Title to a piece of property is the evidence that the owner is in lawful possession of that property. It means you have a legal right to use it within the restrictions imposed by authorities or limitations on its use.

Title insurance protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances or the defects in the title to the property. Learn more here.

A title defect is anything in the entire ownership of a piece of real estate that 1) may encumber the owner's right to the "peaceful enjoyment" of the property or 2) may cause the owner to lose any portion of the property. Defects may include another person claiming an ownership interest, improperly recorded documents, fraud, forgery, liens, encroachments and easements. A title company "cures" such defects by procuring releases or payoffs for liens, clearing estate-related issues and more.

Two types of title insurance policies exist: a lender’s policy and an owner’s policy.

• A lender’s title policy ensures that should the mortgage not be valid or the lien priority incorrect – in other words, should the mortgage fail to be enforceable – the lender will be indemnified against loss, subject to the terms of the policy. Lenders require the homeowner to purchase a lender’s title policy in order to protect their financial investment in the property.

• An owner’s title policy is separate from the lender’s policy and serves to protect homeowners from defects and liens in the chain of title up to the date and time the deed is recorded in the public records. Owner’s title insurance lasts as long as the policyholder or his or her heirs have an interest in the property.

To buy a title insurance policy, you must pay a one-time premium rather than annual premiums like most types of insurance. Rates are set by the Texas Department of Insurance, so all title companies in the state charge the same rates. The cost of a policy is determined by the mortgage amount or the purchase price, whichever is larger. See this page for a calculator and the current rates and formulas.

Insurance such as car, life, health, etc., protects against potential future events and is paid for with monthly or annual premiums. A title policy insures against events that occurred in the past of the real property and the people who owned it, for a one-time premium paid at the close of the escrow.

It places the assets of a corporation behind the title to your home. If attacked, the title will be defended without cost to you, and if the title, or any part of it, should be defective, you will be reimbursed, up to the face amount of your policy, for any financial loss incurred. Learn more here.

After the escrow officer or lender opens the title order, your title company begins a title search. A commitment for title insurance is issued to the customer for review and approval. All closing documents are recorded upon escrow’s instruction. When recording has been confirmed, demands are paid, funds are disbursed, and the actual title policy is created.

You notify the title insurance company and they defend the title, even if it goes to court. The title company bears all expenses.

A commitment for title insurance lays out the conditions required by the title company to issue a particular type of policy. It lists title defects, liens and encumbrances that would not be covered if the title policy were issued as of the date of the report. Learn more here.

If anything should happen to defeat the title, your cause of action would be against the seller and their ability to pay. Attorney's fees and expenses would not be covered.

No one can be sure the title is clean.

The deed into the new owner could be defective because of forgery, incompetence, easements, construction, encroachment or any number of other circumstances.

There are many defects that even the most astute title examination will not uncover. The attorney isn't liable for loss caused by hidden defects.

A condensed version of the recorded documents affecting title to the property. It carries the same liability as an attorney's opinion.

Escrow refers to the process in which the funds of a transaction (such as the sale of a house) are held by a third party, the title company in the case of real estate, pending the fulfillment of the transaction.

Buyers should bring:

• valid, unexpired photo ID such as a driver's license or passport

• a cashier's check for closing costs if they didn't wire funds

Sellers should bring:

• valid, unexpired photo ID such as a driver's license or passport

• keys (including mailbox), codes and garage door openers

• a voided check or wiring instructions for their proceeds

Closing costs cover the services required for a property to change hands. Services required to process the property transaction include title work, appraisals, inspections, document preparation, recording fees and other expenses.

Although they vary by state, typically, closing costs total 1% to 2% of the home’s purchase price, while the escrow impound account may total another 1% to 2%. Closing costs generally cover:

• Mortgage Costs: Loan origination, document preparation, points, underwriting.

• Outside Vendor Costs: Appraisal, credit report, flood determination.

• Title Costs: Closing settlement, tax certification, document preparation, title insurance premium.

• Government Fees: Document recording.

• Escrow Impound Account: Homeowner's insurance and property taxes.

• Additional Fees: Termite inspection, home inspection, survey, etc.

A home warranty is not the same thing as homeowners insurance, which covers major perils such as fires, hail, property crimes, and certain types of water damage that could affect the entire structure or the homeowner’s personal possessions.

A home warranty is a contract between a homeowner and a home warranty company that provides for discounted repair and replacement service on a home’s major components, such as the furnace, HVAC, plumbing, and electrical systems. A home warranty may also cover major appliances, such as washers and dryers, refrigerators, and swimming pools.

This comprehensive list shows all the home warranty providers licensed by the Texas Real Estate Commission.