Who pays title insurance and closing costs in Texas, and what actually moves the number

The short answer on who pays what

In Texas, who pays for title insurance and most closing costs is decided by your contract, not by custom or by the title company. The standard resale contract from the Texas Real Estate Commission has a box to check for whether the seller or the buyer pays for the owner's title policy, and it splits the escrow fee in half by default. The premium itself is set by the Texas Department of Insurance, so it is the same at every title company; what varies is everything around it.

We at Capital Title prepare closing statements for buyers and sellers from our Preston Road office in Dallas, and the most common surprise is not the size of any one line. It is that nobody explained which lines were negotiable before the contract was signed. This guide walks through how the costs are divided, what drives them, and how to get a real number early.

Title premiums are set by the state, not by us

The Texas Department of Insurance regulates title insurance rates, and its consumer guidance says plainly that all Texas companies charge the same rates for title insurance. An owner's policy premium is based on the sales price, and a loan policy premium is based on the loan amount. You cannot negotiate the rate with any title company, because we are not allowed to discount it.

What you can negotiate is who pays it. The TDI title insurance FAQ notes that the buyer and seller may negotiate who pays the premium, and that is exactly what the checkbox in paragraph 6A of the TREC resale contract does. Sellers often pay for the owner's policy, but that is a term of the deal, not a rule, and it is worth deciding on purpose.

The same FAQ explains why a loan policy often looks inexpensive next to the owner's policy: when both are issued at the same closing, the loan policy is priced at a steep simultaneous-issue discount. If a buyer skips the owner's policy, the loan policy is charged at full price. I cover that decision in more depth in my guide on whether you need an owner's policy or only the lender's loan policy.

Because the rate is fixed, a lower total from one company almost always comes from the other lines on the statement, not the premium. That is worth knowing when someone compares two estimates side by side.

The lines on a closing statement that do vary

TDI points out that while premiums are fixed, closing cost fees can differ between companies, and that is where comparing makes sense. These are the items that move from file to file and from company to company:

• Escrow or closing fee, which the TREC contract splits between buyer and seller unless you agree otherwise
• Endorsements to the title policy, often required by the lender, which add coverage for specific risks
• Recording fees charged by the county for the deed, the deed of trust and any lien releases
• Survey costs, which depend on whether an existing survey can be reused
• Tax certificates, courier, document preparation and wire charges
• HOA transfer fees, resale certificates and prorated dues
• Prorated property taxes, which can be the single largest adjustment on the statement

Five things that push your total up or down

When two buyers purchase homes at the same price and end up with very different closing costs, it is almost always one of these factors. None of them has anything to do with which title company you chose.

• Price and loan amount: both premiums scale with them, so a larger purchase or loan means a larger premium
• The survey: the TREC contract lets a seller furnish an existing survey with a T-47 affidavit or T-47.1 declaration; if the title company or lender will not accept it, someone pays for a new one
• Taxes and timing: property taxes are prorated through the closing date, so the month you close changes the credit between buyer and seller
• The loan itself: origination charges, prepaid interest, insurance and escrow reserves belong to the lender's side and often dwarf the title charges
• Curative work: releases of old liens, probate documents or a divorce deed can add recording and preparation costs on the seller's side

Getting a real estimate before you are surprised

I would rather not publish figures here, because a number that is right for a condo near Preston Center is wrong for a Highland Park home with a pool, a new loan and a midyear closing. What I can do is prepare an estimate from your actual contract once the file is open, and Capital Title publishes closing cost calculators and guides on who pays for what on a residential purchase that agents and buyers use to set expectations before the numbers are final.

If you are a buyer with a loan, you will also receive figures from your lender. Federal rules require the lender to give you a Closing Disclosure at least three business days before closing, according to the Consumer Financial Protection Bureau, and our settlement statement is balanced to match it. If you are still at the stage of figuring out what you can afford, a mortgage lender's guide to going from unsure to approved is a better first step than any closing cost estimate.

Seller costs versus buyer costs on a typical purchase

The TREC resale contract lists default expenses for each side in paragraph 12. You can change them in the contract, but if you do nothing, this is roughly how the statement divides.

One blank in that paragraph matters more than people expect: it lets the seller agree to pay a set amount toward the buyer's expenses, which is how many buyers cover part of their closing costs without changing the price. Brokerage compensation is handled in its own part of the same paragraph. Whatever is written there flows straight onto our statement, so if you negotiated a concession in an email but it never made it into the contract or an amendment, we cannot honor it.

• Seller: releases of existing liens including recording fees, tax statements or certificates, preparation of the deed and half of the escrow fee
• Seller: the owner's title policy if the seller box is checked in paragraph 6A, plus any agreed contribution to the buyer's costs
• Buyer: appraisal, loan application, origination, credit report and loan document charges
• Buyer: the loan title policy with the endorsements the lender requires and the other half of the escrow fee
• Buyer: prepaid items such as insurance premiums, reserve deposits and prorated taxes

Refinances, cash deals and commercial files cost differently

A cash purchase has no loan policy and no lender charges, so the statement is shorter, but the owner's policy and escrow fee still apply. A refinance has no sale, so there is no owner's policy; the lender requires a new loan policy, and the title search still has to confirm nothing has been recorded against the property since you bought it.

Reverse mortgage closings and sales of bank-owned or foreclosed property each have their own paperwork. In a bank-owned sale, the seller is an institution with its own addenda and its own ideas about which costs it will pay, so read those addenda as carefully as the main contract. In a reverse mortgage, the lender's requirements drive the title work, and Capital Title uses mobile notaries so borrowers can sign where they are comfortable.

Commercial closings follow the same state premium rules but often carry more endorsements, more complex surveys and more parties to pay at funding. Capital Title has a National Commercial Operations group for larger and multi-site deals, and the cost drivers there are best discussed with your actual contract in hand.

Where people overpay or get surprised

The biggest avoidable cost I see is a new survey that did not need to be ordered. If you are selling and have the survey from when you bought, find it now and send it with a signed T-47 affidavit or T-47.1 declaration if nothing has changed on the lot. If you added a pool, a fence or an addition, tell us, because that may mean the old survey will not be accepted.

The second is a seller who forgets a home equity line or old lien. Its payoff and release are the seller's expense under the standard contract, and finding it late can push the closing date. The third is a buyer who budgets for the down payment and the lender's fees but not for prepaid insurance and tax reserves. Those are not title charges, but they arrive on the same statement and they are real money on closing day.

Finally, read every line. Each charge should trace back to the contract, the lender or a recorded document. If one does not, ask us before you sign. In my experience, the questions people are embarrassed to ask are the ones that catch real errors.

Ask for the numbers early and in writing

Once your contract names Capital Title and we receive it with the earnest money, your escrow officer can give you an estimate and walk you through it line by line. Ask early, before the option period ends if you can, because some cost questions are easier to resolve while the contract is still flexible.

If you want to understand the rest of the month between contract and keys, my guide on what the title company is doing for the next 30 days covers the title search and the problems that delay closings. When signing day comes, my walkthrough of the closing appointment and what to bring explains how the statement you approved turns into funded money and a recorded deed in Dallas County.

Questions people ask me