Q: What is title insurance?
A: An insurance policy-protecting against loss should the condition of title to land be other than as insured.

Title insurance protects an owner or lender's financial interest against loss arising from problems connected to the title to your property. This includes title defects, liens or other matters.

For example, in purchasing a home, it probably was owned by several people before you. When property was transferred from owner to owner, the property may not have been transferred legally because of a forged signature when the title was transferred. Title insurance includes coverage for legal expenses which may be necessary to investigate, litigate or settle an adverse claim and/or reimburses you for your loss because of a title defect as provided in your policy.

The beneficiaries of title insurance policies generally are real estate buyers and mortgage lenders. For a one-time premium, the policy remains in effect until the property is sold or refinanced.

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Q: Why do I need title insurance? A: When you buy a home, or any property for that matter, you expect to enjoy certain benefits from ownership. For example, you expect to be able to occupy and use the property as you wish, to be free from debts or obligations not created or agreed to by you, and to be able to freely sell or pledge your property as security for a loan. Title insurance is designed to cover these rights you bargain for.

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Q: If my lender gets title insurance for its mortgage, why do I need a separate policy for myself?
A: The lender's policy covers only the amount of its loan, which is usually not the full property value. In the event of an adverse claim, the lender would ordinarily not be concerned unless its loan became non-performing and the claim threatened the lender's ability to foreclose and recover its principal and interest. And, in the event of a claim there is no provision for payment of legal expenses for an uninsured party. Please note: THE LOAN POLICY DOES NOT PROTECT THE PURCHASER /BORROWER. The loan policy ONLY protects the lender against loss due to unknown title defects. (It also protects the lender's interest from certain matters which may exist but not known at the time of the loan.) That is why the owner needs an Owner's Policy, which can be issued at the same time as the loan (mortgagee's) policy. When a loan policy is being issued, the small additional expense of an owner's policy is a bargain.

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Q: How can there be a title defect if the title has been searched and a loan policy issued?
A: Title insurance is issued after careful examination of the copies of the public records. But even the most thorough search cannot absolutely assure that no title hazards are present, despite the knowledge and experience of professional title examiners. In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search. Here are a few of the most common hidden risks that can cause a loss of title or create an encumbrance on title:

• False impersonation of the true owner of the property
• Forged deeds, releases or wills
• Undisclosed or missing heirs
• Instruments executed under invalid or expired power of attorney
• Mistakes in recording legal documents
• Misinterpretations of wills
• Deeds by persons of unsound mind
• Deeds by minors
• Deeds by persons supposedly single, but in fact married
• Liens for unpaid estate, inheritance, income or gift taxes
• Fraud

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Q: What will happen at my closing?
A: Your closing will take place at Grayhawk Title, Inc., which will act as the escrow agent and title agency. As detailed in the earnest money contract, Grayhawk Title may hold the earnest money, prepare the closing statement and generally coordinate with all the entities involved in the closing. This includes collecting invoices and written information from the mortgage lender, insurance agent, surveyor, attorneys for buyer/seller/lender, tax search firm, mechanical and termite inspection companies and title underwriter. In addition to acting as escrow agent, Grayhawk Title will research the title to your home and issue a commitment for the title insurance reflecting the ownership, restrictions, easements, liens and other exceptions that will have an effect on the property.

At the time of closing, Grayhawk Title will allocate the fees between the purchaser and seller in accordance with the contract, lender's instructions and local custom. The closing will take about forty-five to sixty minutes; however, occasionally there are last minute delays from one of the many servicing companies, especially at the end of the month.

After the buyer and the seller have signed the necessary documents, we will return the mortgage papers and proposed title policies to the lender for review and funding of the loan. Upon receipt of the buyer's funds and the loan amount, Grayhawk Title will disburse all proceeds as shown on the closing statement and cause the deed and deed of trust to be recorded with the county clerk. Please Note: Title insurance regulations require funds to be in the form of either a cashier's or certified check payable to Grayhawk Title, Inc. or transferred to the our bank account via wire transfer.

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Q: What is escrow?
A: Escrow is a process that requires a neutral third party to perform the following functions to close a real estate transaction:

• Receives a completed and fully executed purchase and sales agreement and/or lender's instructions
• Orders and delivers a commitment for title insurance to the parties of the transaction
• Orders all necessary payoff statements and demands to clear the title
• Prepares all necessary documents to transfer title
• Prepares the estimated and final closing statements
• Obtains all necessary signatures, funds and documents to close the transaction
• Records and delivers all necessary documents and disburses the funds according to the parties' and/or lender's instruction.

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Q: What if I have a problem? Do I have to lose my property to make a claim?
A: Not at all. At the mere hint of a claim adverse to your title, you should contact your title insurer or the agent who issued your policy. Title insurance includes coverage for legal expenses which may be necessary to investigate, litigate or settle an adverse claim and/or reimburses you for your loss because of a title defect as provided in your policy.

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Q: What does title insurance cost?
A: The policy forms, premium rates, rules and procedures for title insurance are promulgated and controlled by the Texas Department of Insurance in accordance with the Texas Insurance Code, Chapter Nine. Therefore, all title companies charge exactly the same premium rates. Please see our title insurance calculator.

The important thing to remember is that you only pay once, and then the coverage continues in effect for so long as you have an interest in covered property. If you should die, the coverage automatically continues for the benefit of your heirs. If you sell your property, giving warranties of title to your buyer, your coverage continues. Likewise, if a buyer gives you a mortgage to finance a purchase of covered property from you, your coverage continues to protect your security interest in the property.

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Q: Is it common in Texas for the Seller to pay for the Buyer's Owner's Title Policy?
A: Yes, in Texas it has been standard for the Seller to pay for the Buyer's owner's title policy unless negotiated otherwise.

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Q: Can you be a little more specific about the types of claims, or risks, covered by title insurance?
A: Standard coverage handles such risks as:

• Forgery and impersonation;
• Lack of competency, capacity or legal authority of a party;
• Deed not joined in by a necessary party (co-owner, heir, spouse, corporate officer, or business partner);
• Undisclosed (but recorded) prior mortgage or lien;
• Undisclosed (but recorded) easement or use restriction;
• Erroneous or inadequate legal descriptions;
• Lack of a right of access; and
• Deed not properly recorded.

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Q: What is the Homestead Exemption in Texas?
A: The Texas Constitution and various state statutes establish the homestead rights in Texas. The homestead rights protect a family's homestead from claims of creditors, both secured and unsecured, subject to the following exceptions.

A forced sale of a homestead can occur if the debt arises from either:

• Funds borrowed to finance the initial purchase price of the homestead.
• Funds borrowed to finance work and materials used in construction of permanent improvements on the homestead (if contracted with a mechanic's lien)
• For taxes due on the homestead; including a federal tax lien.
• Home equity and reverse mortgage loan
• A property improved owelty of partition lien created upon partition of the property.

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Q: How does the Texas Homestead Exemption protect me?
A: It provides that the homestead of a family, or of a single adult person, is protected from forced sale of the payment of all debts, except for those specifically authorized under the constitution.

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Q: How do I declare a homestead?
A: Upon purchasing a home, contact the appropriate county's appraisal district and request the necessary forms for declaring your homestead. Please note: It is not necessary to pay anyone to file your homestead exemptions, as it is provided free of charge from all counties.

Dallas County (214) 631-0910 www.dallascad.org

Collin County (972) 578-5200 www.collincad.org

Denton County (940) 349-3800 www.dentoncad.com

Tarrant County (817) 284-0024 www.tad.org