"What Is Missouri's Notice of Availability of Owner's Title Insurance, and Should You Sign It?"

Somewhere in the stack of papers on a Missouri home purchase there is a single page with a title longer than most of the others: Notice of Availability of Owner's Title Insurance. The Missouri Department of Commerce and Insurance calls it Form T-2. It has a signature line, and it asks you to decide something about your own home that nobody else at the table is going to decide for you.

Missouri's Form T-2 is the state's written notice that the lender's title policy on your loan protects your lender and gives you no title protection as the owner. It also tells you that you can buy an owner's title policy within sixty days of closing, at a cost the notice states. Signing it to decline is allowed, and the choice is yours.

I'm Jeff Moran, a mortgage broker in Bluffton, South Carolina, originating since 1996, licensed in fifteen states, including Missouri, NMLS #483943, through C2 Financial Corporation.

I want to walk you through that page the way I would if we were sitting at your kitchen table with it in front of us, so that when you sign it, you know exactly what you are choosing.

The Missouri law behind Form T-2

Missouri wrote the notice into its title insurance law. Section 381.015 of the Missouri statutes covers a purchase where you are financing the home, the title company is issuing a lender's policy at the same time, and nobody has asked for an owner's policy. In that situation, the title insurer, title agency or title agent has to give you written notice. The notice has to say that the lender's policy gives you no title protection as the owner, and that you can buy an owner's policy within sixty days of closing at a specified or approximate cost.

The statute ties the notice to the title commitment, the report the title company prepares before closing that shows what it found on the home and what it will insure. A copy of the notice, signed by you, stays in the title insurer's underwriting file for at least fifteen years after the policy takes effect.

The state's own regulation, 20 CSR 500-7.060, titled "Disclosure of Coverage Limitation," sets the form. The notice goes out on Form T-2, revised January 17, 2008, or on a form that substantially follows it. The Department of Commerce and Insurance lists Form T-2 on its forms page, along with the other title forms it prescribes. If you sign the T-2 to turn down owner's coverage, that signature is the waiver.

The rule does not tell you which way to go. It requires that the choice be put in writing and signed by you.

What does the lender's title policy protect, and what does it not cover for you?

If you are financing a purchase, your lender requires a lender's title policy, and you will have one. It protects the lender's claim against the home, the deed of trust that secures your loan. If a problem with the title turns up after closing, that policy is there to make the lender whole.

The owner's policy is the one written for you. It protects your ownership of the home against the kinds of problems a title search can miss. That includes an old lien that never got released, a mistake somewhere in the chain of ownership, or a signature on a past deed that turns out not to be genuine. The lender's policy and the owner's policy can come out of the same title search and the same closing, and they still protect two different parties.

The lender's policy does not protect you. Your down payment, and every dollar of equity you build after that, is covered only if you have an owner's policy of your own. Who pays for owner's title insurance walks through the difference between the two policies in more detail, across every state I lend in.

Who pays for the owner's policy in Missouri?

Your purchase contract decides. Missouri has no statewide custom on who pays the owner's premium, which the Missouri mortgage page covers too. A Missouri contract can put it on either side, or split it, and it is a fair item to negotiate when the offer is being written.

If you are relocating from a state where the seller customarily provides the owner's policy, please read the cost section of your Missouri contract with that in mind. A habit from another state does not carry across the line. The same goes for Kansas City, which straddles the state line: practice on the Kansas side does not tell you what the Missouri side does. Who pays for title insurance, state by state lays out which states have any statewide authority on this question at all, and Missouri is one of the states with none.

The premium itself follows filed rates. In Missouri each title insurer files its own price list with the state, county by county, so the premium on an owner's policy comes from that insurer's filing. There is no single statewide table. The settlement and title-service fees are a different matter, because state law does not cap those. Those are the charges worth seeing as separate line items as you compare title companies in Missouri.

The sixty days after closing to buy an owner's policy

The statute gives you sixty days from closing to buy an owner's policy, and the notice itself has to state the cost, or an approximate cost, of that policy. So the number you need to decide is already supposed to be on the page in front of you.

The sixty days give you room to think it over, ask questions and decide after the keys are in your hand. The window does have an end date. The closing agent at the title company can tell you what the last day is on your file, and it is worth asking for it in writing along with the cost.

Deciding before closing can be easier, because the title company is already working on your file. Deciding afterward is allowed too, and the same title company is the one to call, since it handled your closing and holds your file. After your deed is recorded, your Missouri deed recording gives you the recording information you will want in your folder either way.

How do I decide whether to buy an owner's policy in Missouri?

These are the questions I would walk through with you.

1. Please ask the title company for the owner's policy cost in writing. The T-2 is required to show a specified or approximate cost. If yours shows an approximate figure, please ask for the specific amount once the purchase price and loan amount are final.
2. Please read who pays under your contract. Your Missouri purchase contract decides who pays for the owner's policy. If it is on your side and you would like the seller to cover it, the time to ask is while the offer is being written.
3. Please look at the title commitment's Schedule B. That is the list of items the title company found and either needs cleared before closing or will leave as exceptions. How a title issue before closing gets resolved explains how to read it. A commitment with a long list of exceptions is worth a closer look before you decide.
4. Please ask what the owner's policy covers and what it leaves out. An owner's policy has its own exceptions, and the title company can show you the coverage before you pay for it.
5. Please write down the sixty-day deadline if you are not deciding at closing. Your closer can confirm the last day on your file.
6. Then you can sign the T-2 knowing which way you are going. Declining and buying are both fine, and the signed form records which one you chose.

Mistakes that cost clients something here

Treating the T-2 as one more signature. The page is short and it lands among a lot of other paperwork. It is the one page in the stack about protecting you as the owner, so please read it before you sign.

Assuming the lender's policy covers you because you paid for it. On many files the client pays the premium for the lender's policy. Paying for it does not make you the one it protects, which is exactly what the T-2 says in writing.

Assuming somebody else pays because that is how it worked last time. Missouri has no statewide custom on the owner's premium. Your contract is the only thing that says who pays.

Letting the sixty days run out without deciding. Once the sixty days pass, the option to buy the owner's policy at the stated cost is gone.

Comparing only the premium. The premium comes from each insurer's filed rates, and the settlement and title-service fees are uncapped, so please compare those fee lines between Missouri title companies too.

An example of the sixty days on a Springfield purchase

The details below are made up to show how the notice and the sixty days fit together. They are not anyone's real file.

Say you are buying a home in Springfield with a loan. Your purchase contract is silent on the owner's policy, and nobody has asked for one, so the title company sends the T-2 along with the title commitment. The form tells you the lender's policy gives you no protection as the owner and shows the cost of an owner's policy for your purchase price.

You read the commitment. Schedule B shows an older deed of trust from two owners back that the title company is requiring a release for before closing. Everything on it gets cleared, and you close on March 3.

March 3        Closing. You sign the T-2 to decline for now.
March 4-31     You read the owner's policy coverage and decide.
April 1-30     Still inside the window.
May 2          Day sixty. The last day your closer confirmed in writing.

In this example you call the title company in late March, buy the owner's policy at the cost the T-2 stated, and file it with your recorded deed. Another client in the same spot could decline it and not pay for it.

Your next step in Missouri

If you are buying in Missouri, a good first step is seeing the numbers for your own scenario. Run your numbers and you will see rates for your scenario, your debt ratio, and closing costs priced for Missouri rather than a national average. No credit pull, no account, and nobody calls you.

If you want a letter behind your offer, get pre-approved for a Missouri mortgage and we can look at the whole picture together, from who pays for what in the contract through the title commitment to the closing table. You are also welcome to call me if you would just like to talk it through. Who closes a home purchase, state by state covers why a Missouri closing runs through a title company. No pre-approval from anybody is a loan commitment. Final approval depends on the property, the appraisal and underwriting the complete file.

Nothing here is legal advice or a credit decision. Missouri law and filed insurer rates can change, so what applies to your purchase is worth confirming with the title company handling it.

Common questions

What is the Notice of Availability of Owner's Title Insurance in Missouri?

It is Missouri's required written notice, on Form T-2 or a form that substantially follows it, given when a lender's title policy is being issued on a home purchase and no owner's policy has been requested. It tells you the lender's policy gives you no title protection as the owner and that you can buy an owner's policy within sixty days of closing at a stated or approximate cost. RSMo 381.015 requires it, and 20 CSR 500-7.060 sets the form.

Does the lender's title policy protect me as the owner in Missouri?

No. The lender's policy protects the lender's deed of trust on the home. Missouri's Form T-2 exists to tell you so in writing. If a title problem turns up after closing, the lender's policy makes the lender whole, and only an owner's policy protects your own ownership and equity.

How long do I have to buy an owner's title policy after closing in Missouri?

Sixty days from closing, under RSMo 381.015. The notice you receive has to state the cost or an approximate cost of the owner's policy. Your closer can confirm the last day of the window on your file, and it is worth asking for that date in writing.

Who pays for owner's title insurance in Missouri?

The purchase contract decides. Missouri has no statewide custom on who pays the owner's premium, so a Missouri contract can put it on either side or split it. Practice on the Kansas side of Kansas City does not carry over to the Missouri side.

Is it okay to sign the Form T-2 and decline owner's title insurance?

Yes. Declining is a choice Missouri allows, and the signed T-2 records that you made it with the notice in front of you. A signed copy stays in the title insurer's file for at least fifteen years. If you decline at closing and change your mind, you still have sixty days from closing to buy the owner's policy.