Texas Real Estate Practices

Attorney Involvement

Please describe any requirements under applicable state law for attorney, abstractor or other special professional involvement, for example, in the search, examination, opinion of title, signing, closing, disbursement, recording, preparation of documents, and/or policy-issuance.

Attorney involvement is not required at any stage. Fee attorneys act as escrow officers for title companies and receive a percent of premium and can have the title company’s name on door in return for audit of their escrow accounts. Third party attorneys operate under authority of Procedural Rule P-22, are not escrow officers and cannot receive Insured Closing Protection. Search, exam and closing the transaction can all be done by layperson.

Title insurance agents must provide title evidence from a licensed abstract plant. Attorneys can, for an agreed upon fee, examine or close the transaction as defined in procedural rule P-1f of the Texas Basic Manual for Writing of Title Insurance promulgated by the Texas Insurance Department.

Cancellation/Commitment Fee

Does your state permit or require a cancellation fee or commitment fee upon cancellation?

No.

Certificate of Release (of Mortgage)

If anyone other than the lender (such as a title agent, settlement agent, underwriter or attorney) has the authority to release the security instrument, please describe.

Underwriter can sign a release affidavit after settlement agent has paid the loan and given lender notice that the loan was paid, no release has been sent by lender, and that the affidavit is being filed as a release. Proof of payment must be attached to the letter to the lender.

Deeds

Please describe the kinds of deeds that are customary for commercial and residential transactions. Please describe the kinds of deeds that are generally not insurable.

General warranty deeds (residential transactions) and special warranty deeds (commercial transactions) are commonly used for insured transactions. Deeds without warranty are acceptable with underwriter approval. Quit claim deeds do not provide bona fide purchaser status and except in family situations are generally not used in a current transaction, and are generally not insurable.

Joinder of Spouses

If a non-title holding spouse is required to join in the execution of a deed or a security instrument, please describe. Any analogous rights, such as those in a civil union or equivalent, should also be addressed. 

If the property is homestead of the owner and non-title holding spouse, joinder of the spouse is required. In case of certain liens, the non-titled spouse may sign only the lien instrument and not the debt instrument. Texas does not recognize civil unions or the equivalent.

Liens and Limitations

Please contact a local state underwriter with any questions.

Texas Limitation Statutes

 

 

Mortgage Tax

Is there a mortgage tax in your state? If yes, is it uniform across the state or does it vary? If it is uniform, please describe. 

No.

Payment Customs

Who customarily pays for:
(a) Owner’s Policy?
Seller, but negotiable
(b) Transfer Tax & Recording Fee? Buyer
(c) Survey Charges? Seller many times pays for the survey; buyer pays for area and boundary amendment.
(d) Closing/Settlement Fees? Parties customarily split escrow fees. Texas does not have a closing settlement fee.

Policy Countersignatures

Please describe any statutory or regulatory requirements for countersignatures in order to issue the policy (for example, residency requirements).

A licensed title insurance agent, licensed escrow officer or designated underwriter must countersign all policies.

Real Estate Taxes

Please describe the general tax year, due dates, and delinquency dates, including lien dates and payment cycle.

Real estate taxes become a lien on January 1st of each year, tax values and tax rates are not set until rolls are certified in October. Taxes are not yet due and payable from January to October. They are due and payable after October 1 and delinquent February 1 of the following year, unless installment payments are paid.

Search and Examination Fees

Is it permissible and/or customary to charge a separate search and/or examination fee, and under what circumstances? If your jurisdiction is all-inclusive, please state that.

Texas premiums are all-inclusive except for unregulated escrow fee charged to handle documents and settlement funds.

Search Requirements

Is there a minimum period of time for a title search required: (a) by state law, (b) pursuant to marketable record title acts, or (c) by any other applicable title examination standards (e.g., state bar association)? Please respond to each category. If a minimum search period exists for any category, please state it.

There is no minimum search requirement. The minimum period covered by an abstract plant is 25 years. All searches must be done in an abstract plant if one exists in a county or unless all of the owners of abstract plants in the county refuse to provide title evidence within the times and for the prices sets out in P-22-P-25. There is no marketable record title act. There are Title Examination Standards, which do not authorize a minimum period for the search.

Security Instruments (Deed of Trust vs. Mortgage)

Please describe the customary and permissible form(s) of security instruments used in your state. 

Deed of Trust

Who can be listed as the trustee on the Deed of Trust (e.g., residency and/or natural person requirements, etc.)?

Customarily the trustee is an individual who does not have to be a resident of Texas. Initial trustees are frequently replaced with substitute trustees who conduct foreclosures.

Can an underwriter or title agent be designated as the trustee? Yes
And, if so, is it customary? No

Standard Exceptions and Requirements

Please identify the standard exceptions and requirements that are customarily used in your state.

General exceptions are not allowed if an insured objects (P-5).  Parties in possession is governed by P-3.  Mechanic’s liens are governed by P-8. Taxes and rollback taxes are printed in the commitment and policy.

Standard Exceptions

In addition to the Exclusions and Conditions and Stipulations, your Policy will not cover loss, costs, attorney's fees, and expenses resulting from:

1.  The following restrictive covenants of record itemized below (We must either insert specific recording data or delete this exception):

2.  Any discrepancies, conflicts, or shortages in area or boundary lines, or any encroachments or protrusions, or any overlapping of improvements.

3.  Homestead or community property or survivorship rights, if any, of any spouse of any insured. (Applies to the Owner’s Policy only.)

Exception is taken to any homestead, community property or survivorship rights in this item. This exception only applies to any owner policy to be issued.

4.  Any titles or rights asserted by anyone, including, but not limited to, persons, the public, corporations, governments or other entities,

a. to tidelands, or lands comprising the shores or beds of navigable or perennial rivers and streams, lakes, bays, gulfs or oceans, or
b. to lands beyond the line of the harbor or bulkhead lines as established or changed by any government, or
c. to filled-in lands, or artificial islands, or
d. to statutory water rights, including riparian rights, or
e. to the area extending from the line of mean low tide to the line of vegetation, or the rights of access to that area or easement along and across that area.


(Applies to the Owner’s Policy Only)

5.  Standby fees, taxes and assessments by any taxing authority for the year 20____, and subsequent years, and subsequent, taxes and assessments by any taxing authority for prior years due to change in land usage or ownership, but not those taxes or assessments for prior years because of an exemption granted to a previous owner of the property under Section 11.13, Texas Tax Code, or because of improvements not assessed for a previous tax year.  (If Texas Short Form Residential Mortgagee Policy of Title Insurance (T-2R) is issued, that policy will substitute “which become due and payable subsequent to Date of Policy” in lieu of “for the year 20____ and subsequent years.”)

6.  The terms and conditions of the documents creating your interest in the land.

7.  Materials furnished or labor performed in connection with planned construction before signing and delivering the lien document described in Schedule A, if the land is part of the homestead of the owner. (Applies to the Mortgagee Title Policy Binder on Interim Construction Loan only, and may be deleted if satisfactory evidence to us before a binder is issued.)

8.  Liens and leases that affect the title to the land, but that are subordinate to the lien of the insured mortgage. (Applies to Mortgagee Policy (T-2 only.)

9.  The Exceptions from Coverage and Express Insurance in Schedule B of the Texas Short Form Residential Mortgagee Policy of Title Insurance (T-2R).  (Applies to Texas Short Form Residential Mortgagee Policy of Title Insurance (T-2R) only.  Separate exceptions 1 through 8 of this Schedule B do no apply to the Texas Short Form Residential Mortgagee Policy of Title Insurance (T-2R).

10. The following matters and all terms of the document creating or offering evidence of the matters (We must insert matters or delete this exception.):

11. Rights of Parties in Possession.  (Applies only if the Insured completes Waiver of Inspection.)

12a. Owner’s Policy (amount to include the cost of immediately contemplated improvements)

“Any and all liens arising by reason of unpaid bills or claims for work performed or materials furnished in connection with improvements placed, or to be placed, upon the subject land.  However, the Company does insure the Insured against loss, if any, sustained by the Insured under this Policy if such liens have been filed with the County Clerk of _______ County, Texas, prior to the date hereof.”

“Liability hereunder at the date hereof is limited to $_______.  Liability shall increase as contemplated improvements are made, so that any loss payable hereunder shall be limited to said sum plus the amount actually expended by the Insured in improvements at the time the loss occurs.  Any exceptions made for improvements, subsequent to the date of this policy, will be deemed made as of the date of this policy.  In no event shall the liability of the Company hereunder exceed the face amount of this policy.  Nothing contained in this paragraph shall be construed as limiting any exception or any printed provision of this policy.”

12b. Loan Policy (issued prior to completion of improvements)

“Any and all liens arising by reason of unpaid bills or claims for work performed or materials furnished in connection with improvements placed, or to be placed, upon the subject land.  However, the Company does insure the Insured against loss, if any, sustained by the Insured under this Policy if such liens have been filed with the County Clerk of _______ County, Texas, prior to the date hereof.”

“Pending disbursement of the full proceeds of the loan secured by the lien instrument set forth under Schedule A hereof, this policy insures only to the extent of the amount actually disbursed, but increases as each disbursement is made in good faith and without knowledge of any defects in, or objections to, the title up to the face amount of the policy.  Nothing contained in this paragraph shall be construed as limiting any exception under Schedule B, or any printed provision of this policy.”

Requirements
Your Policy will not cover loss, costs, attorney's fees, and expenses resulting from the following requirements that will appear as Exceptions in Schedule B of the Policy, unless you dispose of these matters to our satisfaction, before the date the Policy is issued:
1.  Documents creating your title or interest must be approved by us and must be signed, notarized and filed for record.

2.  Satisfactory evidence must be provided that:

  • no person occupying the land claims any interest in that land against the persons named in paragraph 3 of Schedule A,
  • all standby fees, taxes, assessments and charges against the property have been paid,
  • all improvements or repairs to the property are completed and accepted by the owner, and that all contractors, subcontractors, laborers and suppliers have been fully paid, and that no mechanic's, laborer's or materialman's liens have attached to the property,
  • there is legal right of access to and from the land,
  • (on a Mortgagee Policy only) restrictions have not been and will not be violated that affect the validity and priority of the insured mortgage.

3.  You must pay the seller or borrower the agreed amount for your property or interest.

4.  Any defect, lien or other matter that may affect title to the land or interest insured, that arises or is filed after the effective date of this Commitment.

State-specific Policy Variations

If there are state-specific changes to the provisions in the ALTA policies (e.g., Arbitration, Minerals), please describe.

Texas forms, policies, commitments, binders and endorsements are promulgated by the Insurance Commissioner. After May 1, 2008, they are essentially the ALTA forms with minor variations.

By law, Texas title insurance policies may not insure marketable title.
Texas policies insure good and indefeasible title.
Texas policies insure against mechanic’s liens with an inception on or before Date of Policy.
Texas policies require specific responses if a claim is made.
Texas policies do not provide mandatory arbitration if the insured is a natural person.

Title Insurance Form and Filing Regulations

Please describe the form and/or rate filing requirements, if any, related to policies and endorsements. Please describe any applicable rating bureau. 

The Texas Insurance Commissioner promulgates both rates and forms after public hearings. Tdi.state.tx.us is the insurance department website.

Transfer Taxes

Is there a transfer tax in your state? If yes, is it uniform across the state or does it vary? If it is uniform, please describe.

No.

Usury

Is usury coverage available?

No.

Withholding Taxes

What are your state’s requirements, if any, with regard to withholding proceeds from a sale, similar to but not including FIRPTA?

None.

Witness Requirements

Are witnesses required on a deed or security instrument? If so, please describe.

No. Acknowledgement by notary is the norm. Two witnesses can replace the notary, but this is not common.