Title Insurance, Escrow Fees & Prorated Property Taxes in Texas
Title Insurance, Escrow Fees & Prorated Property Taxes in Texas
Whether you are buying or selling a home in San Antonio, Cibolo, Schertz, New Braunfels, or another nearby community, these three closing items can materially affect your final numbers. Here is what they mean, who generally pays them, and where they appear in a Texas transaction.
The Quick Answer
Protects against covered ownership problems
An owner’s policy protects the buyer’s ownership interest from certain title problems that existed before the purchase but were unknown at closing. A separate loan policy protects the lender.
Pays for closing and settlement services
The title or escrow company coordinates documents, funds, payoff items, and disbursements. Under the current standard Texas resale contract, the buyer and seller each pay one-half of the escrow fee unless the contract is changed.
Divides current-year taxes by time owned
Because Texas property-tax bills are generally issued late in the year, the seller commonly gives the buyer a credit for the seller’s portion of the current year when those taxes have not yet been paid.
Escrow fee is not a lender escrow account
The title company’s escrow fee is a transaction charge. A lender’s escrow account is a separate reserve used to collect money for future property-tax and homeowners-insurance bills.
What Does a Texas Title Insurance Policy Cover?
A title search examines public records for matters such as deeds, mortgages, judgments, tax liens, easements, and other recorded claims. The title commitment is delivered before closing and lists the requirements that must be satisfied as well as exceptions that will not be covered. The actual title policy is issued after closing.
Owner’s title policy
Protects the home buyer, subject to the policy’s terms, exclusions, and exceptions. Coverage is generally based on the purchase price and continues for as long as the insured owner or qualifying heirs retain an interest in the property.
Lender’s title policy
Protects the mortgage lender’s lien interest—not the buyer’s equity. Most lenders require a loan policy when financing a home purchase.
Who pays for the owner’s policy? It is negotiable. The current Texas resale contract includes a choice for the buyer or seller to pay. In many Greater San Antonio resale transactions, the offer is written with the seller paying for the owner’s policy, but this is not automatic and can change with the negotiated terms.
Are title premiums different from one San Antonio title company to another?
No. Texas title insurance premiums are regulated by the Texas Department of Insurance, so licensed title companies charge the same basic premium for the same policy amount. The premium is paid once at closing. However, separate charges—including escrow fees, tax certificates, courier charges, recording fees, and other settlement costs—can vary.
| Policy amount | 2026 Texas basic premium | What to remember |
|---|---|---|
| $300,000 | Approximately $1,768 | Premium is based on policy amount, generally the sales price for an owner’s policy. |
| $400,000 | Approximately $2,262 | The regulated premium should be the same among licensed Texas title companies. |
| $500,000 | Approximately $2,756 | Additional settlement charges and optional endorsements may affect the final total. |
Sample premiums use the Texas Department of Insurance basic premium rates effective March 1, 2026. Confirm the current premium, available credits, endorsements, and transaction-specific charges with a licensed title company.
What Are Escrow Fees at a Texas Real Estate Closing?
The escrow or settlement fee compensates the title company for handling the closing process. That work can include receiving earnest money, coordinating lender and title documents, obtaining payoff information, collecting and disbursing funds, and providing the final settlement documents.
Under Paragraph 12 of the Texas Real Estate Commission’s current One to Four Family Residential Contract (Resale), the seller pays one-half of the escrow fee and the buyer pays the other half. The contract also assigns other expenses to each party, and negotiated contributions may cover eligible buyer expenses.
Why estimates differ: The title-policy premium is regulated, but escrow fees and several additional settlement charges can differ by title company and transaction. Ask for a written fee estimate and compare the full list of charges—not just the title premium.
Escrow fee vs. mortgage escrow account
| Item | What it is | When it is paid |
|---|---|---|
| Title-company escrow fee | A settlement charge for coordinating and closing the transaction. | At closing. |
| Lender escrow deposits | Initial reserves for future property-tax and homeowners-insurance bills. | Collected at closing and usually replenished through the monthly mortgage payment. |
| Earnest money held in escrow | Buyer funds deposited with the escrow agent under the purchase contract. | Delivered after the effective date and credited according to the contract at closing. |
How Are Property Taxes Prorated at Closing?
Texas taxing units generally begin mailing property-tax bills in October. In most cases, the taxes are due by January 31 and become delinquent on February 1. Because a sale may close before the current year’s final bill is available, the closing statement uses a proration to allocate the year’s taxes between the seller and buyer.
Under the current standard Texas resale contract, taxes for the current year are prorated through the closing date. If the current-year taxes have not already been paid, the buyer is responsible for paying the bill when due. The seller’s estimated share is normally reflected as a debit to the seller and a credit to the buyer at closing.
Simple tax-proration example
Assume the estimated annual property taxes are $8,000 and the transaction closes on June 30 of a 365-day year. June 30 is the 181st day of the year.
In this simplified example, the seller would generally be charged about $3,967.12 and the buyer would receive the same credit. The buyer later pays the full annual bill when it becomes due.
Why the final tax bill can differ from the closing estimate
The Greater San Antonio area crosses multiple counties and taxing jurisdictions, including Bexar, Comal, Guadalupe, Kendall, Medina, and Wilson counties. A property’s total bill may include a city, county, school district, hospital district, community college district, municipal utility district, or other special district. There is no single “San Antonio property-tax rate.”
The estimate can also change because of:
- A homestead, over-65, disabled-person, disabled-veteran, or other exemption that ends or begins after the sale.
- A change in appraised value or taxable value.
- New construction that was not fully reflected on the prior tax bill.
- A change in a taxing unit’s adopted rate.
- A rollback, agricultural-use issue, supplemental bill, or special assessment.
Can the proration be corrected later? Yes. Paragraph 13 of the current TREC resale contract says the parties will adjust the proration when the current-year tax statements become available if the actual taxes differ from the amount prorated at closing. Keep your closing disclosure or settlement statement and stay in contact with the other party if a post-closing adjustment is required.
How These Costs Affect Buyers and Sellers
Budget beyond the down payment
Your cash to close may include lender costs, prepaid interest, insurance, lender escrow deposits, your portion of the title-company escrow fee, a loan title policy, endorsements, recording fees, and other transaction charges. Credits from the seller or lender can reduce eligible costs when permitted.
Review estimated net proceeds
Your closing statement may include the negotiated owner’s title-policy premium, one-half of the escrow fee, current-year tax proration, lien payoffs, agreed buyer-expense contributions, brokerage compensation, and other contracted costs.
The purchase contract—not a general rule of thumb—controls which party is responsible for a negotiable expense. Before signing an offer or accepting one, ask your real estate professional and title company to explain how the proposed terms affect your estimated cash to close or net proceeds.
Closing-Cost Checklist for Greater San Antonio
- Confirm which party will pay the owner’s title-policy premium.
- Review the title commitment promptly, including Schedule C requirements and listed exceptions.
- Ask the title company for a complete estimate of escrow and additional settlement fees.
- Do not confuse the title-company escrow fee with lender escrow reserves.
- Confirm which exemptions and taxing jurisdictions were used for the tax-proration estimate.
- Pay special attention to new construction, MUD or PID assessments, acreage, and changing exemptions.
- Compare the final Closing Disclosure or settlement statement with earlier estimates and ask about every unexpected change.
- Keep the title policy and closing documents in a secure place after closing.
Frequently Asked Questions
Is title insurance required when buying a home in Texas?
A lender will generally require a loan title policy when the purchase is financed. An owner’s title policy protects the buyer rather than the lender. Whether the buyer or seller pays for the owner’s policy is negotiable in the Texas resale contract.
Who normally pays for the owner’s title policy in San Antonio?
Many Greater San Antonio resale offers are written with the seller paying for the owner’s title policy, but that is a negotiated contract term—not an automatic rule. The buyer can pay it, and market conditions or other offer terms can influence the decision.
Are Texas title insurance rates the same at every title company?
Yes. The Texas Department of Insurance regulates title-policy premiums. Licensed title companies charge the same basic premium for the same policy amount, although escrow fees and other settlement charges may differ.
Who pays the escrow fee in a standard Texas resale contract?
The current TREC One to Four Family Residential Contract (Resale) assigns one-half of the escrow fee to the seller and one-half to the buyer. The parties should rely on their signed contract for the actual allocation in a specific transaction.
Does an escrow fee include the money collected for taxes and insurance?
No. The title-company escrow fee is a settlement charge. Mortgage escrow deposits are separate funds a lender collects and holds to pay future property-tax and homeowners-insurance bills.
Why does the seller give the buyer a property-tax credit at closing?
When the current-year taxes have not yet been paid, the seller generally credits the buyer for the seller’s ownership period. The buyer then receives the annual bill and pays the full amount when due.
Can prorated property taxes be adjusted after closing?
Yes. The current TREC resale contract provides for an adjustment when the current-year tax statement becomes available if the actual taxes differ from the amount prorated at closing.
Have Questions About Your San Antonio Closing Costs?
Keith & Sheila Realty Group helps buyers, sellers, military families, and veterans understand the numbers before they sign. With 14 years as a professional spouse team and Keith’s 13 years as a former Texas Professional Inspector, we bring practical experience to every step of the transaction.
This article provides general educational information and is not legal, tax, insurance, or financial advice. Contract terms, title coverage, fees, tax estimates, exemptions, and lender requirements vary. Consult the appropriate attorney, title professional, tax office, lender, insurance professional, or financial adviser about your specific situation. Information and sample rates are current as of August 2026.
Official references: Texas Department of Insurance Title Insurance FAQ, 2026 Texas Title Insurance Basic Premium Rates, TREC One to Four Family Residential Contract (Resale), and Texas Comptroller Property-Tax Payment Information.
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