors that affect premiums include the amount and type of work required to underwrite and fulfill the policy. Owner’s title insurance, which protects the buyer, is not required but recommended.
Industry Dynamics
The Texas title insurance system is the nation’s most expensive. Industry lobbyists work hard every legislative session to suppress any effort at reform. Title insurance covers third-party claims on a property that don’t show up in the initial title search and arise after a real estate closing.
Payment Responsibilities
Who should pay for title policy in Texas?
In Texas, the buyer typically pays for the owner’s title insurance policy. The lender usually requires a separate lender’s title insurance policy, which the buyer, as the borrower, is responsible for obtaining. The title insurance policy covers the total cost of the property if the title did not successfully pass to the homeowner.
Cost Comparison
The average cost of a lender’s and owner’s title insurance policy is $1,374 for a house at the national median value of $200,000. The cost of a title policy in Texas ranges from 0.9% to 0.6% of the property value. Usually, buyers pay more than sellers for closing costs. When the Texas owner’s policy is purchased with the lender’s policy, it costs $100.
Title Policy Practice
There are two types of title insurance in Texas:
- Owner’s Policy: Protects the homeowner.
- Loan Policy: Only protects the mortgagee.
It is customary for the seller to pay for the Owner’s Policy in Texas.
Payment and Coverage Duration
You do not pay a monthly premium for your title insurance in Texas. The policy itself is paid at closing and lasts as long as you own the property.