Helpful Resources
Frequently Asked Questions
The following questions are asked often by our clients.
We’ve compiled this list to help make the closing process as easy as possible.
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WHAT IS TITLE INSURANCE?
Title Insurance: An owner’s title insurance policy is provided to the new buyer at the time of purchase. If necessary, the owner’s title insurance policy protects the new owner/buyer (monetarily and with legal defense) if a title-related loss or claim presents itself after closing. The cost is a one-time fee based on the sales price and standardized across the entire state of Texas. Buyer and seller negotiate within the sales contract who will pay that one-time cost at closing.
Title Insurance: An owner’s title insurance policy is provided to the new buyer at the time of purchase. If necessary, the owner’s title insurance policy protects the new owner/ buyer (monetarily and with legal defense) if a title-related loss or claim presents itself after closing. The cost is a one-time fee based on the sales price and standardized across the entire state of Texas. Buyer and seller negotiate within the sales contract who will pay that one-time cost at closing.
Possible claims include:
- Errors or omissions in deeds
- Mistakes in examining records (ex: missed easement or deed restriction)
- Claims by a prior owner’s divorced spouse
- Undisclosed or unknown heirs from a deceased’s estate
- Delinquent property taxes from a prior owner
- Forgery
Title Commitment: The Commitment to Insure Title, or “title commitment,” is a preliminary disclosure from the title company that describes the proposed terms of the title insurance policy, based on the contract and the title research we receive.
Explanation of a Title Commitment:
- Schedule A: Description of Insureds, Vested Owners and Legal Description
- Schedule B: Exceptions to title that will remain post closing (deed restrictions, easements, plat issues.
- Schedule C: Exceptions that are generally satisfied/cured at closing (seller’s mortgage, IRS liens, divorce issues, etc.)
- Schedule D: Disclosures related to title company, regulatory info.
There are two types of Texas title insurance policies – an owner’s policy and a lender’s (mortgagee policy). An owner’s policy protects the buyer/ insured by paying claims and legal fees should an insured title issue arise. Owner’s title insurance is purchased for a one-time fee at the original purchase and lasts as long as the buyer or its heirs have an interest in the property. When obtaining a new loan or refinancing an existing loan the lender will always require the borrower to purchase a lender’s policy. A lender’s policy only protects the lender’s interest in the property.
Helpful Tips: As a buyer make sure to review the title commitment (especially Schedule B) and the restrictions that are on record. Why? For one example: some deed restrictions mandate that houses within the neighborhood cannot be more than one story; if you want to add a second story, this could make or break the deal. Also, a buyer should make sure to contact the city within the option period to confirm that any desired improvements will be allowed. Municipal restrictions and recorded restrictions do not always match.
WHAT ABOUT A SURVEY?
The need for a new survey is negotiated within the standard sales contract. It is negotiable whether seller or buyer are responsible for the cost if a new survey is needed. Often, the sellers are able to provide an existing survey that is also acceptable to the lender (if applicable) and title company.
Helpful Tips: If you know before the contract is finalized that the seller is not able to provide a new survey, select the new survey option from the beginning
(paragraph 6 of the TREC 1-4 Family Resale Contract). In the contract, be sure to allow enough time after option expires and before the new survey due date. Survey turnaround time is typically between 3 to 7 days.
Remember: If the seller is responsible for providing an existing survey and notarized survey affidavit (paragraph 6(C)(1) in TREC 1-4 Family Resale Contract) and those are not provided to buyer by the time specified in the contract, then the seller is required to pay for a new survey. If the seller provides survey and affidavit within the time prescribed, but it is not acceptable to title and/or lender, then it would follow terms of contract as to who is responsible for the new survey needed (buyer or seller as negotiated).
Paragraph 6(C)(1): If seller fails to furnish the existing survey or affidavit within the time prescribed, Buyer shall obtain a new survey at Seller’s expense no later than 3 days prior to the Closing Date.
Another tip when representing the seller: the survey affidavit does have to be notarized, but when the seller is a married couple either spouse can execute it (Howeth Title do not require both to sign). We do have a notary available at Howeth Title.
Survey Amendment: The survey amendment deletion coverage/shortages in area amendment is 5% of the Owner Title Policy Premium. It insures the boundaries of your property (Example: Survey shows lot to be 70 feet but the lot is actually 60 feet). It also insures any loss due to encroaching improvements which are not shown on the survey (Example: Garage on neighbor’s yard is shown on neighbor’s yard on the survey but the Garage is actually encroaching 10 feet onto our property).
Additional Coverage – T19.1 Coverage: Additional Survey Coverage (Is also 5% of the Owner Title Policy Premium). Protects against known encroachments (Example: home built over the 35’ building line).
WHAT ARE KEY PROPERTY TAX DATES?
WHAT IS A HOMESTEAD EXEMPTION?
Homestead exemption may not be transferred.
Exemptions only eligible on one home (no second homes).
Buyers will apply for their homestead exemption directly with the Central Appraisal District. It is a free, online application available through the appraisal district.
WHAT ARE OVER-65 EXEMPTIONS?
Over-65 and Disability Exemptions are available when owner turns 65 or becomes disabled (eligible for one only, not both).
Over-65 exemption also creates a tax ceiling (“freeze”) for school taxes based on taxes for the first year of eligibility (other municipalities may also offer tax ceilings, but are not required by law). If home is improved (remodeled) or if owner sells, ceiling may be raised. Percentage of ceiling may be transferred to next home.
Over-65 may be transferred midyear to new home, but should remain for the remainder of the year if owner dies or moves to rental/retirement home.
WHAT DO MY CLIENTS NEED TO BRING TO CLOSING?
- Seller
- Driver’s License
- Key (Even if there is a leaseback)
- Voided Check (If proceeds are to be wired)
- Buyer
- Driver’s License
- Funds due for the closing (Must be a wire transfer – NO ACH TRANSFER)
WHAT HAPPENS AFTER EVERYONE SIGNS?
After signing, the funding process begins and can take several hours before the property is fully funded and the title company can release the keys.
Lender and buyer wires must be at the title company
Lender must approve all buyer signed documents via email
Once we receive all signed documents, all funds, and the buyer’s lender’s authorization to disburse, we can notify all parties of the completed transaction.
Remember: Buyers should not necessarily plan for movers/contractors immediately after signing. There are many “pieces to the puzzle,” but in most cases (not all), buyer and sellers can expect funding authorization by/before close of business on that day.
FROM SELLER: WHY IS MY MORTGAGE PAYOFF HIGHER ON THE CLOSING STATEMENT THAN WHAT MY PRINCIPAL BALANCE SHOWS?
FROM SELLER: I ESCROW MY PROPERTY TAXES SO WHY AM I PAYING THE TAXES ON THE CLOSING STATEMENT?
FROM SELLER: WHEN I PURCHASED THE HOUSE, I WAS SINGLE SO DOES MY SPOUSE NEED TO COME TO THE CLOSING?
FROM BUYER:MY SPOUSE IS NOT ON THE LOAN SO DO THEY NEED TO COME TO THE CLOSING?
HOW THE OPTION PERIOD AFFECTS BUYING AND SELLING A HOME
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What is an Option Period?
What is the purpose of the Option Period?
In Texas, the Option Period is typically between 1 and 10 days. The first day is the day after the purchase contract is signed by both parties. It ends at 5pm on the specified end date. In certain cases the buyer can negotiate with the seller to extend the Option Period.
During the Option Period, the buyer can terminate the contract for any reason without the risk of losing their earnest money. This is why the Option Period is a limited amount of time.
How Does The Option Period Impact Buying and Selling Texas Homes?
To reduce the stress of the option period, it is helpful for buyers to get pre-approved for home financing. Additionally, buyer agents can help provide resources for home inspection and appraisal to expedite those processses to ensure they are completed within the option period. Sellers can proactively make repairs to their property to reduce that uncertainty.
The information in this article is not intended as legal advice.
Beware of Wire Fraud
All parties to a real estate transaction are targets for wire fraud and many have lost hundreds of thousands of dollars because they simply relied on the wire instructions received via email without further verification. If funds are to be wired in conjunction with the real estate transaction, we strongly recommend verbal verification of the wire instructions through a known, trusted phone number prior to sending funds. Do NOT rely on phone numbers sent via email for wire instruction confirmation.
The following non-exclusive self-protection strategies are recommended to minimize exposure to wire fraud:
NEVER RELY on emails purporting to change wire instructions. Parties to a transaction rarely change wire instructions in the course of a transaction.
ALWAYS VERIFY wiring instructions, specifically the ABA routing number and account number by calling the party who sent (or should be sending) the instructions. DO NOT use the phone number provided in the email containing the instructions, use phone numbers you have called before or from a verifiable source such as the real estate contract. DO NOT send an email to verify as the email address may be incorrect or the email may be intercepted by the fraudster. Howeth Title would never send revised wiring instructions.
USE COMPLEX EMAIL PASSWORDS that employ a combination of mixed letter case, numbers and symbols. Make your passwords greater than eight (8) characters. Also, change your password often and do NOT reuse the same password for other online accounts.
USE MULTI-FACTOR AUTHENTICATION for email accounts. Your email provider or IT staff may have specific instructions on how to implement this feature.
If you suspect fraud, contact your escrow officer (or your bank if you’ve already sent the wire) immediately. Time is critical when you’ve been a victim.
This information is not intended to provide legal or professional advice
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