What does title insurance actually pay for? It covers ownership problems created before you bought, like a forged deed or an heir nobody disclosed. The company defends your title in court and pays the loss, for as long as you own the home.
Nobody gets excited about title insurance. It shows up on the closing statement as a number with no obvious story attached, everybody signs and it is the one line item where the person paying usually has no idea what they bought.
So let me tell you about a file where it mattered and then explain what you are actually getting.
A signature from two owners ago
A man died in Texas without a will. His son handled things and part of handling things was signing an affidavit of heirship, which is a sworn document stating who the legal heirs are. The affidavit said he was the only child.
He had a sister.
The property sold. Then it sold again. We came into this a full two transactions later, representing a seller who had no connection to any of it and no idea anything was wrong. The defect had simply traveled with the property, sitting quietly in the deed records, waiting for somebody to look closely.
The daughter eventually found out. And her reaction is the part that stays with me, because she was furious at the real estate agents and the title company and she did not know what to do next.
I understand the anger. I also want to be honest about it because the people she was angry at were not the people who wronged her. Agents are not title examiners. We do not authenticate signatures and there is no step in a normal transaction where a licensed agent could have caught a relative lying under oath about his own family. The title company relies on sworn affidavits because that is what the law provides. A person willing to commit fraud can get past all of it.
That is not a failure of the system. That is precisely the risk the system insures against.
What the policy does when this happens
Here is the mechanism and it is the whole reason the product exists.
An owner's title policy covers problems that arose before you bought the property but were not known at closing. The Texas Department of Insurance lists forgery of a previous deed, fraud and errors or omissions in earlier deeds among the covered risks. Claims by undisclosed heirs are squarely in that territory.
Two things happen when a claim like this lands. First, the title company defends the title. Not you, alone, hiring your own attorney and hoping. The insurer takes on the lawsuit. Second, if the claim succeeds and there is a covered loss, the insurer pays it up to the policy amount.
For an insured owner, the practical result is that you stay in your house and someone else fights about it. Without a policy, that same homeowner is defending their own ownership with their own money against a claim created by a stranger before they ever saw the property.
And the coverage does not expire. One premium, paid once at closing, lasts as long as you or your heirs own the land. There is no renewal.
The sister's position is harder and I do not want to pretend otherwise. Her claim runs primarily against the brother who defrauded her and pursuing it means a lawyer, a determination of heirship and years. Meanwhile the innocent buyers downstream are protected. That asymmetry is uncomfortable but it is the design. The insurance is there so that a fraud committed by one family member does not cascade into the lives of every person who buys that house afterward.
If you are dealing with an inherited property, this is the reason to have it done correctly the first time. Heirship affidavits are sworn statements by witnesses, not a court's determination of who the heirs are and a sworn statement can be wrong or a lie.
Two policies and only one of them is for you
This is where most buyers get confused, and it is worth ten seconds of attention.
The lender's policy is required if you are financing. Your lender will not fund without it. It protects the lender's lien, up to the loan amount and it does nothing for you. If a title claim wipes out your ownership, that policy makes the bank whole, not you. Your down payment and your equity are not in it.
The owner's policy is the one that protects you. In Texas it is not legally required. It is, in my opinion, not optional either.
Buyers occasionally ask whether they can skip the owner's policy since the lender's policy is mandatory. You can. You would be paying for insurance that protects your bank while leaving yourself uncovered and there is a wrinkle that makes it a bad trade even financially. When both policies are issued together by the same company, the lender's policy is issued at a steeply discounted simultaneous rate, often around a hundred dollars. Decline the owner's policy and you pay the full standalone rate for the lender's policy instead. You end up paying more for less.
In Texas, you cannot shop this on price
This surprises people from other states and it is genuinely useful to know.
Title insurance rates in Texas are promulgated. The Texas Department of Insurance sets them and every title company in the state charges the identical premium. It is not negotiable and there is no discount hiding at a competitor.
Here are the current basic premium rates, effective March 1, 2026:
Policy amount | Basic premium |
|---|---|
$300,000 | $1,676 |
$400,000 | $2,566 |
$500,000 | $3,456 |
Because the price is fixed, choosing a title company is entirely a question of competence and service. Who answers the phone. Who catches a problem in the commitment before it becomes a delay. Who can actually explain what an exception means. That is the only variable, so weight it accordingly.
Who pays for it. Under Paragraph 6A of the TREC contract, this is negotiable and across most of North Texas the custom is that the seller pays for the owner's policy. The buyer pays for the lender's policy. Custom is not law, though and in a shifting market this line gets negotiated more than it used to. Read the paragraph rather than assuming.
The survey, the T-47 and the coverage you have to ask for
Now the part almost nobody explains and the part where a few dollars protects you from a genuinely expensive problem.
Under Paragraph 6C, the most common arrangement is that the seller furnishes an existing survey along with either a T-47 affidavit or the newer T-47.1 declaration. The two forms do the same job. The seller is stating that nothing about the property has changed since that survey was made. No new fence, no added deck, no shed, no pool. The T-47 requires a notary. The T-47.1 does not, allows electronic signature and asks for the seller's date of birth instead.
You need both the survey and one of the forms. A survey with no affidavit or an affidavit with no survey usually means a new survey gets ordered and the contract governs who pays for it. If the seller will not represent that nothing has changed, you are buying a new survey.
That existing survey and affidavit are, in practical terms, a courtesy from the seller. They save the buyer several hundred dollars and a couple of weeks. But here is what they do not do on their own.
Every Texas title commitment contains this exception in Schedule B: any discrepancies, conflicts or shortages in area or boundary lines, and any encroachments, protrusions, or overlapping of improvements.
Read that list. Boundary disputes. Encroachments. A neighbor's improvement overlapping your line. Those are excluded from your policy unless you do something about it.
What you do about it is buy the amendment, called area and boundary coverage or survey deletion. It narrows that exception down to shortages in area alone, and everything else on that list becomes covered. To get it you need a survey, the T-47 or T-47.1 if the survey is an existing one, and the premium.
The premium is 5 percent of the owner's policy premium:
Policy amount | Survey coverage |
|---|---|
$300,000 | about $84 |
$400,000 | about $128 |
$500,000 | about $173 |
A hundred and twenty-eight dollars on a $400,000 house. Now think about what the uncovered version of that looks like. A driveway poured three feet onto the neighbor's lot. A fence line that has been in the wrong place since 1994 and everyone assumed was correct. A garage addition sitting in a utility easement. Any one of those becomes your problem, your attorney, and potentially your demolition bill.
Check the box. There is not a serious argument on the other side.
What it does not cover
Being straight about the limits matters as much as selling the benefits.
Your policy does not cover defects you create after closing, problems you caused yourself or matters that arise after the policy date. It does not cover zoning or how you are permitted to use the property. And it does not cover anything specifically listed as an exception in Schedule B of your commitment, which is exactly why somebody competent needs to read Schedule B with you during your option period rather than sliding it across the table at closing.
If you want the broader picture of what happens in that window, I walked through it in The Texas Option Period: What It Is, What It Costs and Why You Should Never Waive It. Reviewing the title commitment belongs in it.
What to actually do
- Read Schedule B of your title commitment during the option period. Ask what each exception means. This is the single most skipped document in a residential transaction.
- Buy the owner's policy. Always.
- Check the area and boundary amendment box. It costs about five percent of a premium somebody else is probably paying.
- Make sure the survey comes with a T-47 or T-47.1, and that the seller actually completed it. An incomplete form costs time you may not have.
- If anything on the property was built or moved since the survey date, expect a new survey and budget for it rather than fighting about it.
- Choose your title company on responsiveness, not price, because the price is identical everywhere.
Frequently asked questions
Is title insurance required in Texas? The lender's policy is required if you are financing, because your lender will not fund the loan without it. The owner's policy is not legally required, but it is the only one that protects your ownership and your equity. Declining it also forfeits the simultaneous issue discount, so you generally pay more and get less.
What is a T-47 and why does the seller have to sign it? It is a sworn statement that nothing about the property has changed since the existing survey was made. It lets the title company and lender rely on that older survey rather than requiring a new one. Texas now also allows the T-47.1 declaration, which does the same thing without a notary but requires the seller's date of birth.
How much does survey coverage cost in Texas? Five percent of the owner's title policy premium for residential property. On a $400,000 home that is roughly $128 against a $2,566 premium at 2026 rates. It removes the standard exception for boundary discrepancies, encroachments, and overlapping improvements, which is the coverage most buyers assume they already have.
If you found this useful, read these next
- Selling a Home After Divorce in Texas: What You Really Need to Know covers another way title gets tangled, including why a divorce decree does not by itself update the deed.
- What Actually Happens Between Under Contract and Closing Day walks through the window where the title work happens, so you know when to expect the commitment and what to do with it.
If you are under contract in Sachse, Wylie, Murphy, Rockwall, or Rowlett and nobody has walked you through Schedule B of your title commitment, send it to me. Fifteen minutes on that document is the cheapest protection in the entire transaction.
Rates in this post are the Texas promulgated rates effective March 1, 2026 and will change. Jeanie Marten Real Estate is a brokerage, not a title company or a law firm, and nothing here is legal advice. For a specific property, your title company and a Texas real estate attorney are the right sources.
Visit MartenTeam.com or book a consultation.
Jeanie Marten Real Estate 972-414-0719 | MartenTeam.com
