Legislative Changes to Texas Title Insurance: Title Insurance Companies Can Now Charge for Electronic Filing Fees

H.B. 3073 alleviates a statutory uncertainty, allowing title insurance companies to charge for the actual, or reasonably estimated, cost of electronic filing fees by changing Tex. Ins. Code § 2501.008.

There has been some debate within the title insurance community whether or not electronic filing fees could be passed down to the consumer as a separate charge from the title insurance premium. Because of the potential inability to pass the cost on to the consumer, many title companies have been reluctant to adopt electronic filing of real estate documents.

Electronic filing of real estate documents provides a benefit to all parties involved: the county clerks, the consumer and the title companies. The county clerks, should they have an electronic filing system, benefit from “more immediate filing, better notice, and reduced labor and recording costs.” See Bill Analysis at http://bit.ly/enj6R. The consumer benefits from “immediate filing.” Id. The title company benefits from “reduced losses due to gaps in filing.” Id. Clearly, an electronic system provides a more seamless system with less room for errors or problems than a system that relies upon certified or overnight mail and bureaucrats shuffling unending stacks of paper.

To read H.B. 3073, go to http://bit.ly/31Zg38.

Legislative Changes to Texas Title Insurance: Continuation of Coverage

Beginning January 1, 2010, owner's title insurance policy on residential real property will provide for continuation of coverage beyond the original named insured in the following circumstances:

(1) to a person who inherits the title to the original named insured's real property on the original named insured's death;

(2) to the original named insured's spouse who receives title in a dissolution of marriage with the original named insured;

(3) to the trustee or successor trustee of a trust established by the original named insured to whom the original named insured transfers title after the date of the policy; and

(4) to the beneficiaries of the type of trust as in (3) on the death of the original named insured.

These continuations of coverage benefit the Texas residential property owners greatly, allowing Texas title insurance to adjust to the events of death and divorce--which our modern society cannot seem to avoid. Additionally, by extending the continuation of coverage to a trust created by the original named insured, Texas residential property owners have greater freedom to conduct nontestamentary planning without losing the benefits they receive under their title insurance policy.

Finally, these changes by the Texas legislature probably bring the law and title insurance coverage more in line with the Texas residential property owner's expectations for when they should be able to rely upon their title insurance policy for protection. I am willing to bet most people already think their title policy covers them in these situations and would only find out when they would file a claim and their lawyer breaks the bad news to them. The legislature made a good change.

To read the new statute, see Tex. Ins. Code § 2703.101(g).

Legislative Changes to Texas Title Insurance: Title Insurance Company Affidavit As Release of Lien

The Texas Legislature passed a law allowing Texas title companies to execute an affidavit confirming that a mortgage on a one- to four- family residence has been paid in full and released. This affidavit, in effect, constitutes a release of lien. Albeit, this new power of a title company does not relieve a mortgagee (the releasing mortgage company) from any obligation it may have to execute and deliver its own release.

This new power given to title companies should allow them to speed up the lien-clearing process. In the past, as required by Procedural Rule P-11, a title company could not clear a lien unless it received the mortgage company’s release of lien or the appropriate Master Indemnity Agreement. The new law gives the Texas title company another option to use to help their customer when, say, the mortgage company no longer exists or was subsumed by a larger lender and no one knows who has authority to sign for the old mortgage company.

Do not expect all title agencies or direct operation title insurance companies to immediately begin to use this new tool. With so much power placed in the title insurance company’s hands to clear title liens, expect them to be careful using it—else open themselves up to an unnecessary liability they did not have before. Title companies probably will restrict the authority to sign such affidavits to a limited few of their officers or legal counsel—and not to any and all of their escrow officers. To read the new statute allowing this affidavit, see Tex. Prop. Code § 12.017 at http://bit.ly/viXUM.