Who Selects and Pays for Title Company?

Short Answer: It depends.

Longer Answer: Check your contract.

See, three words vs. two, it’s longer. 🙂

But really, check your contract! Section 8 covers Title Insurance, Record Title and Off-Record Title.

Section 8.1 determines who selects and pays for record title and owner’s extended coverage (OEC).

8.1.1 – if checked, or of neither 8.1.1 or 8.1.2 is checked, then Seller selects and Seller pays for record title.

8.1.2 – If checked, Buyer selects and Buyer pays for record title.

8.1.3 – OEC will be paid as noted – by Buyer, Seller, 1/2 and 1/2, or Other

There are many allowable variations, but one important prohibited option — Seller selects and Buyer pays.

Section 9 of RESPA states, in part, that:

  • (a) No seller of property that will be purchased with the assistance of a federally related mortgage loan shall require directly or indirectly, as a condition to selling the property, that title insurance covering the property be purchased by the buyer from any particular title company.
  • (b) Any seller who violates the provisions of subsection (a) shall be liable to the buyer in an amount equal to three times all charges made for such title insurance.

Some notes:

  • RESPA Section 9 applies to loans with a “federally related mortgage”. Which, in reality, covers most loans. See this article at USLegal.com for more details. This prohibition would not apply to, say, a cash deal, or some private financing.
  • A great article that goes into more detail about Section 9 can be found this article by Hawley Troxell.