17.38 Residential Owner Title Policies


In General

The Texas Residential Owner Policy was adopted by the Texas Department of Insurance on January 1, 1993. This policy form is written in “plain language” for the purpose of easier reading and understanding.

The residential owner policy is to be used when issuing title insurance on property which meets the following guidelines:

·  Land is residential real estate (one-four family housing) within a recorded subdivision which includes condominiums; or

·  On five (5) acres or less; or

·  Two hundred (200) acres or less to be used by individual insureds for agricultural production.

See Procedural Rule P-1(u) and Procedural Rule P-38.

The policy is composed of the following parts or sections:

·  Owner’s Information Sheet

·  Owner’s Coverage Statement

·  Covered Title Risks

·  Schedule A

·  Schedule B

·  Exclusions

·  Conditions


Situations Where The Residential Policy Is Not

·  Property is commercial property.

·  Property is vacant property.

·  Property is not within category of one-four family residential dwellings within a recorded subdivision.

·  Property consists of more than 200 acres to be used for agricultural purposes.


Owner’s Information Sheet

The information sheet gives a brief outline of the policy features.


Owner’s Coverage Statement

This statement is designed to provide a short and simple summary of the policy benefits.


Insuring Provisions

The “Insuring Provisions” contained in the Texas Owner Policy are referred to as “Covered Title Risks” in the residential owner policy form. The major difference is that the provisions have been reworded and simplified.


This Policy covers the following title risks subject to the Exceptions (p. 4) and Exclusions (p. 2), if they affect your title to the land on the Policy Date. We do not promise that there are no covered risks. We do insure you if there are covered title risks.

¨  Someone else owns an interest in your title.

¨  A document is invalid because of improper signature, acknowledgment, delivery, or recording.

¨  A document is invalid because of forgery, fraud, duress, incompetency, incapacity or impersonation.

¨  Restrictive covenants apply to your title.

¨  There is a lien on your title because of:

 a mortgage or deed of trust,

 a judgment, tax, or special assessment, or

 a charge by a homeowner’s or condominium association.

¨  There are liens on your title for labor and material which have their inception before the policy date. However, we will not cover liens for labor and material that you agreed to pay for.

¨  Others have rights in your title arising out of leases, contracts or options.

¨  Someone else has an easement on your land.

¨  You do not have good and indefeasible title.

¨  There are other defects in your title.

¨  There are other liens or encumbrances on your title.

This Policy also covers the following title risk:

You do not have any legal right of access to and from the land.


Exclusions From Coverage

In the Texas Residential Owner Policy Form the “Exclusion from Coverage” are plainly referred to as “Exclusions” and consist of the following:


In addition to the Exceptions in Schedule B, we do not insure you against loss, costs, attorneys’ fees, and expenses resulting from these Exclusions:

¨  We do not cover loss caused by the exercise of governmental police power or the enforcement or violation of any law or government regulation. This includes building and zoning ordinances and laws and regulations concerning:

 Land use

 Improvements on the land

 Land division

 Environmental protection

This exclusion does not apply to notices of violations or notices of enforcement that appear in the public records at Policy Date. However, there may be an Exception in Schedule B.

·  We do not cover the right to take the land by condemning it, unless:

¨  a notice of exercise of the right appears in the public records on the Policy Date, or

¨  the taking happened before the Policy Date and is binding on you if you bought the land without knowing of the taking.

·  We do not cover title risks:

¨  that are created, allowed, or agreed to by you,

¨  that are known to you, but not to us on, the Policy Date unless they appeared in the public records,

¨  that result in no loss to you, or

¨  that first affect your title after the Policy Date. This does not limit the labor and material lien coverage in Item 6 of the Covered Title Risks.

·  We do not cover the effect of failure to pay value for your title.

·  We do not cover lack of a right:

¨  to any land outside the area specifically described and referred to in item 3 of Schedule A,

¨  in streets, alleys, or waterways that touch your land.

This exclusion does not limit the access coverage in the Covered Title Risks.

·  We do not cover any claim based upon allegations that your purchase of title (or acquisition of title by gift or otherwise):

¨  was a fraudulent conveyance, fraudulent transfer, voidable distribution, or voidable dividend;

¨  should be subordinated or recharacterized as a result of equitable subordination;

¨  was a preferential transfer unless

 the Company or its issuing agent failed to timely file for record the deed to you after delivery, or

 the recordation of the deed to you is not legal record notice.

(We do not cover the two types of claims described in c.(1) and c.(2) above).

·  We do not cover the refusal of any person to buy, lease or lend money on your land because of unmarketability of the title.

·  We do not cover claims concerning the physical condition of your land or of the access to your land.



The “Conditions” of the Texas Residential Owner Policy Form are labeled and worded in plain language for easy identification and understanding.

The “Conditions” relate to the following topics:

·  Definitions

·  Continuation of Coverage

·  Your Duties if You Make a Claim

·  Our Choices When You Notify Us of a Claim

·  Handling a Claim or Court Case

·  Limitations of Our Liability

·  Transfer of Your Rights

·  Arbitration

·  Entire Contract Provision

·  Complaint Notice


Commitment Preparation

According to Procedural Rule P-18, a commitment for title insurance must be issued on all residential real property. The commitment should show on Schedule A that the contemplated transaction involves the issuance of a residential owner policy form.


Schedule A Analysis

(For the full analysis of Schedule A, see “Owner Policies” Section 14.12.5.)

Schedule A of the Texas Residential Owner Policy Form has the following special characteristic:

The named insured and the owner of the property must be the same.


Schedule B Analysis

(For the full analysis of Schedule B, see “Owner Policies” Section 14.12.6.)

Schedule B of the Texas Residential Owner Policy Form has the following special characteristics:

·  The tidelands exception has been revised and simplified.

·  If access cannot be insured under this new policy, the following language under Procedural Rule P-37 must be added:

“Lack of a right of access to and from the land. Company deletes the insurance of access under Covered Title Risks.”


Endorsements to Residential Owner Policy Form

·  Leasehold Endorsement (For a full analysis, see “Leasehold Insurance” Section 11.04.)

·  Increased Value Endorsement (For a full analysis, see “Owner Policies” Section 14.12.7.)