Short answer
On a small Dallas apartment purchase, the title company examines ownership, liens and easements, issues the owner's and lender's policies, and runs escrow for funds, payoffs and prorations. What changes as the building grows is the financing and contract (one to four units usually residential, five or more commercial), the survey the lender requires, the entity paperwork, and the work to reconcile leases, rents and security deposits before ownership changes.
This guide answers
- Who is a good title company for a small apartment building purchase in Dallas?
Key takeaways
- One to four units usually fit residential financing and contract forms; five or more usually move to commercial loans and commercial contracts.
- Occupied units bring leases, rent ledgers and security deposits into the closing even when the loan is residential.
- If an LLC is buying, the contract buyer, borrower, deed grantee and insured owner must match, or the difference must be documented.
- Under Texas Property Code Section 92.105, a new owner is liable for tenants' security deposits from the date title is acquired, whether or not they were transferred.
- Rent, tax and utility prorations need an agreed cutoff and records that support them, not just the rent roll.
- Tell the title company at the start if exchange funds are involved, so the closing instructions fit the 1031 structure.
What changes between a fourplex and a larger apartment deal?
Properties with one to four dwelling units generally fit residential mortgage categories, although an investment purchase or LLC borrower may require a different lending program. At five or more units, financing generally moves into commercial multifamily lending, with greater emphasis on property income, operating expenses and the borrowing entity. Confirm the actual program with your lender before selecting a contract or vesting structure.
Contract choice also matters. Texas has a residential resale contract intended for one-to-four-family properties. A larger apartment acquisition generally uses a commercial contract addressing leases, operating records, due diligence, assignments and closing adjustments. Unit count alone does not determine whether a particular contract fits the transaction. The Texas Real Estate Commission publishes the promulgated residential forms.
A fourplex may follow a familiar residential title workflow, but occupied units still create investment-property issues. The buyer needs the leases, deposit records, rent ledger and agreed allocation of income and expenses. Those obligations do not disappear because the loan is residential.
A larger building usually brings more documents and more people whose approvals must align. The lender may require particular survey features, endorsements, organizational documents and lease-related instruments. The purchase contract should allow the buyer to obtain and review those materials before the relevant deadlines.
Use this checklist by size when organizing the transaction:
| Purchase size | Financing, contract and survey | Tenant and escrow checklist |
|---|---|---|
| Fourplex | Confirm residential or investment financing eligibility, borrower name and appropriate contract. Obtain the existing survey and supporting seller statements; confirm lender and underwriting acceptance | Collect every lease, reconcile deposits and prepaid rent, and establish utility transfer arrangements |
| Five units through a smaller apartment property | Confirm commercial loan requirements and commercial contract provisions. Check legal description, access, easements, liens and the lender's survey specifications | Reconcile the rent roll to leases and ledgers; determine estoppel requirements and settlement allocations |
| Larger small apartment property, up to about 50 units | Coordinate borrower authority, lender conditions and any exchange requirements. Resolve survey discrepancies and requested coverage before document preparation is complete | Establish responsibility for tenant balances, concessions, deposits, utilities and post-closing collections |
The middle and larger categories are planning distinctions, not separate legal thresholds. The actual requirements come from the property, contract, lender and underwriting review.
What title examination, escrow and insurance each cover
Title examination starts with the property's legal description and ownership history. It identifies recorded matters that may affect the buyer's ownership or the lender's security, including deeds of trust, judgments, easements, restrictions and other encumbrances. An apartment acquisition may also involve adjoining parcels or recorded agreements serving parking, access or utilities.
The title commitment identifies the proposed insured parties, coverage amounts, requirements and exceptions. A requirement might call for a lien payoff and release. An exception identifies a matter that will remain outside coverage unless underwriting approves a change. Buyers should review both, together with the referenced documents, before their contractual objection deadline.
Escrow handles the closing mechanics under the applicable instructions. That includes receiving earnest money and closing funds, coordinating signatures, obtaining payoff information, preparing settlement figures and disbursing when funding conditions are satisfied. Signing documents does not, by itself, establish that every condition for disbursement has been met.
An owner's policy protects the buyer's insured ownership interest against covered title risks, subject to its terms, exclusions and exceptions. A lender's policy protects the lender's insured lien interest. Buying the lender's policy does not provide the buyer with an owner's policy. TDI explains this distinction.
Neither policy replaces review of operating income, building condition or tenant accounts. A discrepancy between advertised rent and collected rent is different from a recorded lien. Likewise, a survey showing parking spaces does not establish that the property's use complies with every city requirement.
For commercial financing, identify requested endorsements early. Our resource on commercial title endorsements provides a starting point for discussing coverage. Availability depends on the requested protection, supporting evidence and underwriting requirements.
Buying in an LLC: settle ownership and signing authority early
If an LLC will purchase the building, establish its exact legal name before closing documents are prepared. The contract buyer, approved borrower, deed grantee and proposed insured owner need to align, or the differences need documented resolution.
Do not assume that signing personally and substituting an LLC later is automatic. The contract may restrict assignment, and the lender may approve a particular borrower. A change can affect underwriting, loan documents, guarantees, insurance and exchange planning. Raise the intended ownership structure before those documents are finalized.
We may need formation records, the operating agreement, amendments and evidence authorizing the purchase, borrowing and signatures. The required package depends on the entity's structure and the transaction. A manager's title on an email signature does not establish authority to acquire or mortgage real estate.
The seller's authority matters too. If an entity owns the building, the person signing the deed and closing documents must have appropriate authority. A dissolved entity, missing operating agreement or disagreement among owners can require additional documents and review.
For entities owned through other entities, identify the full authority chain. Also establish who will send funds and who is entitled to receive proceeds. Resolving those questions early helps prevent last-minute changes to documents and disbursement instructions.
Existing survey and affidavit or a new survey?
Request the existing survey as soon as the contract permits. Review it against the current property, legal description and lender specifications. The important question is whether it supplies acceptable evidence for this transaction.
On a qualifying residential transaction, an existing survey may be submitted with the applicable seller affidavit or declaration describing changes. Acceptance depends on the contract, lender and title underwriting requirements. A seller's statement supports review of the existing survey; it does not independently verify today's boundaries or improvements.
Ask early whether the existing survey and affidavit will be accepted for this property and loan: the answer decides who orders what, and when.
Commercial lenders may require a survey prepared to specified standards and including selected features. Obtain those instructions before commissioning the work. Otherwise, the surveyor may need to revise a completed survey to address lender requirements.
For an apartment property, pay particular attention to building locations, fences, parking, drives, access points, utility easements and improvements near boundaries. Compare the survey with recorded easements and the property actually being purchased. An adjacent area used for parking may belong to someone else or depend on a separate agreement.
If the survey reveals an encroachment or access issue, identify the available response before closing. That might require additional evidence, an agreement, physical correction or an underwriting decision about coverage. A new survey provides information; it does not automatically cure what it reveals.
Leases, deposits and estoppels: reconcile the occupied property
The rent roll should be a working index to the underlying records. Request signed leases, amendments, renewals, concessions and tenant ledgers, then reconcile them by unit. Confirm tenant names, lease terms, stated rent, prepaid amounts, delinquency and deposits.
For a fourplex, reviewing every tenancy is a manageable and important part of acquisition work. For a larger property, use a consistent reconciliation process and investigate exceptions. A seller's summary can omit a side agreement, an unrecorded concession or a payment that has not reached the ledger.
Security deposits need a separate reconciliation. Identify the amount attributable to each tenant, distinguish deposits from prepaid rent and other charges, and document how the buyer receives the corresponding funds or credit. The closing statement should follow the contract's agreed treatment.
Under Section 92.105 of the Texas Property Code, a new owner of residential rental property is liable for returning tenants' security deposits from the date title is acquired, whether or not the deposits were actually transferred. The seller stays liable until the new owner delivers to the tenants a signed statement acknowledging that the new owner has received the deposits and is responsible for them. A buyer should not assume that a missing credit ends its responsibility to tenants.
Tenant estoppels provide another source of confirmation. Depending on their wording, tenants may confirm lease terms, deposits, prepaid rent, amendments and claimed disputes. Estoppels can reveal differences between tenant understandings and seller records, but they do not replace the leases.
On a small deal, decide during contract negotiations whether estoppels are required, whose signatures are needed and what happens if tenants do not respond or disclose discrepancies. A buyer may seek them even when the lender does not. Their delivery requirements and consequences depend on the contract and financing.
Also specify which lease assignments, notices and management handoff materials must be delivered. Escrow can reflect agreed adjustments and coordinate closing documents, but we need clear instructions supported by reconciled records. Escrow cannot settle a disputed tenant balance simply by entering a figure.
Dallas code liens, prorations and utilities
Recorded municipal liens can affect title. Dallas provides a process for lien payoff and release requests, which makes early identification important when a property has unresolved city charges. A payoff should address the relevant lien and required release documentation, rather than rely solely on a seller's estimated balance.
An open code matter and a recorded lien are different issues. A title search does not substitute for investigating building use, permits, inspections or unresolved code cases. Ask the seller for notices and case information, and have the appropriate buyer representative investigate outstanding conditions.
The contract should address who handles unresolved matters and what evidence must be delivered. If the proposed solution involves a holdback, it requires an acceptable written agreement and any necessary lender and underwriting approval. Holding money does not itself resolve a title defect.
Rent prorations require an agreed cutoff and reliable collections data. Separate rent already collected from unpaid balances. Identify who receives prepaid rent attributable to the buyer's ownership period and how delinquent rent collected after closing will be allocated. Avoid treating the rent roll as proof that every scheduled payment was received.
Tax prorations require an agreed calculation method. Determine which bill or estimate will be used and whether the contract provides for later adjustment when actual taxes are known. A settlement credit does not predict the buyer's future assessed value or tax expense.
Utilities require an operational handoff as well as accounting. Identify master-metered services, tenant-held accounts, seller-held accounts and reimbursable charges. Establish responsibility for final bills, account deposits, readings and charges that arrive after closing. Confirm service transfer arrangements directly with providers.
Before approving settlement, reconcile these adjustments with the operating records and contract. The goal is a closing statement that explains who owes what, supported by records the buyer can use after ownership transfers.
Costs, 1031 funds and preparing the closing file
Texas title insurance premiums are promulgated by TDI. The premium is the same at every title company for the same policy under the applicable rate rules; escrow fees vary. Compare service, coverage and the itemized settlement estimate rather than expecting a lower basic premium from a different agent. TDI confirms that Texas companies charge the same title insurance rates.
Keep policy premiums separate from escrow fees, survey charges, recording charges, lender expenses and transaction-specific services. Endorsements and applicable rate rules can affect the insurance total. Seller-paid items depend on the contract, so the total transaction cost and the buyer's cash requirement are different figures.
Ask for an itemized estimate built on this purchase: policy amounts, requested endorsements and the contract's cost allocations decide the actual settlement charges and the cash needed.
For an exchange buyer, notify us at the start. Our commercial escrow and 1031 closings work involves coordinating closing instructions and funds with the parties handling the exchange. The qualified intermediary and tax adviser should confirm the exchange structure, taxpayer identity and applicable deadlines.
Do not assume ordinary purchase instructions will accommodate exchange funds. The IRS describes qualified-intermediary arrangements and restrictions involving receipt of proceeds in its exchange instructions. Our guide to 1031 exchange closings explains the closing coordination involved. Escrow coordination does not establish tax eligibility.
To prepare the file, deliver the executed contract and amendments, entity documents, lender contact, existing survey, tenant reconciliation and exchange information. Our apartment acquisition checklist can help organize the handoff.
Complete records, prompt payoff responses and consistent instructions support progress. Missing releases, survey revisions, unresolved authority and disputed adjustments slow it. For your Dallas apartment purchase, open a title order and give us the documents needed to identify the remaining closing requirements.
What Aurum Title handles on a small apartment purchase
Aurum Title Inc. is a Texas title agent (TDI license 2752531). Our multifamily title and escrow work covers an occupied fourplex as well as a larger apartment property. We are attorney-owned: our owners include the managing partners of Atwood & McCall, PLLC, and our executive escrow officer, Austin Pennington, is an attorney, Board Certified in Civil Trial Law, who leads real estate transactional matters there. Complex title defects, liens and high-liability transactions receive attorney attention.
Austin Pennington and Monday Locklear are our licensed escrow officers. Our policies are underwritten by Chicago Title, Fidelity National Title and Westcor; the appointments on our TDI record are for Dallas County. Our process is systemized: for an apartment buyer, that means organizing title requirements, entity documents, lender instructions and settlement information early enough to see what remains unresolved. A missing lien release, an unacceptable survey or a disputed deposit ledger can still delay closing, so tell us at the start whether the purchase involves an LLC, occupied units or exchange funds.
Frequently asked questions
Who handles title for a small apartment building purchase in Dallas?
A licensed Texas title agent issues the policies and runs the escrow. At Aurum Title we handle multifamily title and escrow in Dallas, including commercial and residential transactions. We are a licensed Texas title agent, and our attorney-owned structure brings attorney attention to complex title defects, liens and high-liability transactions.
Does a fourplex close like a house?
A fourplex may qualify for residential financing and an appropriate residential contract. Occupied units still require lease review, deposit reconciliation, rent adjustments and a management handoff. The lender and transaction structure determine the actual closing requirements.
Can an LLC buy a small apartment building?
An LLC can acquire real estate, subject to its authority, the contract and lender requirements. Confirm the exact entity name, borrower eligibility and authorized signers early. Changing the buyer after loan approval may require additional review.
Can we use the seller's existing survey?
Possibly. Acceptance depends on the survey, property changes, supporting seller statements, lender instructions and underwriting requirements. Obtain confirmation before relying on it. A new or updated survey may be necessary if the existing materials are insufficient.
Does title insurance cover inaccurate rents or every city violation?
Title insurance covers specified title risks under the policy's terms. It does not replace lease verification, income analysis, inspections or code investigation. Recorded municipal liens may affect title, while unresolved conditions require separate due diligence.
