Buying or selling in Texas and heard you need two title insurance policies? You are not alone. Title insurance can feel confusing, especially when you are juggling loan terms, HOA docs, and closing costs. In a few minutes, you will understand what each policy covers, who typically pays, what to watch for in condos and townhomes, and how to move through closing with confidence. Let’s dive in.
Title insurance basics in Texas
Title insurance protects you from past problems with the property’s title that could threaten ownership or your lender’s lien. Think recording errors, undisclosed heirs, forged deeds, or unpaid liens that surface later. It is different from home insurance, which covers future events like fire or storm damage.
Texas closings commonly involve two separate title insurance policies. A lender’s policy protects your mortgage lender’s interest in the property. An owner’s policy protects your ownership interest. The lender’s policy is typically required if you get a mortgage. The owner’s policy is optional but strongly recommended for buyers.
Owner’s vs. lender’s coverage
What an owner’s policy covers
An owner’s policy usually protects your ownership against covered title defects that existed on or before your closing date. This can include:
- Defects in the chain of title, like forged deeds or undisclosed heirs
- Recorded liens or encumbrances missed by the title search
- Errors in public records, such as misindexed or misfiled documents
- Priority disputes that affect ownership
- Defense costs and covered losses up to the policy amount, which is usually the purchase price
Coverage lasts as long as you or your heirs have an ownership interest.
What a lender’s policy covers
A lender’s policy protects the lender’s security interest up to the loan amount. It covers similar title risks, but only to the extent those risks impair the lender’s mortgage lien. It does not protect your equity or your ownership rights. The coverage amount declines over time as you pay down your loan.
Key differences at a glance
- Beneficiary: Owner’s policy protects you. Lender’s policy protects the lender.
- Amount: Owner’s equals purchase price. Lender’s equals loan amount.
- Duration: Owner’s lasts as long as you own. Lender’s lasts while the loan exists.
- Scope: Endorsements can expand coverage on both, but owners and lenders often choose different endorsements.
Costs and who pays in Texas
Texas title insurance premiums are a one-time cost at closing. Rates are generally based on a state-promulgated schedule and tied to the amount insured. The owner’s policy is usually priced from the purchase price. The lender’s policy is priced from the loan amount.
In many Texas markets, it is customary for the seller to pay the owner’s title policy. Buyers typically pay for the lender’s title policy and any loan-related endorsements. These customs are negotiable and can shift with market conditions, county norms, and your contract terms. Always review your signed contract and confirm with the title company early in the process.
Discounts may apply in common scenarios:
- Simultaneous issue: When owner’s and lender’s policies are issued at the same time, a discount often applies.
- Reissue rates: If the property was recently insured, a reduced premium may be available, subject to underwriting rules.
Because premiums and discounts follow state rules and underwriting guidelines, ask your title company for a written quote and a sample closing statement as soon as you are under contract.
Condo and townhome considerations
Condo and townhome transactions add a layer of documents and definitions that affect title coverage. You want your owner’s policy to clearly insure your specific unit as defined by the recorded declaration and any amendments. Ask the title company to confirm the description matches the condominium plat and dedicatory instruments on record.
Homeowner association items deserve attention. Title insurance can address recorded liens for past-due assessments if they are identified and cleared at closing. It typically does not cover future assessments. An HOA estoppel letter can reveal current delinquencies, pending special assessments, or litigation that could affect costs after closing.
Endorsements can help tailor coverage. For attached homes, you may consider endorsements related to surveys or plats, access, restrictions, and certain HOA matters where available. Endorsement availability and wording can vary, so ask the title officer which options are customary for your property type.
Finally, note that project master insurance policies and deductibles do not replace your need for the right personal property or interior coverage. Title insurance protects ownership and liens, not future physical damage to your unit.
Standard exceptions to review
Title insurance provides strong protection, but every policy has exceptions. You will see them in the title commitment, typically under Schedule B. Common examples include:
- Easements and rights of way that allow utilities or shared access
- Covenants, conditions and restrictions, including recorded declarations
- Property taxes, especially the current year if not yet due
- Survey matters, unless you buy a survey-related endorsement
- Mineral interests and reservations that were previously severed
- Rights of parties in possession, including unrecorded leases
Exceptions are risks the policy will not cover. Review them carefully with your agent and title officer. You may be able to clear certain items before closing or add endorsements to reduce exposure.
The title process timeline
Most Texas transactions follow a similar title workflow after you go under contract.
Open title and order the title search. The title company gathers recorded documents and starts examining the chain of title.
Receive the title commitment. This outlines the proposed coverage (Schedule A), requirements to close (Schedule B-1), and exceptions to coverage (Schedule B-2). Review it with your agent and ask questions.
Clear title issues. Sellers and the title company work together to address payoffs, releases, lien cures, or document corrections. Buyers secure any needed endorsements.
Close and fund. Documents are signed, funds are disbursed, and the deed and deed of trust are recorded. Policies issue after recording.
Buyer checklist
- Request and review condo or HOA documents and an estoppel letter early
- Confirm who pays owner’s and lender’s title policies per your contract
- Ask your title officer about recommended endorsements for your property type
- Read Schedule B exceptions and request clarification on anything material
- If boundaries or access are unclear, consider survey or plat-related endorsements
Seller checklist
- Provide payoff details for mortgages and any lien releases promptly
- Work with the title company to resolve judgments or liens that are your responsibility
- Coordinate with the title officer if your contract assigns you the owner’s policy cost
- Respond quickly to document correction requests to keep closing on track
Mineral rights and other Texas nuances
Mineral interests are often severed from the surface estate in Texas. Many title policies list mineral reservations as exceptions, which means they are not covered. Even in urban or suburban areas, historical reservations can exist. Ask your title officer to explain how minerals and related rights appear in your commitment.
Survey matters can also be important. For attached homes, the legal description and plat must align with the unit you are buying or selling. If coverage depends on survey detail, explore whether a survey or a plat-related endorsement is appropriate.
What this means for Rice, Dallas–Plano–Irving, and Navarro County
Local customs about who pays can vary by county and market conditions. In many Texas transactions, sellers often pay for the owner’s policy and buyers pay for the lender’s policy, but your contract controls. Whether you are purchasing a townhome in the Dallas–Plano–Irving area or selling a home in Navarro County communities like Rice, give yourself time to review the title commitment and HOA documents.
Focus on three things:
- Get clarity on payment responsibilities in your contract
- Review Schedule B exceptions and ask about endorsements that fit your property type
- Use an HOA estoppel to confirm assessments, delinquencies, or pending suits before you close
A little diligence early can prevent costly surprises later, no matter which Texas market you call home.
Get guidance you can trust
Title insurance is one of the most important protections you can buy in a Texas real estate transaction. It is also one of the most misunderstood. If you want a clear, step-by-step plan for your condo, townhome, or single-family purchase or sale, our team is here to help you review commitments, estimate costs, and coordinate a smooth closing. Reach out to Joseph Diosana for a friendly, no-pressure consultation.
FAQs
What is the difference between owner’s and lender’s title insurance in Texas?
- An owner’s policy protects your ownership up to the purchase price, while a lender’s policy protects the lender’s lien up to the loan amount and does not cover your equity.
Who usually pays for owner’s title insurance in Texas?
- In many Texas markets the seller customarily pays for the owner’s policy, while the buyer pays the lender’s policy, but it is negotiable and controlled by your contract.
How much does title insurance cost in Texas?
- Premiums are a one-time charge based on a state-promulgated rate schedule and the amount insured, with potential discounts for simultaneous issue or recent reissue.
Do condo or townhome buyers need special endorsements in Texas?
- Often yes, buyers consider endorsements related to surveys or plats, access, restrictions, and certain HOA matters where available to fit attached-home risks.
Does title insurance cover HOA assessments for Texas properties?
- Policies may address recorded liens for past-due assessments discovered at closing, but they generally do not cover future assessments, so rely on an HOA estoppel.
Are mineral rights covered by a Texas owner’s title policy?
- Mineral interests are commonly excepted from coverage, so ask the title officer how mineral reservations appear in your commitment and what that means for risk.
How long do owner’s and lender’s policies last in Texas?
- An owner’s policy lasts as long as you or your heirs have an interest in the property, while a lender’s policy lasts only while the loan is in place.
