The Title Company - The Fort Hood Home Buyer Academy

The Escrow Officer

In Texas, the title company is responsible for not only the title insurance but also act as the escrow officer as well. This is different from some states in which a lawyer acts as the escrow officer.

What is an escrow officer? They hold onto all the money until the closing documents are signed by everyone and everything is ready for the deal to be finalized. That is why, when there is a new deal, the buyer’s earnest money is due to the title company.

This is also why the closing is handled by the title company.

Title Commitment

The title commitment is the search that the title company does on the property. This search is looking for liens and restrictions related to the property in order to ensure that the buyer is getting a “clean title”. Common commitment issues include:

Mortgage liens (not an issue unless it’s a surprise to the seller)
Tax liens (unpaid taxes)
Mechanics liens (unpaid bills, like roofers, HVAC repairmen, etc)
Spouses (the seller’s spouse has to sign off, in case that was a surprise)
City liens (if they charged the home for mowing tall grass, for example)

Problems with the title are the seller’s problem. But if they have issues that they can’t resolve, then it may mean the home is not going to work out for the buyer, either. The title commitment is usually back within a week of receiving the executed contract for the buyer and seller to review for issues.

Title Insurance

Does the seller own the house they are selling? Hopefully. But titles and deeds can be tricker than meets the eye. Maybe someone who should have inherited a part of the home was left out accidentally. Maybe someone was married and the spouse didn’t sign off on the sale. Maybe the home was improperly foreclosed on like happened recently in Georgetown, TX just thirty minutes away, illustrating just how important it is to have title insurance.

Title insurance is relatively cheap – a one-time fee at closing that works out to under 1% of the sales price. It is not often that title insurance has to pay out. Lenders generally require title insurance, and it is common in the Fort Hood area for the sellers to pay for it as part of the transaction costs. In the rare event that someone showed up at your door claiming to own your home, the title insurance policy would pay for lawyers or damages defending your title to the property.

There is a lender’s title policy and owner’s title policy. These amounts are slightly different. Generally, the lender’s title policy is more. But you do not have to pay both: if you are getting an owner’s title policy (technically optional), then the lender’s title policy is just their policy amount minus what you’re already paying toward the owner’s title policy. Example: If the owner’s title policy is $1500 and the lender’s title policy is $1600, then at closing would be paid the $1500 owner’s title policy and $100 toward the lender’s title policy.

The title company provides that title insurance, sometimes themselves, and sometimes with a policy from a third party title insurance company.

Deed Restrictions and HOA Covenants

Early in the process, you will want to review the neighborhood deed restrictions and HOA covenants for the home you are offering on. You will want to make sure there is nothing prohibiting you from doing what you want with the property, like building a pool, starting a business, installing solar panels, or parking a boat. HOA neighborhoods usually have copies of their rules on their website. Deed restrictions are recorded with the county as public information, and often the title company is a good source to get a copy to review. Most neighborhoods have deed restrictions, even those that are not HOAs. For example, Tuscany Meadows in Harker Heights is not an HOA neighborhood, but the deed restrictions restrict owners to only two dogs.