Your title insurance policy is a contract between you (the owner of a parcel of land) and a title insurance company which guarantees you a particular set of facts concerning the land described. The primary facts insured are described below:
THAT THE HOMEOWNER IS IN FACT THE OWNER OF THE LAND DESCRIBED AND HIS TITLE IS GOOD AGAINST EVERY OTHER CLAIM EXCEPT AS STATED IN THE POLICY.
If this fact is found later to be untrue, the title insurance company will pay to you under your owner policy an amount of money equal to the loss suffered by you, calculated on the price paid for the property at the time of the original closing. If
your home were lost to an outside claimant, the face amount of the policy is your maximum recovery. If only a part of the land on which the home is situated is lost, only a portion of the policy amount will be paid, based on the purchase price
or value of the property at the time of original closing, NOT upon the fair market value of the property at the time the loss occurred. However, if you wish you can buy increased amounts of insurance as your home appreciates in value.
You are protected against fraud, forgery, (irrespective of whether the forgery occurred on year, fifty years, or one hundred years previously) and claims by missing heirs or children. You are also protected against mechanic’s lien claims for unpaid bills when you purchase a newly constructed home. This is one of the most important facts insured under title policies as it is the guarantee of absolute ownership.
2. THAT THE TITLE TO THE LAND INSURED IS CLEAR OF ALL ENCUMBRANCES TO THE TITLE, SUCH AS MORTGAGES OR LIENS, SERVITUDES, EASEMENTS, RESTRICTIONS, OIL AND GAS LEASES, OUTSTANDING MINERAL INTERSTS OR LEASES FOR OTHER USES OF THE LAND, INCLUDING PASTURE LEASES, CROP LEASES OR OTHER TENANCIES OF THIRD PARTIES, EXCEPT AS STATED IN THE POLICY.
Prior to purchasing your home or other parcel of land you may request the title insurance company or title insurance agent to issue a title report (called a commitment) to the prospective homebuyer or his attorney. This title report is a commitment by the title insurance company to issue a policy of title insurance in the amount stated in the title report all in accordance with the matters set forth in the title report. In this way, a prospective purchaser has the opportunity to examine every outstanding interest against the title to see whether or not the state of title is consistent with his proposed purchase. If a defect in the title is not revealed and no exception is made in the title policy, the title insurance company will have to pay to the homeowner an amount up to the contract amount of insurance in proportion to the value of the land lost to the encumbrance. A prospective homebuyer has the right to receive a commitment if he is placing a bonafide order for a title policy. There is no cost or charge for issuing a title commitment in Texas.
THAT ALL PROPERTY TAXES (INCLUDING STATE AD VALOREM, CITY AND SCHOOL TAXES) HAVE BEEN PAID AGAINST THE SUBJECT PROPERTY. *EXCEPT FOR THE YEAR IN WHICH THE PROPERTY IS PURCHASED AND SUBSEQUENT YEARS.
*In October of year it is POSSIBLE to obtain a guaranty of payment for THAT year’s taxes, if the tax bills have been sent out.
These questions and answers are to serve as a guide only and are not intended to be legal guidance for your needs.
The information provided here-in is for educational purposes only and we recommend you speak with a representative
of Marathon Title Co. for more specific guidance and answers.
© Marathon Title Co. 2018 | 990 Isom Rd. | San Antonio, TX 78216 | Phone: 210-366-1306