Buying a House in Texas? 10 Legal Issues to Check Before Closing

Buying a house can move quickly. Between negotiating the price, scheduling inspections, arranging financing, and preparing for closing, it can be easy to focus on the house itself and overlook the legal issues connected to the property.

But buying a house in Texas involves more than deciding whether you like the property.

Contracts, deadlines, title issues, easements, surveys, deeds, and other legal matters can affect what you're actually buying—and what problems you may inherit after closing.

Here are ten issues Texas buyers should understand before closing on a property.

Quick Answer: What Should You Check Before Buying a House in Texas?

Before closing on a Texas home, buyers should generally understand the purchase contract, option period, earnest money requirements, title commitment, property survey, easements, potential encroachments, title insurance, deed being delivered, and any unresolved title problems.

Each of these can affect the buyer's rights or ownership after closing.

1. Understand Your Option Period

One of the first deadlines a buyer should identify is the option period.

An option period can provide a buyer with a contractual right to terminate the transaction during a specified period, provided the requirements of the contract have been satisfied.

This is often when buyers conduct inspections and investigate whether they want to proceed with the purchase.

Missing the deadline can significantly change the buyer's options.

2. Know What Happens to Your Earnest Money

Earnest money is intended to demonstrate the buyer's seriousness about completing the transaction.

But what happens to that money if the transaction doesn't close?

The answer can depend on why the transaction terminated and whether the buyer or seller complied with the contract.

A buyer who properly exercises a contractual termination right may be in a very different position from someone who simply refuses to close.

3. Read the Title Commitment

A title commitment deserves more attention than many buyers give it.

The title commitment can identify requirements that must be satisfied before the title company issues a policy as well as exceptions that may affect the coverage ultimately provided.

It may reveal matters involving:

• Liens;

• Easements;

• Restrictions;

• Ownership;

• Existing documents affecting the property; and

• Other title matters.

Do not assume that receiving a title commitment means everything concerning title is automatically clear.

4. Review the Property Survey

A house may look perfectly situated when you're standing in the backyard.

The legal boundaries may tell a different story.

A property survey can show the location of boundary lines, improvements, easements, fences, and other matters affecting the property.

Surveys can become especially important when buyers plan to add a fence, pool, building, driveway, or other improvement after purchasing the property.

5. Find Out Whether Easements Affect the Property

An easement gives another person or entity certain rights involving someone else's property.

For example, easements may exist for utilities, access, drainage, or other purposes.

An easement doesn't necessarily mean there is something wrong with the property.

But buyers should understand existing easements because they may affect how portions of the property can be used.

6. Look for Encroachments

An encroachment can occur when a structure or improvement extends across a property boundary.

Common examples can involve:

• Fences;

• Driveways;

• Garages;

• Sheds;

• Retaining walls; or

• Other improvements.

A buyer may not discover an encroachment simply by walking through the property.

This is another reason reviewing an appropriate survey can be important.

7. Don't Ignore a Boundary Dispute

A disagreement over where one property ends and another begins can become considerably more serious after purchasing the property.

A boundary line dispute may involve competing surveys, fences, longstanding use of land, encroachments, or disagreements between neighboring owners.

If there is already a known boundary issue, buyers should understand it before closing rather than assuming it will disappear after ownership changes.

8. Understand What Title Insurance Does

Many buyers hear the words title insurance at closing without really understanding what they mean.

Title insurance generally protects against certain covered title risks, subject to the terms, exclusions, and exceptions contained in the policy.

It is different from homeowners insurance.

Homeowners insurance generally concerns risks involving the home and property.

Title insurance concerns ownership and title-related risks.

Understanding the title commitment before closing can also help a buyer understand what may eventually be excluded from title coverage.

9. Know What Type of Deed You're Receiving

The deed is the document used to convey ownership of real estate.

But not every deed provides the same warranties.

Texas real estate transactions may involve different types of deeds depending upon the circumstances.

General Warranty Deed

A General Warranty Deed generally contains broad warranties of title from the grantor.

Special Warranty Deed

A Special Warranty Deed generally limits the grantor's warranty to certain matters arising during the grantor's ownership.

Deed Without Warranty

A Deed Without Warranty conveys the grantor's interest without warranties of title.

Quitclaim Deed

A Quitclaim Deed operates differently from a traditional deed conveying property with warranties and can create particular concerns in Texas real estate transactions.

Buyers should understand what document is actually being used to convey the property.

10. Make Sure There Isn't a Cloud on Title

A cloud on title is a potential claim, defect, document, or other issue that creates uncertainty about ownership or the property's title.

Examples might involve:

• Old liens;

• Improperly recorded documents;

• Missing releases;

• Conflicting deeds;

• Heirship issues;

• Probate problems; or

• Competing ownership claims.

A cloud on title can become particularly important when someone tries to sell, refinance, or obtain title insurance.

Resolving a title problem before closing is generally preferable to discovering it after you've purchased the property.

Bonus: What Does Buying a Property “As Is” Mean?

Many Texas real estate contracts involve the buyer accepting property in its present condition.

However, “as is” does not necessarily mean “don't investigate.”

Buyers should still understand their contractual rights, inspection opportunities, option-period deadlines, and seller disclosures.

What Should a Texas Home Buyer Review Before Closing?

Before closing, consider making sure you have reviewed or understand:

• Your executed purchase contract;

• Option-period deadline;

• Earnest money requirements;

• Inspection results;

• Seller disclosures;

• Title commitment;

• Property survey;

• Recorded easements and restrictions;

• Title insurance;

• The deed that will convey the property; and

• Any unresolved ownership or title concerns.

The particular documents and issues will vary depending upon the transaction.

What If You Find a Problem Before Closing?

The earlier a buyer identifies a problem, the more useful the available contractual options may be.

Depending upon the issue and contract, the parties might:

• Resolve the title issue;

• Negotiate a repair;

• Amend the contract;

• Obtain additional documentation;

• Resolve an encroachment;

• Address a lien;

• Negotiate another solution; or

• Exercise an available contractual right.

Waiting until closing—or after closing—can significantly change the situation.

Common Questions About Buying a House in Texas

What should I check before buying a house in Texas?

Before buying a house in Texas, review the purchase contract, option-period deadlines, earnest money requirements, seller disclosures, title commitment, property survey, easements, restrictions, title insurance, and the deed that will transfer ownership.

What should I look for in a Texas title commitment?

Look for ownership information, requirements that must be satisfied before closing, recorded liens, easements, restrictions, and exceptions that may affect title insurance coverage. A title commitment should be reviewed before applicable contract deadlines expire.

Should I get a survey before buying a house in Texas?

A property survey can help identify boundaries, easements, improvements, fences, and potential encroachments. Whether a new survey is necessary depends on the property and transaction, but buyers should understand what the available survey shows before closing.

What happens if there is an easement on a property I want to buy?

An easement generally gives another person or entity certain rights to use part of the property. Buyers should understand where the easement is located, who benefits from it, and whether it could interfere with their intended use of the property.

What happens if a survey shows an encroachment?

An encroachment may exist when a fence, driveway, building, or other improvement crosses a property boundary. The issue should be investigated before closing because it may affect title, financing, future improvements, or a later sale.

What is a cloud on title in Texas?

A cloud on title is a potential claim, defect, document, or other issue that creates uncertainty about ownership or title. Examples can include unreleased liens, conflicting deeds, heirship problems, or improperly recorded documents.

Does buying a house “as is” in Texas mean I can't get an inspection?

No. Buying property “as is” does not necessarily prevent a buyer from inspecting the property. The buyer's specific rights depend on the purchase contract, including any applicable option period and termination rights.

Do I need a real estate attorney before buying a house in Texas?

Not every Texas residential purchase requires a buyer to hire an attorney. However, an attorney may be particularly helpful when there are title defects, unusual contract provisions, boundary disputes, inherited property, easements, deed issues, or disagreements between the parties.

San Antonio Real Estate Attorney

Real estate problems are often easier to address before closing than after ownership has already changed.

Walter Law, PLLC assists buyers, sellers, investors, and property owners with contracts, deeds, title issues, property disputes, and other Texas real estate matters.

If you need a San Antonio real estate attorney to help you understand a transaction, title problem, or property dispute, Walter Law, PLLC can help you evaluate your options.