I just watched a title company come close to costing my sellers money, and the only thing it had to do to prevent it was speak up.
The house had been under contract before, and the same title company handled both deals. The new contract needed an HOA resale certificate, and Texas law already covers that. The party who ordered the original certificate can ask for an update within 180 days. The association has seven days to deliver it, and the fee is capped at $75. A full new certificate is capped at $375.1
The HOA’s management company didn’t follow that law. It wanted a brand-new package at full price. The title company didn’t push back, and it didn’t tell our sellers they had the right to fight for the cheaper update. It just sent them the payment link.
Weston and I caught it. We pressed the title company not to make our sellers pay, and we had the sellers contact the HOA directly and remind it what Texas law requires. Once the association realized it was in the wrong, it waived every fee for the resale certificate. Our sellers paid nothing.
That’s the right ending, but it shouldn’t have taken two listing agents to get there. The title company had handled the first contract. Forwarding the bill without a word isn’t neutral. It puts the cost on whoever doesn’t know the law. I wrote about the management-company side of that problem in Who’s minding your HOA’s money? This piece is about the title company.
Neutral shouldn’t mean silent. Forwarding the bill without a word puts the cost on whoever doesn’t know the law.
It wasn’t a one-off. It’s a pattern, and every agent who recommends a title company should understand it.
01
“We don’t arbitrate contracts”
Title companies love to say they’re neutral. They hold the money, close the deal and stay out of disputes between buyer and seller.
That sounds reasonable until you notice how they apply it. They follow the contract when it protects them and set it aside when it asks them to act. Here’s where I see it most.
02
The 15-day demand they won’t use
Your buyer is three weeks past the option period. The appraisal came in short, the financing addendum let them out, and they terminated exactly the way the contract allows. The seller goes quiet.
Paragraph 18 of the TREC One to Four Family Residential Contract already covers this. Your buyer makes a written demand for the earnest money. The title company sends it to the seller. If no written objection comes back within 15 days, the escrow agent may release the money to the buyer. And if the escrow agent follows that process, both parties release it from all claims about the disbursement.2
The contract hands them the authority and the legal cover in the same sentence. Many still say, “We need a release signed by both parties or a court order.”
I’ve even read a title company’s own published Q&A that says it can’t act on one party’s request. A few paragraphs later, it admits that under Paragraph 18 it may release the funds and be fully indemnified.3 Both things can’t be the policy.
The contract gives them the authority and the legal cover in the same sentence. They choose not to use it.
03
The HOA refund that isn’t optional
This one is even harder to defend. The TREC addendum for property in a mandatory owners association gives the buyer three days after receiving the subdivision information to terminate. The addendum doesn’t say the earnest money may go back. It says the earnest money will be refunded to the buyer.4
No judgment call. No dispute to referee. The form the seller signed already decided it.
Yet a buyer terminates on day two, and the money still sits there until everyone signs a release.
04
When “neutral” turns into a lawsuit
On a separate deal, a title company holding the earnest money sent an email threatening to sue my client. My client hadn’t done anything wrong. The buyer and seller simply disagreed about who gets the deposit.
That’s called an interpleader. The title company sues both parties, hands the money to the court and steps away while a judge sorts it out. It can also ask the court to pay its attorney’s fees out of the earnest money. So the buyer and seller pay for a lawsuit filed against them, and whoever wins gets back less than they put up.
The contract gives the title company a 15-day demand process with a release from liability built in. Instead of using it, they threaten to sue the people whose money they’re holding. That isn’t neutrality. That’s self-protection at our clients’ expense.
05
Why they do it
Liability. Nobody at the title company wants to be the one who guessed wrong. I understand that.
But refusing to act is a decision too. It’s the one that protects them while our client pays an attorney to recover their own deposit, gets a bill for a full certificate when the law says an update costs $75, or gets dragged into court over a dispute they’re trying to resolve.
The contract even puts teeth on the side that stalls. A party who wrongfully refuses to sign a release within seven days of a request can owe the earnest money, damages, attorney’s fees and court costs.5 The contract wants these things resolved. The house policy wants them frozen, or litigated.
06
It’s time to fix this in Austin
If title companies won’t follow the contract on their own, the law should tell them to.
The Texas Legislature convenes January 12, 2027, and bill filing opens November 9, 2026.6 That gives us a window. Texas law should direct escrow agents to release earnest money through the contract’s demand process when no one objects. It should direct them to refund it when a buyer terminates on time under a promulgated addendum. And it should put the protection the contract already offers into statute, so the liability excuse goes away, and with it the reason to threaten a lawsuit.
Nobody is asking title companies to referee disputes. We’re asking them to follow the forms everyone signed.
For the first 25 years of my career, I served on and chaired committees that dealt with ethics, technology and getting our industry to do right by people. I learned that these fixes don’t happen by accident. They happen when agents bring real examples to Texas REALTORS and to their own legislators. If this has happened to one of your clients, write it down and send it in. This is one worth bringing.
We’re not asking title companies to referee anything. We’re asking them to follow the forms everyone signed.
07
Ask before your next referral
Until the law changes, our name goes on every title company we recommend. Before you send your next client, ask your title partner four questions:
1. Will you follow the 15-day demand process in Paragraph 18, or do you require a mutual release no matter what?
2. When a buyer terminates on time under the HOA addendum, will you refund the earnest money the way the addendum says?
3. If an HOA or its management company won’t honor an updated resale certificate the law allows, will you tell my seller before you send a payment link for a whole new package?
4. If the parties disagree, will you file an interpleader, and will your legal fees come out of my client’s earnest money?
Ask for the answers in writing. A title company with a clear written policy is one you can hold to it.
Our clients trust our recommendations. Let’s make sure they deserve it.
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