01
If Texas does not require title insurance, why would a cash buyer buy it?
Texas does not require title insurance. The lender requires a loan policy to protect its interest in the loan. A cash buyer has no lender, so nobody in the deal has to raise the subject. The buyer and seller may negotiate who pays the premium. On TREC Form 20-19, Paragraph 6A, who pays is a checkbox with no preprinted default.
What a strong answer sounds like
A good answer says it plainly. Nothing in Texas law makes a buyer carry a policy, and the premium is negotiable. It points at Paragraph 6A and names which box the contract has checked. A cash buyer should hear that the box exists before signing anything.
Red flag
The costly version is silence. Being told the policy is just part of closing costs tells the buyer nothing. Being told to skip it because there is no lender is no better. Neither answer names what the policy actually covers.
02
Does the loan policy protect the buyer too, or only the lender?
Two different policies exist. The loan policy is issued to the lender and ends when the loan is repaid. The owner's policy protects the buyer against losses from ownership problems that arose before the purchase and were not known at the time. It lasts as long as the buyer or the buyer's heirs own the land. A cash buyer who skips the owner's policy has no policy at all.
What a strong answer sounds like
A good answer separates the two. The loan policy covers the lender until payoff. The owner's policy covers the buyer, in the amount of the sales price under Paragraph 6A, for as long as the family owns the land. A cash buyer hearing the word policy should ask who the insured party is.
Red flag
Describing title insurance as one product is the red flag. There are two, and only one names the buyer. A cash buyer told that closing includes title insurance should ask to see the owner's policy named on the paperwork.
03
What kind of title problems would a records search miss?
The Texas Department of Insurance lists what an owner's policy addresses. Forged or fraudulent documents are on the list. So is a transfer nobody was authorized to make. So is a document executed under a falsified or expired power of attorney. Undisclosed or unrecorded easements are there too, along with no right of access to and from the land.
What a strong answer sounds like
A good answer names cases, not categories. Ownership claims by undisclosed or missing heirs. A defect arising from an improper prior foreclosure. Undisclosed restrictive covenants. A buyer should be able to repeat two of those back after the conversation ends.
Red flag
Hearing that the search came back clean, so the policy is redundant, is the warning sign. A clean search is a search of the records. The defects on the Department list are the ones the records do not show.
04
Can a previous owner's unpaid bill become the new owner's problem?
Liens attach to the property. The Texas Department of Insurance lists them as covered examples. Statutory or constitutional contractor's, mechanic's or materialman's liens are on that list. So are liens for labor or materials furnished without the owner's consent. So is a previous owner's unpaid mortgage or deed of trust, judgment, tax or special assessment, or homeowners association charge.
What a strong answer sounds like
A good answer walks the commitment lien by lien. It says who clears each one before closing. A remodel finished shortly before the sale should prompt a question about contractor liens. The buyer should hear which liens are being released and which are staying on the land.
Red flag
Being told a cash closing is simpler, so liens matter less, has it backwards. The lien does not care how the buyer pays. Without an owner's policy the new owner absorbs that loss alone.
05
Should a cash buyer shop around for a cheaper title policy?
Title insurance rates in Texas are regulated. The Texas Department of Insurance sets the premium rate. Every title company charges the same premium for a policy. Shopping on premium is therefore pointless. The real comparison is service: how a company handles the file, what it will accept, and how early it starts clearing requirements.
What a strong answer sounds like
A good answer is direct. The premium is set by the state, so compare service instead. In Georgetown, Round Rock and Liberty Hill, where T. Kerr Property Group works, the useful question is what a company will accept on survey and lien items. The Department publishes the current rate table.
Red flag
A pitch built on a cheaper policy price is the signal to slow down. The premium does not move. What moves is who clears the title problems, and when that work starts.
06
Does a clean title commitment mean there are no title problems?
The commitment comes before closing and the policy comes after. A commitment says a company is willing to issue insurance under certain conditions, and if the seller fixes certain problems. It lists potential issues, exclusions and exceptions. It does not guarantee that no issues exist now or will arise later. It is a contract to issue a policy, not an opinion or report of title.
What a strong answer sounds like
A good answer walks the four schedules of the Texas form. Schedule A is the land, the insured, the policy amount and the estate. Schedule B is the exceptions from coverage. Schedule C is the requirements that must be cleared. Schedule D is the estimated premium and endorsements.
Red flag
Being handed a commitment and told it is clean is the moment to read Schedule C. Requirements left uncleared do not vanish at closing. They become exceptions on the policy the buyer just paid for.
07
Does the policy cover a boundary dispute with the neighbor?
Title insurance does not cover a boundary dispute with a neighbor unless extra coverage is bought. Schedule B item 2 of a Texas policy prints an exception. It covers discrepancies, conflicts or shortages in area or boundary lines, encroachments, protrusions and overlapping improvements. Amending that exception narrows it to shortages in area only. Rate Rule R-16 sets the price at 5 percent of the basic premium rate on a residential owner's policy. The minimum is $20.
What a strong answer sounds like
A good answer covers the survey and the amendment together. Under Procedural Rule P-2 a company may accept an existing survey, whatever its age, with a Form T-47 affidavit. The survey still has to be acceptable to the company. The company may not require an indemnity from a seller, buyer, borrower or lender to provide the coverage.
Red flag
A cash buyer with no lender is the one most likely to hear that the survey does not matter. The amendment is priced at $0 on a loan policy, so a lender never has to fight for it. Nobody is fighting for the cash buyer. A T-47 is also not a warranty of where the improvements sit.
This article is general information about the Central Texas market and is not legal, tax or financial advice. Statutes, rates, deadlines and district rules change. Confirm anything that affects a decision with a licensed attorney, a tax professional, the Williamson County Tax Assessor Collector or the Williamson Central Appraisal District before acting on it.
