The Texas Closing Cost Almost Everyone Pays (But Not Required)
When sellers in Austin are getting ready to make a move, one of the first things we do at Pinnacle Property Group is break down the numbers on a net sheet. Almost every time, there’s one line item that sparks questions:
The Owner’s Title Policy.
It’s a closing cost that isn’t required by Texas law—and not even required by lenders—but almost every real estate transaction includes it anyway. Let’s break down why.
What Is an Owner’s Title Policy?
An owner’s title policy protects the buyer’s legal ownership of the property after closing. If an issue shows up down the road—such as:
A previously unknown lien
An error in public records
A forged document
A dispute over ownership
…the owner’s title policy steps in to protect the buyer’s rights to the property.
Why It Matters for Sellers, Too
Even though the policy protects the buyer, it also benefits the seller.
By providing an owner’s title policy, sellers help deliver marketable title, reduce the risk of post-closing issues, and create a smoother transaction overall. Fewer surprises means fewer delays—and fewer headaches for everyone involved.
Is It Required in Texas?
Short answer: No.
Not required by Texas law
Not required by the lender
However, it’s considered a standard practice in Texas real estate. You’ll see it on nearly every contract that crosses the table because it protects both parties and keeps transactions moving forward.
How Much Does It Cost?
The cost is typically about 0.5% of the purchase price.
For example:
On a $500,000 home, the owner’s title policy usually costs around $2,500
This is a one-time fee paid at closing.
Who Pays for It?
In Texas, who pays for the owner’s title policy is fully negotiable.
In competitive markets, buyers may offer to pay for it to strengthen their offer
In markets with more supply than demand—like what we’re currently seeing in Austin—buyers often request that the seller cover this cost
Most of the time in today’s Austin market, sellers should expect this to be part of their closing costs, but every deal is different.
The Bottom Line
The owner’s title policy:
Is not legally required
Is considered a standard closing cost
Protects both buyers and sellers
Is negotiable, depending on market conditions
Understanding costs like this upfront helps you plan smarter and avoid surprises when it’s time to close.
If you’d like help breaking down your numbers or have questions about selling in today’s Austin market, don’t hesitate to reach out to us at Pinnacle Property Group. We’re always happy to help.
