Title FAQ

What is Title Insurance?

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 title in the event a defect, or problem, occurs.

Can I choose which Title company I use?

Yes!  You have the choice of which title company you prefer to use.  We are authorized to issue title policies in Archer, Clay, and Wichita counties, and we would be honored to serve you for all of your title needs!

What are the current Title Insurance rates?

Click here to view and/or download current title insurance rates.

Glossary

Abstract of Title:  The condensed history of the title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate.

Abstract Plant:  A geographically-filed assemblage of title information which helps expedite title examinations, such as copies of attorney’s previous title opinions, abstracts, tax searches, and copies or take-offs of the public records.

Accrued Item:  Expense that will be billed to the buyer but is owed by the seller.

Attorney’s Opinion:  The written statement of an attorney setting forth what he believes to be the condition of a real estate title.

Binder:  Sometimes called a “preliminary certificate”, a binder is a preliminary report as to the condition of the title and is a commitment to issue a title insurance policy in a certain manner when certain conditions are met.

Certificate of Title:  Sometimes called an “Abstract Certificate”, a certificate issued by a title examiner stating the condition of a title. Usually more formal than an attorney’s opinion.

Chain of Title:  The chronological and successive composite of all the instruments affecting the ownership of a property. The chain of title starts with the original source of title (for example, the State of Texas) to each successive owner to the present day. Each conveyance is a link in the chain.

Closer:  See “Escrow Agent”.

Closing:  The consummation of a real estate transaction, when the seller delivers title to the buyer in exchange for payment by the buyer of the purchase price. Closings typically take place at the title company, but are sometimes conducted at an attorney’s office.

Closing Costs:  Various fees and expenses payable by the seller and buyer at the time of real estate closing, set out in the settlement statement.

Closing Statement:  Also known as a “settlement statement” or “HUD-1”, the closing statement is a summation, in the form of a balance sheet, prepared before and executed at closing which shows the amounts of debits and credit to which each party to a real estate transaction is entitled.

Cloud on Title:  An irregularity or encumbrance which, if valid, would adversely affect or impair the title. Clouds on title must be cured (see “Curative”) prior to closing.

Community Property:  Nine states (including Texas) have community property laws which pertain to all property that has been acquired during a marriage (other than a gift or inheritance). Even if one spouse earns all the money to acquire the property, all the property acquired is considered to be community property. While there are a number of differences in each state, all states have special laws that operate on the theory that both spouses contribute equally to the marriage; thus all property acquired during the marriage is the result of the combined efforts of both spouses. In community property jurisdictions, souses equally own all community property (fifty percent owned by the husband and fifty percent owned by the wife).

Contract:  A legally binding and enforceable agreement between two or more persons regarding an exchange (of money, promises, property or services). In order to be valid, a contract must be between two or more legally competent parties and include an offer, an acceptance and consideration.

Curative:  The body of measures required by the examiner to “cure” defects in the chain of title, to correct erroneous or ambiguous instruments, and to reconcile record title with the actual use and possession of the land.

Document Preparation:  Fee charged by attorney for preparing legal documents for transaction.

Earnest Money:  An amount of money deposited by a prospective buyer as evidence of good faith under the terms of a contract. The earnest money deposit is forfeited if the buyer defaults but applies to the sales price if the sale is closed.

Easement:  A right to use the land of another for a specific purpose, such as for right-of-way or utilities.

Encroachment:  A building or some portion of it (for example, fences, garage eaves, deck encroachments into power line easements, roof encroachments over building lines, and misaligned driveways) that extends beyond the land of the owner and illegally intrudes onto a portion of an adjoining owner’s property. Encroachments will be noted on the survey and in the title policy.

Encumbrance:  Any lien (such as a mortgage, tax or judgment lien, or an easement or a restriction on the use of the land) that may diminish the value of a property; a cloud against clear, free title to property.

Escrow:  An agreement between two or more parties providing that certain instruments or property be placed with a third party (usually a title company) for safekeeping, pending the fulfillment of performance of a specified act or condition.

Escrow Account:  An account held by the lending institution into which the borrower pays taxes, insurance and special assessments and from which the lender pays these sums as they become due. This type of escrow account is not the same as being “in escrow” or “in contract” during the sales of real estate; this type of escrow account is optional to most borrowers but is a popular option, as they can avoid large annual lump-sum insurance or tax bills by paying into their lender’s escrow account each month.

Escrow Agent:  Also known as a closer or settlement agent, the escrow agent is the disinterested third party responsible for receiving and holding funds and documents related to a real estate transaction, for preparing the HUD-1 Settlement Statement, and for closing the transaction in accordance with instruction.

Escrow Fee:  Charged by the title company to service transaction and to escrow money and documents; amount varies with company; usually split between buyer and seller.

Exception:  A provision in a title insurance binder or policy which excludes liability regarding a specified title defect or an outstanding lien or encumbrance.

Fiduciary Relationship:  A relationship of trust, confidence and responsibility, such as between trustee and beneficiary, attorney and client, or agent and client. The fiduciary party must exercise obedience, loyalty, disclosure, care, accountability and responsibility.

Forfeit:  The act of losing money or a right as a result of failure to perform an agreement, obligation or duty.

Hazard Insurance:  Also called “homeowner’s insurance” or “property insurance”, provides coverage for specific physical property hazards such as fire, wind, earthquakes and vandalism. During the closing of a property sale, the buyer is almost always required to obtain some form of hazard insurance.

Homeowner’s Insurance:  Protects property and contents in case of loss; must be for at least loan amount or for 80% of the value of the improvements, whichever is greater.

Homestead:  Property designated as a primary residence, which under Texas Homestead Law is protected from forced sale to pay debts.

Homestead Exemption:  A rule that discounts the value of your primary residence for taxing purposes. Homeowners are eligible for the exemption if they property was their primary residence on January 1, if it is owned by an individual (not a corporation or partnership) and if they apply to the appropriate taxing authorities.

HUD:  Also known as a HUD-1, HUD-1 Settlement Statement, or the Uniform Settlement Statement, this form is required on every federally-related mortgage transaction. It provides a financial snapshot of the flowing, documenting in balance sheet format all the monies flowing into an out of settlement. The Settlement Agent is responsible for preparing the HUD-1 and closing the transaction in accordance with several documents. (See “Escrow Agent”).

Index:  1) An alphabetical listing in the public records (county clerk’s office) of the names of parties to recorded real estate transactions, together with the volume and page where the recorded instrument can be found; 2) The geographic listing in abstract and title plants of recorded real estate instruments in groups according to land descriptions; 3) The alphabetical listing in abstract and title plants which affect but do not describe particular real estate, such as judgments, powers of attorney, wills and probate proceedings.

Inspections:  An examination of property for various reasons such as termite inspections; inspection to see if required repairs were made before funds are received, etc.

Interest:  Always paid in arrears.

Lenders Title Policy:  See “Mortgagee Title Policy”.

Lien:  Claims or charges against property that serve as security for obligations or debts. Liens may be created by a contract such as a mortgage, or by operation of law, such as a mechanics lien or a tax lien.

Loss:  1) Damage suffered by a person due to defects in or liens upon his title to real estate; 2) Money paid by the title insurance company in settlement of policy claims.

Marketable Title:  Title that is free of defects that can be conveyed to a new owner without the likelihood that claims will be made on it by someone else.

Mortgagee Title Policy:  Also known as a “lenders title policy”, title insurance policy that protects a lender against loss. The lender is protected only as long as the loan is outstanding and for the amount of the loan balance at any given time.  It is required by lender to ensure that the lender has a valid lien; it does not protect the buyer.

Owners Title Policy:  A title insurance policy that protects a buyer or owner against loss by reason of defects in title. Policies can exclude certain encumbrances or defects. Owner’s title policies protect owners even after a property is sold if title was warranted in the sale. The title company will defend the owner’s title court or cure the title defect on behalf of the owner; this insures that buyer has title to property.

Premium:  The amount paid for an insurance policy. Title insurance policies are paid in one upfront payment.

Prepaid Item:  Item on a closing statement that has been paid in advance by the seller, such as insurance premiums or homeowners association fees, for which he or she will be reimbursed by the buyer. Can also refer to items required by a buyer’s lender to be paid in advance such as accrued interest, mortgage insurance premiums or hazard insurance premiums.

Prorate:  To divide or distribute expenses, either prepaid or paid in arrears, between, buyer and seller at the closing (such as taxes, interest, rents).

Rate:  The cost per dollar unit of title insurance, used to set the premium. For example, the rate for a $10,000 title insurance policy is stated as (so many) dollars. Mandated by the Texas Department of Insurance.

Real Estate Fees:  An amount paid to real estate agents as compensation for their services.

Recording Fees:  Charged by County Clerk to record documents in the public records.

Restrictions:  Certified copy of deed restrictions required by lender.

Risk:  Exposure to loss. A title insurance company assumes the risk incident to a possible title loss when it insures the owner of the title.

Settlement Agent:  See “Escrow Agent”.

Survey :  The process by which boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions, position of buildings on a lot, and any encroachments or easements.  This confirms lot size and any encroachments or restriction violations.

Tax Certificate:  Certificates issued by taxing authorities showing the current years’ taxes and the last year that taxes were paid.

Tax Proration:  Seller pays buyer taxes from January 1 to closing.

Title:  Evidence of ownership of property; the right to own property. The sale of real estate transfers title from one party to another.

Title Defect:  A blemish, imperfection or deficiency that could result in another party laying claim to a property. A defective title is one that is irregular or faulty. Title defects must be cured (see “curative”) before closing. Also referred to as a “cloud on title”.