WHAT CLAIMS OR DEFECTS ARE COVERED BY TITLE INSURANCE POLICIES IN TEXAS?

If someone claims an interest in your property, a title company will defend your title in court and pay for any actual loss under these circumstances:

A lien is filed against your title because a previous owner failed to pay a mortgage or deed of trust; a judgment, tax, or special assessment; or a charge by a homeowners or condominium association. If you receive notice of a previous lien, contact your title company immediately and follow your policy’s claim filing procedure. Failure to do so could jeopardize your claim.

There is a lien on your title for labor and materials furnished by a contractor without your consent. Generally, your policy protects you if you buy a house already built, but not if you own the land and contract with a builder to build your home. Consult an attorney about your rights.

There are other liens or claims against your title that aren’t listed in the policy exceptions.

Leases, contracts, or options on your land weren’t recorded in the public records and disclosed to you.

The title policy failed to disclose legal restrictions on how you can use your property.

There is an easement that isn’t in public records and that you don’t know about. The title policy assures you a legal right of access to your property. This means that you have a right to travel from your property to a public street or road.

Someone didn’t properly sign the chain of title, or a notary public made an error on the document, made an error in recording the document at the county clerk’s office, or failed to deliver the deed according to statutory requirements.

A deed or other document in your chain of title is invalid as a result of forgery, fraud against the rightful owner, a signature given under force, or a signature given by a person legally incompetent to sign or claiming to be someone else.

It is important for Buyers and Sellers of real estate in Texas to read title insurance policies carefully because different companies may describe their coverage exceptions differently. In particular, review SCHEDULE B of your title insurance policy with an experinced real estate lawyer. This Section explains any limitations, exclusions, exceptions, and special conditions.

San Antonio lawyer Trey Wilson is an experienced real estate attorney familiar with Texas titke policy forms, exceptions and exclusions. he was named by his peers as one of San Antonio's best real estate litigation attorneys. He may be reached at 210/223-4100 or www.sa-law.com.

WHAT EXACTLY IS TITLE INSURANCE?

In Texas, the two most common types of title policies are “mortgagee policy of title insurance,” which protects lenders, and “owner policy of title insurance,” which protects property buyers. Title insurance protects you and your lender if someone challenges or encumbers your title to real property because of title defects that were unknown when you bought the policy.

Most lending institutions will not loan money to purchase a residence or other property unless you buy a "mortgagee" title policy. A Mortagee policy protects the lender´s investment if a title defect voids your title. This policy covers up to the amount of the principal on your loan and will repay the balance of your mortgage if a claim against your property voids your title. Mortgagee policies remain in effect until the loan is repaid. Most lenders will require you to buy a new mortgagee title policy if you refinance your home. When the new loan pays off the existing loan, the old mortgagee policy expires. You are entitled to a premium discount on a new mortgagee policy if you refinance within seven years.

When you buy a house, the title company also issues an owner´s policy, unless you reject it in writing. The owner´s title policy protects you, as the purchaser, against the covered risks and the specific kinds of claims listed in the policy. When you buy a house and purchase a mortgagee policy, a title company will automatically issue an owner policy unless you specifically reject it in writing. An owner policy only covers you up to the value of the property at the time you purchased the policy. It does not cover any increase in value, unless you purchase a special “increased value endorsement.” An owner policy of title insurance remains in effect as long as you or your heirs own the property or are liable for any title warranties made when you sell the property. You should keep your owner policy, even if you transfer your title or sell the property.

In Texas, title policy forms are standardized. This means the policy language is the same, regardless of the company. It’s important that you read your policy carefully because different companies may describe their coverage exceptions differently. Pay special attention to Schedule B of the policy, which explains any limitations, exclusions, exceptions, and special conditions.

Whenever you are planning to close on the purchase of real estate in Texas, you should consult with a lawyer experienced in reading and undertanding title insurance policies, expections, surveys and earnest money contracts. San Antonio Attorney Trey Wilson is experienced in real estate law, including how to file a title insurance claim, understanding title insurance coverage and exclusions / exceptions. He may be contacted at R L Wilson, P.C. Law Firm by calling 210/223-4100 or online at www.sa-law.com