Can a Title Claim Happen After You Buy a Home?
You have signed the papers, paid the closing costs, and received the keys. The house is yours - or so you think. In a small but significant number of real estate transactions, title claims surface after closing, threatening the new owner's right to their property. Understanding how this happens, and how title insurance protects you, is something every Texas homebuyer should know.
What Is a Post-Closing Title Claim?
A post-closing title claim occurs when a third party asserts a legal right to your property after the transaction has already closed. This can come in many forms - a previously unknown heir claiming an interest in the estate that sold the property, a forged deed earlier in the chain of title, an unpaid lien that was not discovered in the title search, or a boundary dispute with an adjoining landowner. These issues can arise months or even years after your closing.
How Common Are Title Issues in Texas?
Title issues are more common than most homebuyers realize. According to the American Land Title Association, one in three title searches reveals a defect or problem that needs to be resolved before closing. Texas properties with long ownership histories, inherited properties, foreclosure sales, and properties that have changed hands frequently are at higher risk of having unresolved title issues.
How Title Insurance Protects You
Owner's title insurance provides coverage for title claims that arise after closing - including legal defense costs and financial compensation up to the policy amount if you are found to not have clear ownership. In Texas, the cost of an owner's title insurance policy is a one-time premium paid at closing. It protects you for as long as you or your heirs own the property. Given the stakes involved, it is one of the most valuable protections available in a real estate transaction.
The Difference Between Lender's and Owner's Title Insurance
Your lender will require a lender's title insurance policy to protect their interest in the property. This policy does not protect you - the homeowner. An owner's title insurance policy is separate and protects your equity and ownership rights. At Cottonwood Title & Escrow, we walk every buyer through both policies at closing so you understand exactly what is covered and why both matter.