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

2 responses

  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.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: