There’s no denying that Texas has one of the hottest real estate markets in the U.S. Even with experts predicting a softening of housing markets around the country, Texas real estate sales continue to break records—up over 44% year over year as of January 2023. And in such a hot market, there is a need for title companies to protect both buyers and mortgage companies to ensure property transfers are safe and legitimate.
In this article, the Curley Law team will discuss how to start a Texas title company. With a firm knowledge of the legal regulations governing the title process and a keen understanding of how to buy real property, you can quickly be on the road to success. We will help you get started. Don’t hesitate to contact us today.
What Does a Texas Title Company Do?
Texas Title Company Responsibilities
The first step in how to start a title company in Texas is to make sure you know what a title company does and what its responsibilities are. You will want to understand how to review a property’s title to make sure it is valid. If the title is free and clear, then the company’s job is to issue title insurance. This insurance protects the policyholder against financial loss from any liens and defects in the title to a property. There are two types of title insurance policies—one protects the mortgage lender, and one protects the property’s buyer.
Texas Title Company Tasks
In addition to being responsible for researching a property’s title, closing transactions, and issuing title insurance, Texas title companies have other tasks to complete in the course of their business. Texas title companies must maintain a database of real estate resources, and they are legally required to have access to public real estate records since their job is to ensure there are no problems with the transfer of a title. This is known as an abstract title plant, or a database containing summaries and records of all relevant titles, judgments, liens, and issues that may affect the transfer of property in the county where you do business.
Some issues and items Texas title companies need to check for in the course of researching a property’s title include:
- Legal problems that may affect the property’s transferability,
- Judgments against the property itself or its current owners,
- Open second mortgages,
- Liens for unpaid taxes,
- Defective deeds at any point in the chain of transfer, and
- Undisclosed heirs for any property owner who held the deed at any time that could affect the property’s transferability.
In addition to performing title research, some companies also maintain escrow accounts for clients, which contain the funds required for closing and settlement costs. Additionally, title companies help ensure that sellers are legitimate and have the right to sell their properties. Once a title is verified and all tasks are completed, title insurance is issued. Title companies also often act as closing agents. As you can see, the tasks associated with this job are much more involved than merely checking a few records and issuing insurance policies.
Starting a Title Company in Texas
Licensing and Bonding
While no formal education is required to become a title agent in Texas, you will need to obtain a title agent license. You may also need to get an escrow officer’s license, depending on the services your title company plans to offer. The title agent officer license does not require a background check or fingerprinting but only filing a form and paying a $50 fee. The escrow officer license is a slightly more involved process that requires fingerprinting. However, no exam is required. Be sure you know which licenses you need for the type of business you want to operate.
A title agent license must also be sponsored by a title insurance company or agent. If you have already worked for a company in this market, it should be easy to find a sponsor. Again, your application will need to be sponsored.
After you have secured the correct sponsorships and licenses, you will need to post a bond with the Texas Department of Insurance. This guarantees that you will comply with the title industry regulations. Title agents are required to post a $10,000 bond, while escrow officers need to post a $5,000 bond.
Business Entity Creation
While getting your license and posting a bond may seem like the final steps to getting your business’s doors open, they are merely the first of many business decisions you will make as a new entrepreneur. As soon as you have handled the logistics of operating a title company, you will want to decide how you want to set up your Texas business. For example, whether you want to be a sole proprietorship, limited liability company (LLC), or corporation. Curley Law can help you create an entity, register a name, and be a trusted business law partner as you complete your company set-up.
How Curley Law Can Help
We have been helping entrepreneurs get their Texas businesses started for well over a decade. Our firm represents businesses and individuals in a broad range of transactional and litigation matters. Contact the Curley Law Firm today to get started.