Q: What are the requirements of issuing the Texas Residential Owner Policy (Form T-1R)?
A: Requirements to issue the
the Texas Residential Owner Policy (Form T-1R) may NOT be issued to an entity (ex: corporation, partnership, LLC, joint venture)
Applicable rules found in the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas are Procedural Rules P-38 and P-1.u, (respectively from above), which appear here for ease in reference:
P-38. Residential Owner Policy of Title Insurance – One-to-Four Family Residences
A Company shall only issue a Residential Owner Policy of Title Insurance-One-to-Four Family Residences (Form T-1R) on property that is Residential Real Property, and the insured is a natural person(s) at the date the policy is issued. In the application of this rule it is permissible to issue a Residential Owner Policy of Title Insurance (Form T-1R) prior to the construction of improvements provided that the Residential Owner Policy of Title Insurance (Form T-1R) is issued to a natural person, in accordance with P-8.a. In all other cases, the Company shall issue the Owner Policy (Form T-1) when issuing a policy to an owner. (See definition in Rule P-1.u)
Memory Tip: A “natural person” is a human being. A corporation, partnership, LLC, or other entity is not a “natural person” thus the Form T-1R Residential Owner Policy may not be issued to an entity even if the property has residential improvements designed for 1-to-4 families.
The Owner’s Policy of Title Insurance (Form T-1) is the only OTP that can be issued to an entity.