WHAT IS TITLE INSURANCE?

Title Insurance is a contract between the insured and the title company. Under the terms of the contract the insured agrees to pay a premium and the title company agrees to defend the title or pay losses the Insured may suffer if the title is challenged or defective.

Is there only one type of Title Insurance Policy?
No. The most often requested policies are:

• Owners Title Policy: Protects the owner of the property while he is the owner and after the property is sold.
• Mortgagee Title Policy: Protects lender from loss if it is determined that its lien is not valid or is inferior to another lien not shown as an exception to coverage on the policy.
• Leasehold Title Policy: Insures against losses a tenant may suffer in the event the landlord does not own the property.

What is the amount of coverage?

• Owners Title Policy - The policy will be issued in the amount of the current sales price. If there is no sale, the policy must be issued for the fair market value of the property.
   
• Mortgagee Title Policy - The policy will be issued in an amount equal to the current outstanding loan balance.
   
• Leasehold Title Policy - The policy will be issued in an amount equal to one of the following:
   
1. The total amount of rentals payable under the lease contract, or
2. The value of the land and any existing improvements, or
3. The value of the land and any existing improvements and the costs of improvements immediately contemplated to be built on the property.

Is Title Insurance just like other insurance?
No. Title Insurance insures against events that happened in the past that affect title to the property. Other types of insurance protect against events in the future.

How does a title company determine if it will insure the property?
Before issuing a title policy a search is made of county real property records. This search is done by using the company abstract plant which maintains references to deeds, mortgages, liens, deaths, divorces, etc. which might affect the property.

These instruments are examined by the title company.

The results of the examination determine whether the title company will issue a policy and what exceptions to coverage will be taken in the policy. The search and the commitment are not representations as to title but are done for title insuring purposes.
 

Can one get title insurance on any property?
No. Title insurance is not intended for titles known to be bad or defective.

Can a defective title be cured?
Sometimes. Depending on the nature of the title defects, they may be corrected with the assistance of an attorney of the seller’s choice.

Correction methods include affidavits, correction deeds and other documents. Court action may be necessary.

Many times the commitment for title insurance will list what items or actions would be necessary to remove the matter in question as an exception to coverage.

The title company does not cure bad titles or write legal papers. Documents required by the title company are not meant to cure a title defect, they are required to satisfy the title company that the property is insurable.
 

Why buy a title policy if an attorney has carefully searched the records and title is found to be good?
There are many hidden defects which may affect title to real estate. Some examples are:

1. Forgeries
2. Frauds
3. False Representation
4. Lost Wills
5. Mistakes in Descriptions
6. Undisclosed heirs
7. Clerical Errors
8. Illegal Trusts

Defects may not appear in the records and may not be picked up by even the most thorough search.

Can you afford title insurance?
Yes. There is a one time premium for coverage. There are no annual renewals. Compared to the cost of a loss, the expense of the premium is a bargain.

TITLE INSURANCE RATES ARE FIXED BY THE TEXAS DEPARTMENT OF INSURANCE.

This information is provided to help you understand title insurance. For exact coverage offered, you must rely on your policy.

WHY DO YOU NEED TITLE INSURANCE?

Many title problems can arise to cause the complete or partial loss of your home or business property.

Won't a search of title keep problems from arising?
Even the most careful search of the public records will not find every title problem. Because some problems are hidden, your title may appear to be perfect but in fact there may be a problem that is a land mine waiting to explode.

Are all my possible losses covered by an owner policy of title insurance?
No, owner’s title insurance protects you against financial loss caused by covered title risks. The title insurer, without expense to you, will defend you against an attack on the title to your property as insured. If the attack is successful, the title insurer will indemnify you against the defined financial loss up to the policy limit.

Do I pay Annual Premiums?
A small, one-time premium provides you with this valuable protection.

Where can I get an Alamo Title Insurance Policy?
Before buying real estate, give us or one of our title insurance agents a call. Ask how simple it is to insure yourself against title loss.

What are some examples of problems title insurance protects against?
To give you an idea of the types of title problems that may occur, we have compiled this list of "Land Mines" that could result in partial or complete loss of your property or an expensive lawsuit.

"LAND MINES"

1. Documents executed under duress.
2. Defective acknowledgments.
3. Deeds by minors.
4. Inadequate legal descriptions.
5. Easements established through continued use but not discovered by a survey or in the public record.
6. Mistakes in recording legal documents.
7. Mistaken reports furnished from taxing authorities.
8. Misinterpretation of wills.
9. Deed of community property recited to be separate property.
10. Errors in tax records. (For example, listing payment against wrong property account.)
11. Birth or adoption of children after date of will.
12. Falsification of records.
13. Undisclosed or missing heirs.
14. Errors in indexing of legal documents by the County.
15. Surviving children omitted from a will.
16. Deeds to or from defunct corporations.
17. Marital rights of spouse allegedly, but not legally, divorced.
18. Instruments executed under fabricated or expired powers of attorney.
19. Forged deeds, releases, etc.
20. Deeds by persons supposedly single but secretly married.
21. Deeds from persons not competent to handle their affairs.

A TITLE INSURANCE POLICY IS A CONTRACT BETWEEN YOU AND ALAMO TITLE INSURING YOU AGAINST LOSS IN THE EVENT A TITLE DEFECT OCCURS RESULTING FROM A COVERED RISK.

WHAT ARE AD VALOREM PROPERTY TAXES?

AD VALOREM TAXES ARE PROPERTY TAXES.

Are Ad Valorem tax liens priority liens over all voluntary liens in Texas?
Yes. Property taxes (based on the value of the property) are required by law to be assessed and available on the tax rolls by October 1 of each year.

Realistically the tax rolls are usually not available on October 1, but are available in the months of October and November.

What tax exemptions are available?
There are several exemptions available to property owners in the State of Texas:

• Homestead
• Over 65
• Disabled
• Agricultural

Check with each taxing authority regarding your exemptions.

When are taxes payable?
Taxes become a lien on January 1 of each year. However, they cannot be paid until October 1. Some taxing authorities give a varied percentage discount if paid early (between October and January). Taxes become delinquent after January 31, of the next year.

When is the tax lien imposed?
Even though the taxes for the year are not assessed and payable until near the end of the year, the law automatically imposes a superior lien against all real property on January 1 of every year to secure payment of the taxes for that year.

The superior lien being applied January of each year requires the prorating or apportioning of taxes between seller and buyer, if a sale takes place between January and October.

How are taxes prorated at closing?
Prorations at the time of closing  allow the seller to give the buyer that portion of the taxes that the seller is liable for (from the first of the year) so that when the taxes are payable in the fall of the year the buyer or his lender will have all the funds required to pay the taxes due for the whole year.

WHAT IS A HOMESTEAD? AND OTHER PROPERTY FACTS.

What is the significance of a Texas Homestead?
Homestead essentially means a protection afforded the owner of a primary residence, business or lived on rural property, which prevents the forced sale of the property to satisfy debts of the owner.

How much of my property is considered Homestead?
The homestead protection is limited to one acre in an urban area and 200 acres in a rural area (100 acres if single). You may have both residential and a business homestead in an urban area and the one acre can be an accumulation of both. You cannot have an urban and a rural homestead simultaneously.

May I borrow against my Homestead?
You can only borrow against your homestead and create a valid lien which can be foreclosed against the homestead for non-payment of:

• Purchase Money
• Home Improvements Loan
• Payment of Taxes
• Owelty Liens
• Federal Tax Liens

What documents are required to improve my Homestead?
If you wish to borrow money to improve, repair, or add-on to your homestead, you must execute (both husband and wife) a Builder’s and Mechanic’s Lien Contract with the contractor who will provide the work and supplies prior to any work being performed and the instrument must be recorded at the County Clerk’s office.

What is community property?
Community property means if you buy property while married, it will be presumed to be jointly owned by you and your spouse. However, there are ways separate property can be acquired during marriage.

What is separate property?
Separate property is property acquired before marriage, or acquired during marriage by gift or inheritance.

HOW TO MAKE SETTLEMENTS EASIER?

A Settlement is:

• Protects the parties to the transaction by having a neutral party seeing that their agreement is implemented.
• Allows the seller to use part of the purchase money to pay his liens and to pass title to the purchaser subject only to the liens agreed to in the sales agreement.
• Aids in the settlement of multiple property transactions.
• Aids in a transaction involving a sale and simultaneous release.
• Enables the real estate broker to devote more time to selling other properties by turning over to the settlement agent the time-consuming details of settlement.
• Inspires confidence in buyers and sellers of real estate that the appropriate documents have been signed and recorded and that taxes and prior liens against the property have been paid.
• Assures lenders that the disbursement of their loan proceeds has been property handled.

What does the settlement agent need from the seller before closing?
After discussing the requirements of the commitment for title insurance with the settlement agent, the seller or his attorney should make the following items available to the settlement agent:

• Deed, other required title documents and curative documents. Please note that title companies do not prepare legal documents that are used for the parties’ benefit (such as deeds, releases, or mortgage instruments), nor are title insurance agents required to cure title defects.
• Hazard insurance policies with proper endorsements and assignments attached (when existing policies are to be assigned) as required by the lender.
• Payoff statements from the holder of existing liens.
• All unrecorded releases of liens or discharges of mortgages in his possession.
• The most current paid real estate tax statements and receipts.
• A statement showing the amount of real estate commissions to be paid out of the settlement and to whom payable.
• An agreed division of charges for title premiums, recording fees and settlement charges.
• Copy of the earnest money contract, fully executed and dated; also, any bill of sale covering personal property or required property condition disclosures.

What does the settlement agent need from the buyer before closing?
The Purchaser and his attorney should make the following available to the settlement agent to expedite closing:

• Required funds in the form of a certified check, cashier’s check or wire transfer instructions.
• Required hazard insurance policies (when not taking over existing policies).
• Other documents required by the earnest money contract.

What does the settlement agent need from the lender before closing?
The Lender should provide to the settlement agent written closing instructions describing the lender’s requirements for insurance in connection with the closing and funding, including:

• Hazard insurance requirements.
• Special provisions required to be in mortgagee policies.
• Payment of service charges and mortgage costs.
• Any other matters relating to the settlement.

What is the duty of the settlement agent's role to the parties?
A settlement or escrow agent is a neutral third party who disburses funds in accordance with the agreement of the parties.

Why Alamo's Title Insurance Agents are your best choice.
Many attorneys, lenders, developers, home builders and real estate brokers close their real estate transactions through our title insurance agents. The simple reason for their decision: It’s easier for them and safer for you.

A TITLE INSURANCE POLICY IS A CONTRACT BETWEEN YOU AND ALAMO TITLE INSURING YOU AGAINST LOSS IN THE EVENT A TITLE DEFECT OCCURS RESULTING FROM A COVERED RISK