FREQUENTLY ASKED QUESTIONS

Q:    What is Title Insurance?  Why do I need it?

Q:    What is meant by a title defect?

Q:    Are there several kinds of title insurance? 

Q:    How much does title insurance cost?  How long does it last?

Q:    How does title insurance protect both me and my heirs?

Q:    Are all titles insurable?

Q:    Do I have to purchase an Owner's Policy?

Q:    How do I read the title commitment?  What does it mean?

Q:    What is the Deletion of Arbitration?

Q:    Do I have to be at closing?

Q:    Will I need a survey?

Q:    Why am I getting tax statements if I just closed at Smith County Title Company?

Q:    Why did I not receive a 1099?

Q:    What are Good Funds?

Q:    What is Title Insurance?  Why do I need it?
A:    Owner's Title Insurance protects purchasers of real estate against title defects that may exist        against the property.  Mortgagee Title Insurance insures lenders as to the priority of their liens, meaning there are no other mortgages, liens, or judgments recorded prior to their mortgage.

Q:    What is a title defect?
A:    Judgments, liens, unsatisfied mortgages, missing heirs, forgeries, unpaid taxes, etc.  These are all examples of title defects.  A title defect can be any one of a number of things that could potentially interfere with the purchaser's right to the "peaceful enjoyment" to the property or which may cause him to lose his/her property.

Q:    Are there several kinds of title insurance?
A:    Yes, there are. There is the Owners Policy which protects the buyer.  There is a Mortgagee Policy which is available to protect the Lender.  There is also a Leasehold Policy which is used primarily by commercial and industrial organizations that rent property on long term leases.  In addition to several types of Title Insurance Policies, there are several different endorsements that can be requested by buyers and/or lenders. 

Q:    How much does title insurance cost?  How long does it last?
A:    The State of Texas Department of Insurance regulates how much title companies can charge for title insurance premiums.  You can click here to view the current rates.  Title Insurance premiums are paid when you purchase/refinance real estate.  Unlike most other insurance premiums, it is a one-time payment.  It will remain in effect as long as you own the property. 

Q:    How does title insurance protect both me and my heirs?
A:    A title insurance policy covers from its effective date back to the origin of title.  After the property has passed  to your heirs or devisees, if any defect antedating the policy should crop up, the title insurance would defend the title for your heirs just as if you were alive.  Or if the property was sold under a General Warranty Deed and the purchaser was faced by a claim arising within the effective term of the policy, his action for recovery from you or your heirs would be taken over by the insurance company according to the terms of the policy issued.

Q:    Do I have to purchase an Owner's Policy?
A:     An Owner's Title Policy is not required by law, but buying real estate is often the biggest investment consumers make in a lifetime.  Transferring clear title to that real estate is a complicated task with many pitfalls.  Because land typically has many owners with many different rights that have attached to it over time, it is important to insure that the title is transferred accurately and free and clear of other's rights.  You can protect your investment by acquiring an Owner's Title Policy.

Q:    How do I read the title commitment?  What does it mean?
A:    We have got a great page to explain the different sections of the title commitment.  Please click here to go to Title Commitment 101.

Q:    What is the Deletion of Arbitration?
A:    Arbitration is a common form of alternative dispute resolution.  It can be a quicker and cheaper means to settle a dispute with your Title Company.  However, if you agree to arbitrate, you give up your right to take the Title Company to court and your rights to discovery of evidence may be limited in the arbitration process.  Further, an arbitrator's award is not normally appealable in court.  Your policy contains an arbitration provision.  It allows you or the Title Company to require arbitration if the amount of insurance is $1,000,000 or less.  If you want to retain your right to sue the Title Company in case of a dispute over a claim, you must request deletion of the arbitration provision before the policy is issued.  (Not applicable to the Residential Owner Policy.)

Q:    Do I have to be at closing?
A:    We prefer that both buyer and seller attend closing.  If for some reason, a party is not able to attend, we can make other arrangements.  Please contact your closer as soon as you know someone may not be able to attend to prevent any delays.

Q:    Will I need a survey?
A:    It depends.  In some instances, a prior survey may be used if there have been no changes since the survey was created.  Some lenders may require a new survey even if there is an existing survey.  Please contact your closer to discuss whether a new survey will be needed.

Q:    Why am I getting tax statements if I just closed at Smith County Title Company?
A:    If you close at Smith County Title Company before October, taxes were not due and payable so they were not collected.  After October and after the Tax Assessor has certified the tax rolls, then we will collect for the current year's taxes.

Q:    Why did I not receive a 1099?
A:    The HUD-1 Settlement Statement now serves as a substitute 1099.

Q:    What are Good Funds?
A:     Please click here for more information on "Good Funds".