Who pays for the title policy in Texas on new homes?  In Texas, the title policy is normally paid for by the seller; however don't assume that the seller will automatically pay.  It must be negotiated during the offer.    This is one of the many reasons why you should be represented by a knowledgeable Realtor in a new home transaction.  Often times a buyer assumes that the builder will pay for title, only to discover after the contract is signed, that the buyer is paying instead.  This could cost the buyer several hundreds, possibly thousands of dollars depending on the sales price.

There are two major title policies that are issued, the owner’s policy and the lender’s policy (also known as the mortgagee policy).  The owner's policy is the main policy and it protects the owner.  It covers the full amount of the purchase price.  It benefits the owner or his heirs(in the event of a death).   In contrast, a lender's title policy only protects the lender.  It is strictly for the benefit of the lender and covers only the loan amount, which is the amount the lender has at risk.  Lenders require lender's title policies as a condition to making loans.  Both policies are a one-time premium. 

Title policies are crucial in a real estate transactions.  They offer protection against risks such as: false representations, undiscovered liens, mistakes at law, forgeries, undisclosed heirs, illegal trusts, delinquent taxes, fraud, clerical mistakes, lost wills, mistakes in legal description, defective acknowledgments on documents, platting discrepancies etc. The parties are protected as long as they have an interest in the property.   The cost of the title policy in Texas is promulgated by the Texas Department of Insurance.  Therefore, all title companies will charge the same rate based on the sales price.  Click here for the title insurance rates for Texas.