Buying or selling in Flower Mound and not sure who pays for title insurance or what it actually covers? You are not alone. Title insurance can feel technical, but it protects your investment and helps your closing go smoothly. In this guide, you will learn who typically pays in our DFW market, what each policy covers, and how to negotiate costs in Texas. Let’s dive in.
Owner vs. lender policies
There are two separate title insurance policies in Texas.
- Owner’s policy: Protects your ownership interest. It is optional but strongly recommended. Coverage lasts as long as you own the home.
- Lender’s policy: Protects the lender’s interest up to the loan amount. It is required whenever there is a mortgage. It protects the lender, not you.
Both are one-time premiums paid at closing. If both policies are issued at the same time, many Texas title companies use simultaneous-issue pricing that lowers the combined cost.
Who pays in Flower Mound
In the Dallas–Fort Worth market, including Flower Mound and greater Denton County, the custom in most resale transactions is for the seller to pay the owner’s title policy. This is a market convention, not a rule. The buyer typically pays the lender’s policy if there is a mortgage.
Payment is always negotiable. Your purchase contract controls who pays for what. New construction, investor deals, short sales, foreclosures, and certain loan types can differ from the usual practice, so confirm the terms before you sign.
What title insurance covers
Title insurance protects against past issues tied to the property’s title that were not found before closing. An owner’s policy typically covers:
- Forged or improperly executed documents in the chain of title.
- Undisclosed or missing heirs who later claim ownership.
- Fraud in prior transfers.
- Clerical errors in public records, such as a wrong legal description.
- Unknown liens or encumbrances that existed before closing but were not found.
If a covered claim comes up, the insurer generally pays for legal defense and either clears the defect or pays losses up to policy limits.
What it does not cover
Title insurance does not cover everything. Common exclusions and exceptions include:
- Problems that arise after the policy date unless an endorsement adds coverage.
- Known exceptions listed in the title commitment, such as recorded easements or covenants.
- Survey issues if there is no survey-related endorsement.
- Zoning compliance or other non-title matters, except where a specific endorsement provides limited coverage.
- Issues that would have been discovered by a physical inspection, like visible boundary encroachments, unless covered by endorsement.
Texas rules and rates
In Texas, the Texas Department of Insurance (TDI) regulates title insurance, including policy forms and rates. Premiums are set using a state rate schedule and are a one-time cost based on the purchase price. Because rates and endorsements are regulated and updated over time, ask your title company for an exact quote early in the process.
Endorsements that add protection
You can add endorsements to expand coverage for a fee. Common Texas options include:
- Survey-related endorsements to address boundary or encroachment risks.
- Mechanic’s lien coverage endorsements related to certain contractor or payment issues.
- Subdivision or zoning endorsements with limited protections for land-use matters.
Availability and cost vary. Review options with your title company so you know what is and is not covered.
Costs and how to negotiate
- One-time premium: Paid at closing and based on the Texas rate schedule. If both policies are issued together, ask about a simultaneous-issue rate.
- Who typically pays: In Flower Mound resale deals, sellers often pay the owner’s policy. Buyers usually pay the lender’s policy. All items remain negotiable.
- Negotiable items: Owner’s policy premium, certain endorsements, survey costs, some closing fees, and seller concessions. You can also split costs or request credits.
- Seller net proceeds: If you agree to pay the owner’s policy, it reduces your net at closing by that premium amount. Build it into your net sheet early.
- Buyer peace of mind: Whether you or the seller funds the premium, an owner’s policy protects your equity and can save you from costly title disputes later.
Texas has no state real estate transfer tax. Separate from title premiums, you will see county recording fees and standard closing charges. Denton County sets recording fees, so ask your title company to quote the current amounts.
How the process works
Title search and commitment: After you go under contract, the title company searches public records and issues a title commitment. This document lists what will and will not be insured.
Review exceptions: Read the commitment carefully. Look for easements, covenants, and any liens or items that need to be cleared or that will remain as exceptions in the policy.
Clear issues: The title company, seller, and sometimes attorneys work to clear defects before closing. Unresolved items will be listed as exceptions.
Close and issue policies: At closing, funds and documents are exchanged and recorded. The title company then issues the final owner’s and lender’s policies and collects the premium on the settlement statement.
Claims: If a covered title defect surfaces later, you file a claim with the issuing title insurer. The company may defend the title, clear the defect, or pay damages up to policy limits.
Local tips for Flower Mound buyers and sellers
- HOAs and CCRs: Many neighborhoods in Flower Mound have HOAs with recorded covenants, conditions, and restrictions. Review these in the title commitment and your HOA documents.
- Surveys matter: If a current survey is not available, consider ordering a new one and ask about a survey-related endorsement, especially for irregular or corner lots.
- New construction: Builders may handle title differently and may not follow the typical seller-pays custom. Read the builder contract and confirm who pays for each policy.
- Tax and lien checks: Title companies search Denton County records for tax liens and assessments. Confirm timing and scope and follow up on any open items before closing.
- Choosing the title company: In Texas, parties negotiate which title company to use. Lenders may have requirements for how closing is handled, so coordinate early.
What to do next
- Ask your title company for an itemized estimate showing owner and lender premiums, endorsements, and Denton County recording fees.
- Review the title commitment with your agent and, if needed, an attorney. Confirm what is covered, what is excluded, and any endorsements you want.
- If you are selling, plan your net sheet with the owner’s policy included if you intend to follow local custom. If you are buying, decide what endorsements make sense for your risk tolerance.
If you want a straightforward walkthrough, a clear net sheet, and local negotiating advice for Flower Mound and DFW, connect with Allen Martinez for one-on-one guidance.
FAQs
Is an owner’s title policy required in Texas?
- No. The owner’s policy is optional, while the lender’s policy is typically required whenever you finance the purchase.
In Flower Mound, who usually pays the owner’s policy?
- By DFW custom, sellers often pay the owner’s policy in residential resale deals, but it is negotiable and exceptions exist.
What does title insurance not cover in Texas?
- It does not cover post-closing issues, known exceptions in the commitment, many survey matters without an endorsement, or non-title issues like zoning unless specially endorsed.
How are Texas title insurance premiums set?
- Premiums are regulated by the Texas Department of Insurance and based on the purchase price. Ask your title company for an exact quote.
Do I need an owner’s policy if my lender has a policy?
- Yes if you want your own protection. The lender’s policy only protects the lender’s interest; it does not protect your equity.
Can I choose the title company in Texas?
- Yes. The buyer and seller negotiate the title company in the contract, and your lender may have requirements for closing procedures.
What if I am paying cash in Flower Mound?
- With no loan, there is no lender’s policy requirement. An owner’s policy remains optional but provides valuable protection for your ownership rights.
