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Why Title Insurance
(Click Here to Print PDF)
The state of Texas regulates
the sale of title insurance, such that the premiums are based on the
sale price of the property and the premiums may not be discounted by
the title companies.
Most sellers view the title
insurance premium as an unnecessary cost of sale, which benefits the
buyer only. In fact, providing title insurance to the buyer is equally
important to the seller.
Transfer of real estate in
the State of Texas must be evidenced by a "deed". Types of deeds
include: quit claim deeds, special warranty deeds and general warranty
deeds, as a few of the most common. The TREC Contract forms require
the seller to provide the buyer a "general warranty deed". This type
of deed is a unilateral contract, evidencing seller's warranty of
title to the buyer. The warranty period goes all the way back to the
Texas land grants in the 1840's. In the event a "cloud on title"
surfaces at the time of the buyer's future sale, the buyer has the
legal right to sue the seller for breach of warranty of title to the
property. Title insurance helps define the seller's risk with respect
to his warranty of title. Accordingly, such insurance is beneficial to
both buyer and seller. Sellers benefit considerably when
providing title insurance to buyers. |