A friend was recently explaining how he saved thousands of dollars purchasing his new (yet previously-owned) home. Knowing there was a strong likelihood I would someday upgrade my own home, I listened intently to the story and was amazed by the simplicity.

Effectively, my friend described a loophole in the Texas title insurance system, where the owner’s previous title insurance company can sign over the title insurance to the new owner for a nominal fee ($100’s), which is much cheaper than purchasing new title insurance ($1000’s). The argument for this makes a lot of sense since most liens in Texas have to be registered with the state and easement issues in well-established neighborhoods are virtually nonexistent. Great, I thought to myself. I’ll use this in the future to save a few bucks, or at worst, it’ll make a great conversation piece at parties. Before any bragging rights could be claimed, I wanted to do a little research to verify the method.

The first person I mentioned this story to was a recently licensed real estate agent from my neighborhood. She began to explain why someone would be crazy to avoid purchasing title insurance, but I was still skeptical of this advice knowing she probably gets a cut of the insurance fee. This put my curiosity in a whirlwind, and after many additional conversations and a couple hours of research, the facts behind this fee-saving method have been uncovered. Stay tuned for an exciting second post explaining the particulars of this loophole. In the meantime, if you have any insight to offer on the subject, comments are welcome.