The Easement That Was Always There
Marcus and Diane Chen spent eight months looking for the right house in Frisco, Texas. They found it in January 2026: four bedrooms, a flat backyard large enough for the pool they'd been planning since their kids were small, a school district that checked every box. They paid $619,000. At the closing table, a title officer slid a thick stack of papers across the desk. One of them was a title commitment — the document disclosing every claim, lien, and encumbrance the title company had found against the property. Another was an invoice for $1,847 — the premium for their owner's title insurance policy. Marcus signed both.
He did not read either one.
The following July, they broke ground on the pool. The excavation contractor was three days in when a neighbor knocked on the back fence and asked, casually, whether they had talked with Oncor about the easement. Marcus had never heard of the easement. Oncor sent a letter two days later. A 15-foot utility easement ran across the rear thirty feet of the property — it had been recorded in Denton County deed records since 1983 — and the pool excavation was proceeding directly on top of it. The contractor stopped work. The pool design was scrapped and redrawn. The revised footprint fit something smaller and differently shaped than they had planned; the layout they'd imagined for their family no longer fit on the property they owned.
Marcus called the title company. The adjuster pulled the closing file and read from Schedule B-2, Exception 5: "Terms, conditions and easement granted in Agreement... dated November 17, 1983, filed in Volume 1247, Page 89, Deed Records of Denton County, Texas."
The easement had been disclosed in the title commitment Marcus had signed. The title company had found it. They had listed it. Marcus had initialed the page and handed it back without reading a word.
Claim denied.
What Title Insurance Actually Is — and What It Is Not
Most Texas homebuyers understand title insurance in roughly the same way they understand homeowners insurance: you pay a premium at closing, something bad happens, you file a claim, the insurance company pays. That mental model is wrong in ways that matter a great deal.
Homeowners insurance covers future events — the fire that hasn't happened yet, the storm that hasn't come. Title insurance covers past events — defects, encumbrances, claims, and errors that existed at the time of closing, which may not surface until years later. The premium is paid once, at closing, and the policy lasts as long as you own the property.
But here is the part most buyers never grasp: title insurance only covers defects that were not disclosed. Every defect the title company finds during its search — and lists in Schedule B — is explicitly excluded from coverage. The more thorough the title search, the longer the list of exceptions, and the longer the list, the smaller the set of things the policy actually insures.
Texas is also one of only two states in the country — along with New Mexico — where title insurance rates are set by the state, not by market competition. The Texas Department of Insurance promulgates standardized rates and standardized policy forms. Every title insurer in Texas charges the same premium for the same coverage amount. A buyer cannot shop for a better rate. What they can do — and what almost none of them do — is read what they are buying.
The Anatomy of a Texas Title Commitment
When a title company agrees to issue a policy, it first delivers a title commitment — a preliminary document that describes what the policy will and will not cover. The commitment has three sections that most buyers receive but few read.
Schedule A states the basics: the effective date of the commitment, the proposed policy amounts, the names of the parties, and the legal description of the property. It is the preamble — important, but rarely the source of surprises.
Schedule B-1 lists the requirements the title company needs satisfied before it will issue the policy: payoff of the existing mortgage, a new deed conveying title from seller to buyer, release of any existing liens. Think of B-1 as the to-do list before closing.
Schedule B-2 is where the actual coverage is defined by exclusion. It lists every item found in the title search that the policy will not cover. Easements. Deed restrictions. HOA covenants. Tax obligations. Survey discrepancies. Rights of parties in possession. Each exception is a category of problem that, if it ever becomes a dispute, you will resolve with your own attorney and your own money — not with a title insurance claim.
In a typical North Texas residential closing, Schedule B-2 runs three to seven exceptions. Buyers initial the page at closing. Almost none of them have read it.
The Five Exceptions That Surprise Texas Homebuyers Most
Not all Schedule B-2 exceptions carry the same practical risk. These five appear in most Texas residential closings and generate the most claims that get denied.
1. Taxes Not Yet Due and Payable. Property taxes in Texas are assessed each January but not due until the following January. The standard commitment excepts "taxes for the year [current year], and subsequent years, which are not yet due and payable." If you close in October and the seller has not paid the current year's taxes, the title company will require an escrow at closing — but the underlying obligation is not covered by your policy. Read the closing disclosure to confirm how taxes are being prorated and escrowed.
2. Any Discrepancies, Conflicts, or Shortages in Area or Boundary Lines. This exception — often called the "survey exception" — is the most consequential item in the schedule for many buyers. It excludes from coverage any boundary disputes, encroachments, or discrepancies that would be revealed by an accurate survey. If your fence is on the wrong property line. If your neighbor's garage extends onto your lot. If the lot is smaller than the listed acreage. None of those are covered under the standard policy unless you take a specific step at closing to remove the exception — which we will return to below.
3. Recorded Easements and Rights of Way. Any easement filed in the county deed records — utility easements, drainage easements, pipeline easements, access easements — is disclosed in Schedule B-2 and explicitly excluded from coverage. The title company found it; they told you; now it is your problem if you didn't read the disclosure. This is exactly what happened to Marcus and Diane in Frisco. The easement was always there. The title company did its job. The buyer was the one who didn't read the commitment.
4. Deed Restrictions and Restrictive Covenants. Most residential subdivisions in North Texas carry deed restrictions from the original developer — rules about fence height, exterior paint colors, permitted structures, short-term rental use, and dozens of other conditions that run with the land regardless of who owns it. These are listed in Schedule B-2 by reference to the recorded document, and they are excluded from title insurance coverage. A homeowner who violates a deed restriction and gets sued by neighboring property owners cannot file a title insurance claim. The restriction was disclosed at closing; coverage was excluded.
5. Rights of Parties in Possession. This exception covers any claim that could be discovered by physically inspecting the property — a tenant's leasehold interest, an adverse possessor's claim, a family member with a long-established use of a portion of the land. Title searches only cover recorded documents; they do not reveal occupancy. If someone with a legitimate legal claim to use or occupy the property was there when you bought it, and you didn't notice, the title policy won't help. This is particularly relevant in inherited or distressed properties where occupancy history is complicated.
Questions about real estate? A WG Law attorney can walk you through your options.
The Survey Exception: How to Close It — and Why Most Buyers Don't
The survey exception is unique among Schedule B items because it is removable. If a buyer obtains a current survey of the property — a staked boundary survey prepared by a licensed Texas surveyor — and delivers it to the title company before closing, the title company can amend the commitment to remove the standard survey exception and replace it with a reference only to the matters the survey actually reveals. That amended exception is narrower: instead of excluding coverage for any discrepancy that would have been revealed by a survey, the amended exception covers only what the delivered survey explicitly shows.
This matters because it gives the buyer coverage for encroachments or boundary problems that exist but aren't visible in the survey — the hidden discrepancy that neither the survey nor the title search found. It is not perfect protection, but it is meaningfully better than the standard exception.
In the current North Texas market, surveys on residential properties typically cost between $450 and $900, depending on lot size and complexity. Many buyers skip them to reduce closing costs, or because neither the agent nor the lender pushes for one. Sellers sometimes offer an existing survey — often years old — which may not reflect additions, fences, or utility installations that occurred since it was prepared. The title company may accept the old survey with a T-47 Affidavit from the seller affirming no material changes, but the buyer assumes the risk that the affidavit is accurate.
Stephan D. Hwang, a real estate attorney at WG Law who has worked in Texas title law since 2003 and currently serves as a fee attorney for Secured Title of Texas, regularly advises buyers to invest in a current survey before closing. "The survey exception is one of the few items in Schedule B that the buyer can actually control," he notes. "Removing it doesn't cost much relative to what it protects against, and most buyers never even ask whether it can be done."
What Title Insurance Does Cover — So the Picture Is Complete
It would be misleading to suggest that title insurance provides no real protection. It covers a meaningful and genuinely dangerous category of risks — defects in the chain of title that existed before the current owner but were not discoverable by a reasonable search. A forged deed somewhere in the ownership history. A prior lien that wasn't released when it should have been. An heir omitted from a probate proceeding decades ago who surfaces with a legitimate claim. An undisclosed prior divorce that affected ownership rights. Fraud perpetrated by a prior seller.
Real estate fraud losses reached $275 million in 2025, according to the American Land Title Association — a 59% increase over 2024. The average fraudulent claim now runs nearly $207,000. For that category of risk, title insurance is the right tool, and the premium is modest relative to the exposure. An owner's policy on a $600,000 McKinney home runs approximately $2,200 under the Texas Department of Insurance's promulgated rate schedule. That is a reasonable price for protection against a total loss due to a fraud or chain-of-title defect the buyer had no way to discover.
The problem is not that title insurance is a bad product. The problem is that buyers routinely assume it covers more than it does — and make decisions about surveys, due diligence, and property condition based on that false assumption.
Back to Frisco — and What Marcus Should Have Done
The Oncor easement was in the deed records. A licensed title company found it in their search and disclosed it in Schedule B-2. A buyer's agent reviewing the commitment before closing would have flagged it. A real estate attorney reviewing the commitment would have told Marcus exactly what the easement meant for his pool plans — before the excavation, before the redesign, before the $11,000 in wasted contractor costs.
Marcus and Diane are not careless people. They are educated professionals who trusted that the process would protect them, signed where they were told to sign, and moved forward. The closing table generates fifty to one hundred pages of documents in a two-hour window. The title commitment is rarely the document anyone pauses to explain.
That gap — between what buyers believe title insurance covers and what it actually covers — is where most post-closing real estate surprises live. Easements, deed restrictions, boundary discrepancies, occupancy rights: these are the categories of problems that generate real estate disputes in North Texas, and they are the categories that Schedule B-2 systematically excludes from coverage.
Reading the commitment does not require legal training. It requires approximately twenty minutes and a willingness to ask what each listed item means for the specific property you are buying. A real estate attorney can do that review in the same amount of time and translate the legal references into plain language before you sign anything.
If You Already Have a Title Problem
If you discover a title issue after closing — an easement you didn't know about, a boundary dispute with a neighbor, an old lien that survived — start with your closing package and find the title commitment. If the problem is listed in Schedule B-2, you are not covered by title insurance. If it is not listed, you may have a valid claim — contact the underwriter directly (not the local title company; the underwriter who issued the policy) and report the defect promptly. Claims have procedures and time considerations.
For disputes that fall outside what title insurance covers, Texas law provides remedies depending on the nature of the problem: quiet title actions, trespass to try title, partition, and injunctive relief in encroachment cases. These require a real estate attorney with experience in Texas property disputes.
At WG Law, Stephan D. Hwang handles real estate law matters throughout the Dallas-Fort Worth area, including title disputes, easement questions, deed review, and closing-related legal issues. Stephan has worked in Texas title law since 2003, is admitted in both the Northern and Eastern Districts of Texas, and has argued before the Fifth District Court of Appeals in Dallas. He practices from WG Law's McKinney and Southlake offices.
Call 214-250-4407 or contact WG Law to request a consultation with our real estate team. We serve clients in Frisco, McKinney, Plano, Allen, Prosper, Celina, Southlake, Colleyville, Grapevine, and across the Dallas-Fort Worth Metroplex from offices in McKinney (7701 Eldorado Pkwy, Suite 200) and Southlake (1560 E Southlake Blvd, Suite 100, Office 116).
For related reading, see our articles on how Texas deed fraud works and how to protect your property, how mechanic's liens can bind a property you thought was clear, and what to do when an easement dispute arises on your North Texas property. For homeowners planning to pass real estate to the next generation, our estate planning team can walk you through Lady Bird deeds, Transfer on Death deeds, and trust-based approaches that avoid probate entirely.
This article is provided for general informational purposes only and does not constitute legal advice. Title insurance coverage depends on the specific policy, title commitment, and facts of each transaction. Easement rights, deed restrictions, and coverage exclusions vary by property. Fraud loss statistics are drawn from publicly available industry sources and subject to change. Consult a licensed Texas real estate attorney before closing on any transaction or when a title dispute arises.