Who Chooses the Title Company and Settlement Provider — Buyer, Seller, or Realtor?

When you’re buying a home, who gets to choose the title company? Who chooses the settlement provider, that is, the escrow company or attorney to handle the closing and disbursement of funds?

The law is clear: it is Buyer’s choice. Even if the Seller’s Realtor has already set up escrow with a particular company, the Buyer has the right to designate the title company and the closer.

What’s more, any Seller who denies the Buyer the right to choose shall pay the Buyer three times the cost of the title insurance.

Sorry, but there’s not an exception in the law for a “busy market.”

If you’d like to read it verbatim, see below. This applies to all 50 states when a federally related mortgage loan is involved in the transaction.

RESPA refers to the Real Estate Settlement Procedures Act.

Section 9 of RESPA [12 U.S.C. § 2608] states:

(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) of this
section shall be liable to the buyer in an amount equal to three times
all charges made for such title insurance.

12 C.F.R. 1024.16 states:

No seller of property that will be purchased with the assistance of a federally related mortgage loan shall violate section 9 of RESPA (12 U.S.C. 2608). Section 1024.2 defines ‘‘required use’’ of a provider of a settlement service.

12. C.F.R. 1024.2, with regard to “required use”, states in part:

​Required use means a situation in which a person must use a particular provider of a settlement service in order to have access to some distinct service or property, and the person will pay for the settlement service of the particular provider or will pay a charge attributable, in whole or in part, to the settlement service.

I hope this clears up some questions and settles some arguments. If you have an interesting or unusual story on this topic, I’d love to hear it.

Thank you for stopping by my blog.

I am licensed to do mortgage loans in CA and WA,

NMLS # 1284134. Carolyn Warren,

Sr Loan Officer, Cherry Creek Mortgage Co #3001

6 thoughts on “Who Chooses the Title Company and Settlement Provider — Buyer, Seller, or Realtor?

  1. Good article Carolyn! Who besides the VA, is a federally-related mortgage company? If you get a mortgage from a Bank or broker—even if they sell it to Fannie Mae—it was not federally-related to start with, was it?

    Thanks so much, Lin

    1. That is a good question! A federally-related mortgage is any mortgage backed by Fannie Mae, Freddie Mac, FHA, or VA. That is the vast majority of loans. It would not be private loans or possibly portfolio subprime loans.

  2. Carolyn – I can’t tell you how happy I was to read your article in regards to “Who Chooses the Title Company….”. This is a battle I deal with on almost every transaction when representing a buyer. I’m a broker in New Mexico that learned in Nevada being licensed there for nearly 14 years, that a buyer should be the one to choose the title company. Since moving to New Mexico, I constantly encounter listing brokers making it a condition of sale. It always puts my buyer in a position to have no choice but to use the seller’s title company (or, more like the broker’s title company). There’s is so much ambiguity in this law since there’s different verbiage that states that it’s allowed as long as the seller is paying for the title policy. Then, there’s verbiage that states seller must pay for “all” title fees. Let me tell you, I could share some interesting stories with you being that I sit on the Professional Standards Committee and the Education Advisory Committee under the New Mexico Real Estate Commission. I hope to get a reply from you because your article seems to be right in line with my understanding and very cut and dry.

    1. Thank you for your insight on this topic, Nadine. It’s an ongoing battle in California as well. Whoever pays for title gets to choose the title company, but recently I had a client who was forced to pay all title and escrow fees, both buyer and seller side, because that’s the way the contract was written. On top of that, the seller’s realtor had chosen a very expensive title company. When the buyer asked to change, the seller’s agent said no. The contract was already signed, so he felt stuck.
      I would love to hear more of your interesting stories. Could you please email me directly at askcarolynwarren@gmail.com?

  3. So what happens when the realtor selects the attorney before the buyer even speaks to the bank?

    1. That happens a lot, but the law is clear. Only the person(s) paying for the closing service (attorney) have the right to choose.
      If the realtor opens escrow with an attorney but you are paying for it and you want a different attorney, simply tell your loan officer who you choose. The loan officer will make the change for you.

      Remember, it says right on the Loan Estimate and on the Closing Disclosure that YOU sign: “Services you did shop for.” The closing fee and the title fee is there. So you are signing saying you took the opportunity to shop and make the choice.

      Don’t let anyone bully you into using their favorite attorney if that person is not your choice. It is ILLEGAL TO COERCE a borrower/buyer to use a particular title company, attorney, or lender.

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