Texas Escrow & Title
Practice Questions & Answers (2026)
Escrow, title, and closing questions on the Texas exam test how real estate transactions are closed, how title is transferred, and what happens at settlement. Texas uses title companies or settlement agents to handle closings, and candidates must understand the closing process, settlement statement, and title insurance requirements under Texas law. Title insurance, title searches, and the difference between standard and extended coverage policies are tested, as are the specific closing costs that are customarily paid by buyers vs. sellers under Texas practice.
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Texas Escrow & Title — Practice Questions & Answers
87 questions on Escrow & Title from the Texas real estate question bank. First 10 are free — sign up to unlock all 87.
Q1. In Texas, title insurance premiums are:
Explanation
Texas is one of the few states where title insurance rates are set (promulgated) by the Texas Department of Insurance. All title companies must charge the same premium for the same coverage, so price competition focuses on service.
Q2. An abstract of title is:
Explanation
An abstract of title is a compilation of all public records affecting title to a property—deeds, mortgages, liens, court judgments, tax records, etc.—presented in chronological order. An attorney then provides a title opinion based on the abstract.
Q3. In Texas, which of the following would most likely appear as an exception in a title insurance commitment?
Explanation
Title insurance commitments list exceptions to coverage—items the policy will not insure against. Common exceptions include utility easements, deed restrictions, and rights of parties in possession. These are existing encumbrances that the buyer takes subject to.
Q4. A deed in Texas must contain which of the following to be valid?
Explanation
A valid Texas deed requires: grantor (named), grantee (named), consideration (even nominal), adequate property description, grantor's signature, and delivery and acceptance. Notarization is required for recording but not for validity between the parties.
Q5. In Texas, a title insurance policy that protects the lender is called a(n):
Explanation
A mortgagee's (or lender's) title insurance policy protects the lender up to the loan amount. An owner's policy protects the buyer's equity. Both are typically issued simultaneously at closing in Texas.
Q6. The Texas Department of Insurance regulates title insurance rates in Texas. This means:
Explanation
Texas has a unique system where the Texas Department of Insurance (TDI) sets title insurance premium rates. All title companies charge the same rate for the same coverage amount, so competition is on service, not price.
Q7. A title commitment in Texas is issued before closing and is BEST described as:
Explanation
A title commitment (or preliminary title report) is the title company's commitment to issue a title insurance policy. It lists Schedule A (transaction details), Schedule B-I (requirements to be met), and Schedule B-II (exceptions that will remain in the policy).
Q8. Which of the following title defects would MOST likely be covered by a Texas owner's title insurance policy?
Explanation
Title insurance covers hidden risks in the chain of title, such as forgery, fraud, missing heirs, and errors in public records. Known matters and governmental regulations are typically excluded.
Q9. In Texas, the HUD-1 Settlement Statement has been replaced at most closings by:
Explanation
As of October 3, 2015, the CFPB's Closing Disclosure (CD) replaced the HUD-1 Settlement Statement for most residential mortgage transactions under TRID (TILA-RESPA Integrated Disclosure) rules.
Q10. Under RESPA, a kickback paid to a real estate agent for referring business to a title company is:
Explanation
RESPA Section 8 prohibits kickbacks and unearned fee splits in connection with federally related mortgage transactions. Violations can result in civil liability and criminal penalties including fines and imprisonment.
Q11. A lis pendens recorded against a Texas property provides notice that:
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