When you buy or sell a home in Texas, one of the line items you’ll see at closing is the title policy (also called title insurance). Many buyers and sellers ask: What is it? Who pays for it? And why is it important?
This guide will walk you through everything you need to know about Texas title policies in residential real estate.
What Is a Title Policy?
A title policy is a type of insurance that protects against problems with a property’s ownership history. Title companies research the chain of ownership and issue a policy that guarantees you are receiving a “clear title.”
Examples of issues it protects against:
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Old liens that weren’t paid off (taxes, contractor bills, HOA dues)
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Boundary or survey disputes
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Forged or incorrect deeds in the chain of ownership
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Heirs or ex-spouses who could claim ownership rights
👉 In short: a title policy gives buyers peace of mind and protects sellers by proving the home is being transferred free and clear.
Who Pays for the Title Policy in Texas?
In Texas, it’s customary for the seller to pay for the owner’s title policy — but it’s a negotiable item in the contract.
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Owner’s Title Policy: Protects the buyer. Typically paid by the seller.
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Lender’s Title Policy: Protects the lender if you’re getting a mortgage. Always paid by the buyer.
💡 Example:
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Sales price: $400,000
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Seller pays: Owner’s title policy (approx. $2,500 — regulated statewide)
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Buyer pays: Lender’s policy + escrow fees + loan costs
Why Is a Title Policy Necessary?
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Protects Buyers – Imagine buying your dream home, then months later someone claims a contractor lien from years ago. The title policy covers those legal and financial risks.
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Protects Lenders – If you finance your home, the lender requires protection on their investment.
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Protects Sellers – By paying for the policy, sellers give assurance they are transferring ownership cleanly and reduce risk of post-closing disputes.
Without it, buyers could be left paying thousands of dollars for someone else’s problem.
How Much Does a Title Policy Cost in Texas?
The cost of title insurance is set by the Texas Department of Insurance (TDI), so every title company charges the same base rates. The premium is based on the home’s purchase price.
Example Costs (2025 TDI Rate Schedule):
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$250,000 home → ~$1,743
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$400,000 home → ~$2,575
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$600,000 home → ~$3,775
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$1,000,000 home → ~$6,575
📌 Good to know: Rates include the title company’s work to research and clear the title. Additional fees may apply for endorsements, surveys, and closing services.
Buyer & Seller Negotiations in Texas
Since the owner’s title policy is negotiable, here’s how it often plays out:
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Balanced Market: Seller usually pays.
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Hot Seller’s Market: Buyers may offer to cover it as part of a competitive bid.
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Buyer’s Market: Sellers almost always cover it to attract buyers.
Real-World Example
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Scenario: A buyer in Frisco, TX is purchasing a $500,000 home.
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Owner’s Title Policy: ~$3,100 (customarily paid by the seller).
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Lender’s Title Policy: ~$500–$800 (paid by the buyer).
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Result: The buyer gets assurance the property is legally theirs, the seller proves clean ownership, and the lender is covered on their mortgage.
FAQs
Do cash buyers need a title policy?
Not required, but highly recommended. Even without a lender, cash buyers still face ownership risks.
Can I choose the title company in Texas?
Yes. The buyer and seller can negotiate who chooses, though typically the party paying for the policy chooses the title company.
What happens if a title issue comes up after closing?
The title company defends you legally and financially against covered claims — often saving buyers from major losses.
Final Takeaways
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A title policy is standard in every Texas home sale.
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The seller usually pays for the owner’s policy, but it’s negotiable.
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Buyers pay for the lender’s policy if using financing.
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Costs are regulated by the state, so shop title companies for service — not price.
✅ Pro Tip from Logan Walter, Top 1% North Texas Realtor
Always review your contract to see who is covering the owner’s title policy. As a buyer, never skip title insurance — it’s one of the most important protections you’ll get in a Texas real estate transaction.
