What Does a Title Company Do in Texas? A Buyer & Seller Guide

What Does a Title Company Do During a Texas Real Estate Transaction?

When you buy or sell a home in Texas, the title company is one of the most important players in the deal, yet many buyers and sellers aren’t sure what it actually does. In Texas, the title company does much more than handle paperwork at the end. It holds your earnest money, researches the property’s ownership history, issues title insurance, runs the closing, and makes sure the sale is officially recorded. Here’s a step-by-step look at what a title company does and why it matters to you.

What Is a Title Company?

A title company is a neutral third party that helps make sure a property’s ownership can be legally and safely transferred from the seller to the buyer. It doesn’t represent the buyer or the seller. Its job is to protect the transaction and make sure everything is done correctly, including the money.

In Texas, title companies manage most home closings. Many other states use attorneys for that role, but Texas isn’t one of them. 

Title insurance in Texas is regulated by the Texas Department of Insurance (TDI). TDI sets title insurance premium rates, so the base premium for the same policy is the same no matter which title company you use. Service, experience, and responsiveness are what set one title company apart from another.

What Does a Title Company Do? Step by Step

1. Opens Escrow and Holds the Earnest Money

Once a contract is signed, it’s sent to the title company named in the contract, and the title company “opens a file.” Under the standard TREC contract, the buyer delivers the earnest money and option fee to the title company within a few days of the contract’s effective date.

The title company holds those funds in escrow, a secure account that neither the buyer nor the seller controls. The money stays there until closing, or until the parties agree on how it should be released if the contract ends.

2. Searches the Title

Next, the title company researches the property’s public records to confirm the seller has the legal right to sell and to find anything that could affect ownership. This title search looks for:

• Liens. These include existing mortgages, home equity loans, tax liens, contractor liens, and judgments.
• Easements. Utility easements and other rights others have to use part of the property.
• Restrictions. HOA covenants, deed restrictions, and building setback lines.
• Ownership issues. Gaps in the chain of ownership, missing signatures, or heirship questions.
• Unpaid taxes or assessments. This includes property taxes and, in many Fort Bend County neighborhoods, MUD taxes. See our post: [What Is a MUD Tax in Texas?]

3. Issues the Title Commitment

The title company then issues a title commitment. This is a document that shows what the title company is willing to insure, what has to be resolved before closing, and what won’t be covered. Texas title commitments are organized into schedules:

• Schedule A. Lists the proposed buyer, the property, the policy amount, and who currently owns the property.
• Schedule B. Lists exceptions the policy won’t cover, like recorded easements and restrictions.
• Schedule C. Lists items that must be resolved before closing, such as paying off the seller’s mortgage.
• Schedule D. Discloses the parties involved in issuing the policy and the premium breakdown.

Buyers have a set amount of time under the TREC contract to review the commitment and survey and object to problems. Your agent can help you review it before that deadline passes.

4. Clears Title Problems

When the title search turns up issues, the title company works to resolve them before closing. That can mean ordering payoffs for existing loans, getting lien releases, collecting missing documents or signatures, or working with an attorney on more complex problems like heirship questions.

5. Reviews the Survey

A survey shows the property’s boundaries, improvements, easements, and any encroachments. In Texas, sellers often provide an existing survey along with a T-47 Residential Real Property Affidavit, which confirms nothing has changed since the survey was done. If the title company won’t accept the existing survey, a new one may be needed.

6. Coordinates With the Lender and Other Parties

Behind the scenes, the title company works with:

• The buyer’s lender. It coordinates loan documents and closing figures.
• The seller’s lender. It gets the exact payoff amount.
• The HOA. It gets the resale certificate and the dues that are owed or prepaid.
• The taxing entities. It gets certificates showing what taxes are owed and prorates them between buyer and seller.
• Both real estate agents. It keeps the closing timeline on track.

7. Prepares the Closing Documents and Settlement Statements

The title company prepares the documents needed to transfer the property, often with help from an attorney who prepares the deed. It also prepares the settlement statements. These show every dollar coming in and going out: the purchase price, loan amount, closing costs, prorated taxes, HOA fees, payoffs, agent compensation, and the final amounts the buyer brings and the seller receives.

8. Conducts the Closing

The title company’s escrow officer runs the closing. They:

• Verify everyone’s identity
• Walk the buyer and seller through the documents
• Notarize signatures
• Collect the buyer’s funds
• Make sure every requirement in the contract and the lender’s instructions has been met

Many Texas closings now offer options like mobile notaries or signing at different times for buyers and sellers.

9. Funds and Disburses the Money

Once the lender approves the signed documents and sends the loan funds, the transaction “funds.” The title company then pays off the seller’s mortgage, pays the agents, settles taxes and fees, and sends the seller their proceeds.

10. Records the Deed and Issues the Title Insurance Policies

After closing, the title company records the deed and the buyer’s loan documents with the county clerk. In Fort Bend County, that’s the Fort Bend County Clerk. Recording makes the change of ownership part of the public record.

Finally, the title company issues the title insurance policies.

What Is Title Insurance, and Who Pays for It in Texas?

Title insurance protects against covered losses from past title problems that weren’t discovered before closing, such as forgery, errors in public records, or unknown heirs. Unlike most insurance, you pay for it once at closing, and it protects against problems that already exist.

There are two main types:

• Owner’s policy. Protects the buyer’s ownership for as long as they or their heirs own the home. In Texas, the seller customarily pays for it, but who pays is negotiated in the contract.
• Lender’s policy. Protects the lender’s interest in the property. It’s usually paid by the buyer as part of their loan closing costs.

Buyers can also add certain endorsements for more coverage, such as an amendment to the survey exception, which is usually paid by the buyer.

Protect Yourself From Wire Fraud

Real estate transactions are a common target for wire fraud. Criminals send fake emails that look like they’re from your title company or agent, with “updated” wiring instructions.

• Always call your title company directly at a phone number you know is real, not one listed in an email, to confirm wiring instructions before you send money.
• Be suspicious of last-minute changes. Legitimate title companies rarely change wiring instructions.
• Never email sensitive financial information unless you’ve confirmed the recipient.

Frequently Asked Questions

What does a title company do in Texas?
A Texas title company holds earnest money, searches title, issues title insurance, prepares closing documents and settlement statements, conducts the closing, disburses funds, and records the deed.

Does the title company represent the buyer or the seller?
Neither. The title company is a neutral third party that handles the transaction for everyone involved.

Who chooses the title company in Texas?
The title company is named in the purchase contract. Either party can propose one, and it’s agreed on as part of the contract.

Are title insurance rates the same at every Texas title company?
Yes, the base premiums are set by the Texas Department of Insurance. Companies compete on service and experience.

How long does it take for a title company to close?
Most Texas closings take about 30 to 45 days from contract to closing, depending on the lender and any title issues.

Who pays for the owner’s title policy in Texas?
The seller customarily pays for it in Texas, but it’s negotiable in the contract.

Work With a Team That Keeps Your Closing on Track

A great title company and an experienced agent working together make for a smooth, stress-free closing. The Cathy Stubbs Team at Keller Williams works with trusted title companies throughout Sugar Land, Richmond, Rosenberg, and Greater Houston. We help you understand your title commitment, meet every deadline, and arrive at the closing table with confidence. Whether you’re buying, selling, building new, investing, or leasing, we’re here to help.

Ready to talk? Call us at 281-967-6149 or visit our office at 307 Ulrich St., Sugar Land, TX 77478.

This article is for general informational purposes and isn’t legal advice. For questions about your specific transaction, consult your title company or a licensed Texas real estate attorney.