Buying and closing
Title insurance in Texas: how it works
Texas handles title insurance differently from most states. The Texas Department of Insurance (TDI) sets the premium rates and the policy forms, so the base premium for the same coverage is the same at every title company. Most Texas residential sales also close through a title company acting as escrow agent. This guide explains the policies, the commitment, the survey, and how they fit the timeline of a standard resale contract.
Not legal advice. The contract references below are to the Texas Real Estate Commission (TREC) One to Four Family Residential Contract (Resale), form 20-19, effective July 1, 2026. Earlier and later versions differ. Read the form you actually sign, and ask a Texas real estate attorney about anything you don't understand.
Why Texas premiums are the same everywhere
Chapter 2703 of the Texas Insurance Code directs the commissioner of insurance to fix and promulgate the premium rates title insurers and agents charge, after public hearings. A premium may not be charged at a rate different from the promulgated rate. TDI publishes the rate schedule and rate rules in its Basic Manual of Title Insurance. In practice that means:
- You don't shop title companies on the base policy premium, because it is set by rule.
- You can compare service, experience, location, and escrow and closing fees, which are separate from the premium.
- Endorsements and amendments also carry premiums set in TDI's rate rules.
Owner's policy and loan policy
| Owner's policy | Loan policy | |
|---|---|---|
| Protects | The buyer's ownership | The lender's lien |
| Amount | Usually the sales price | Usually the loan amount |
| Required? | Not by law, but the TREC contract provides for one | Required by nearly all lenders |
| Who pays | Chosen in the contract: seller's or buyer's expense | Usually the buyer, as a loan cost |
| Lasts | As long as the insured owns the property, subject to policy terms | Until the loan is paid off |
When both policies are issued in the same transaction, TDI's rate rules provide simultaneous-issue pricing for the loan policy. An all-cash investor who skips the owner's policy has no title coverage at all, which is worth weighing against the one-time premium.
What the policy excludes
A title policy insures against loss from covered title defects, subject to exclusions and to the exceptions listed in the policy. The TREC resale contract lists the exceptions the buyer accepts, including restrictive covenants common to the subdivision, standby fees, taxes and assessments, liens from the buyer's own financing, utility easements in the plat, and standard printed exceptions. Anything else that shows up in the commitment can be objected to.
The commitment
The title commitment is the title company's offer to insure, with its list of requirements and exceptions. Under paragraph 6 of the TREC resale contract, the seller must furnish the commitment and copies of the exception documents within 20 days after the title company receives the contract, with an automatic extension of up to 15 days (or until 3 days before closing, if earlier). Read three parts closely:
- Schedule A: who is insured, the amount, and the legal description.
- Schedule B: exceptions from coverage, such as easements, restrictions, mineral reservations and leases.
- Schedule C: what must happen before the policy issues, such as releasing old liens or getting signatures from all owners.
The survey and the "area and boundary" exception
A standard printed exception excludes coverage for discrepancies, shortages in area or boundary lines, encroachments and overlapping improvements. The contract lets the parties choose whether this exception will be amended to read only "shortages in area", and at whose expense. The amendment requires an acceptable survey and carries an additional premium set by TDI.
Paragraph 6C of the contract offers three survey choices: the seller provides an existing survey with a TDI T-47 affidavit or T-47.1 declaration that nothing has changed, the buyer orders a new survey, or the seller provides a new one. If the title company or lender will not accept the existing survey, a new one is needed. For an older rental with fences, sheds or additions, a new survey often reveals issues worth knowing about before closing.
A typical resale timeline
| When | What happens under TREC 20-19 |
|---|---|
| Effective date | The date of final acceptance, written in on the signature page; most deadlines count from it |
| Within 3 days | Buyer delivers the earnest money and the option fee to the escrow agent (paragraph 5A) |
| Option period (number of days agreed) | Buyer may terminate for any reason by notice by 5:00 p.m. local time on the last day. The option fee is not refunded; the earnest money is. |
| Within the agreed days | Seller's Disclosure Notice, if not already delivered (paragraph 7B), and survey (paragraph 6C) |
| Within 20 days of the title company receiving the contract | Commitment and exception documents |
| Agreed objection period | Buyer objects in writing to title or survey matters; seller has 15 days to cure |
| Closing date | Seller signs a general warranty deed; buyer pays in good funds; the title company records documents and issues the policy |
Time is of the essence for paragraph 5. A buyer who does not deliver the option fee on time loses the unrestricted right to terminate. If the buyer does not deliver the earnest money on time, the seller may terminate or pursue other remedies. The seller's disclosure guide covers the separate termination right tied to the disclosure notice.
Points specific to investors
- Buying in an LLC. Name the entity as the buyer in the contract or assign it properly before closing, and give the title company the formation documents and authority it asks for. See LLCs for rental property.
- Property with tenants. The contract requires the Addendum Regarding Residential Leases when leases exist. Collect the leases, deposit ledger and rent roll, and expect lease exceptions in the policy.
- Foreclosure purchases. A trustee's deed usually carries no warranty, and a policy may be limited or unavailable at first. See foreclosure auctions.
- HOA property. The title company often requests the resale certificate. See HOA rules for landlords.
- Selling later in a 1031 exchange. The qualified intermediary must be in place before closing. See 1031 exchanges.
Common questions
Who pays for title insurance in Texas?
The TREC resale contract has a checkbox for the owner's policy at the seller's or the buyer's expense, so it is negotiated. Local custom varies. The buyer usually pays for the lender's policy.
Can I shop for a cheaper title policy in Texas?
The base premium is set by TDI, so it does not vary between companies for the same coverage. Escrow fees and other charges can differ.
What is a T-47 affidavit?
A TDI-promulgated form in which the seller states whether there have been changes to the property since an existing survey. With a T-47 or T-47.1, the title company may accept the existing survey.
Is an option fee refundable?
Under the current TREC resale contract, no. If the buyer terminates during the option period, the option fee goes to the seller and the earnest money is refunded to the buyer. If the sale closes, the option fee is credited to the price.
Related guides
- Texas seller's disclosure notice rules
- Texas property taxes for rental owners
- Texas LLCs for rental property
Official sources: TDI Basic Manual of Title Insurance and TREC resale contract.
Last reviewed 2026-09-17