TexasWaterFrontRanches

A new rule approved by the Texas Department of Insurance and adopted in August allows title insurance companies to take a “Blanket Exception” on their responsibility to determine whether a landowner owns the mineral rights to their property. Under the rule, title insurance companies no longer have to do extra title searches on a property, and it also may protect them from legal action.

The new rule will make it harder for landowners to determine if they own the mineral rights on their property, but may not lead to a discounted price with (arguably) reduced coverage. A panel of judges have held a hearing in the past few weeks regarding insurance rates, and are currently reviewing paperwork and evidence. Insurance industry groups are seeking an increase in title insurance rates, while the Office of Public Insurance Counsel (which represents consumers) agrees with the new rule, but is seeking a rate decrease. Title insurance rates are typically higher in Texas than other states, and are set by the Insurance Department. The decision by the panel will come in November.

Title companies say that forcing them to insure mineral rights statewide on every piece of property they insured would be too high of a cost burden that would cause insurance rates for all consumers to skyrocket. Critics call the new rule less work for the insurance companies at the same rates.

 On if property owners should receive a discount, Deputy Insurance Commissioner Robert Carter, who oversees Title Insurance, says: “[the State Insurance Commissioner Mike Geeslin] wants to hear that issue in the future.”

Buyers or sellers are required to buy title insurance on almost every land transaction. A title policy is essentially a guarantee that the title company will defend the owner in court if there’s ever a dispute about the ownership of a piece of land. Title companies typically run a records check before issuing a title policy, to make sure there’s no cloud over the chain of ownership or over other issues such as easements. Typically, the title company will include a list of exceptions, such as alleys, that are not guaranteed under the policy (explains  Mike Lee of the Fort Worth Star-Telegram, who first reported this story).