Title insurance in Texas (Happy: real estate, lender, new house)

[2austin]

Hello,

Our builder just told us that per contract we are required to pay the title insurance for our new house; cost about $4k!

We did not know that in Texas the title insurance is paid by buyers. Unfortunately we did not read the fine print carefully.

Did anyone face similar fees? Is there is a legal option to dispute and have the builder pay the title insurance for the house "they" are building? This feels simply unfair to pay upwards of $500K for a brand new house and still have to pay for title insurance to ensure the property was legit when sold.

[AustinGuy]

You often can negotiate for the builder to pay the title insurance when you make the deal up front. Since you already made the deal, the only leverage you have is if you threaten to walk.

[woodinvilleguy]

I'm in the same situation and it pretty much sucks. I had my realtor complain and we are seeing what we can do. They pretty much have you over a barell though. It is weird because title insurance really protects them from you suing the crap out of them when the title wasn't filed correctly.

Ours comes to just under $3k, for a house that is between 450k and 500k. 4K seems high. You have the legal right to use any title insurance company that you want so I don't know if you could find a better deal or not.

[TexasHorseLady]

The price of title insurance is set by statute in Texas, and it's based on the purchase price of the house (you can find the current rates here) - all title companies charge the same for the policy. I'm assuming that you didn't have an agent represent you in the purchase before signing the contract - usually the seller pays for the title insurance, but it's a negotiable item.



Which title company is to be used is usually the seller's choice (often because the company they choose has already opened title on the property), but that's negotiable, as well, before the contract is signed.

[2austin]

Unfortunately both us and our real estate agent overlooked this. I know I should be mad at the agent (and myself) but that wont help. I guess there is no way out of this.

Thanks for the link. I assume the rates are pretty standard since they are set by state.

woodinvilleguy, please keep me posted if you find anything useful. I will do the same.

[HappyTexan]

And to add to TexasHorseLady's post..if a buyer wants an Owner's Policy then the buyer pays for that (which I did when I bought my land).

[TexasHorseLady]

HappyTexan, the Owner's Policy is the main policy that the seller usually pays for (and everybody should have one, even for land, though sometimes an abstract of title is used for land instead). The Mortgagee Policy is the less expensive one that the lender usually requires the borrower to pay for.

There's good information here on how this all works.

[2austin]

Thanks TexasHorseLady, your link was very useful!

All new homebuyers, make sure you hire a realtor who understands these hazards. Ours didn't and now we could end up paying $4k that we could have negotiated up front

[bjkkirk]

Cost of title insurance is negociable. In Texas the seller generally pays the insurance, however The cost is sometimes split between buyer an seller. Title insurance is a scam in Texas that is perpertrated by the lenders. If you read your title police it does nothing for you but say there were no leins against the property.

[WillYeung2828]

If you own the land and already have clear title on the land, then build a house on the land, are you still required by the lender to purchase title insurance?