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
(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
* False liens and judgments. (This is common. Someone with a name similar to yours fails to pay a bill and next thing you know, it shows up as a lien on your property. Title insurance protects you and removes it.)
* False heirs claiming ownership. (As in, “My grandma used to live there and she willed the house to me.”)
* Mistakes and errors. (They happen.)
* Fraudulent claims. (Someone says you owe money when you don’t.)
It’s easy to see why title insurance is important: it protects your ownership in the property. But who chooses the title company?
If You Are the Buyer
For a purchase loan, your Purchase & Sale Contract states who the title company is. So, it is decided between the buyer and seller. In some states, it is seller choice. However, the buyer has the right to request a certain title company. If the seller is a private party, they will usually agree to the buyer’s request. If the seller is a bank, then the bank usually has a title company they work with for all their transactions, and they don’t want to switch.
If you are buying from a private party, chances are the seller (like most consumers) is not familiar with title companies; therefore, it ends up being the real estate agent who chooses.
Personally, I like to choose my own title company, because I want a company with a good reputation that doesn’t charge me a bucketful of junk fees. In recent years, some title companies and escrow companies have jumped on the junk fee bandwagon. In addition to their normal compensation, they have added on extra fees such as e-doc or email fee, doc prep. fee, wire fee, courier fee, archive fee, review fee, auxiliary fee, and whatever fee.
How annoyed would you be if you ordered a hamburger for $7.95 and then the restaurant charged you a pickle fee, ketchup fee, mayo fee, and mustard fee? You would say that is part of the hamburger and $7.95 should cover it all, right? The same goes for all the title and escrow add-on fees. It’s bogus, and this is why I like to choose my own title company.
If You are Refinancing
When you refinance, there is no seller or Realtor involved, so the title company is your choice alone. If you do not tell your loan office which title company you would like to use, the loan officer will choose one for you. The same goes for the escrow or closing agent. You need to designate who that should be.
Why It is Important to Choose
By choosing wisely, you could save yourself several hundred dollars. Why pay hundreds more when you could keep that money and use it on something for your home instead?
To see a list of required fees and bogus fees used in mortgage loans, please see Mortgage Rip-Offs and Money Savers, because unfortunately, unnecessary costs are still being tacked on to loans today.
Thank you to Jason Caldwell for writing this review 14 days ago: “The book is exactly what I am going through, loved the book I also emailed her also she responded with very in depth email. I mean she really cares. but I am a first time home buyer and well going through the loan process of first time home buyer. Everything in the book she mention of how the loan officer will react to questions is true. Some of them wouldn’t show me a Good faith Estimate.
From my experience so far, Loan officers don’t depend and don’t want a return buyer. they want to sell you the loan make their high profits and be done.
The book not only tells you but show how they make their profits. how the today’s loan officers can bait and trick you at signing, yes you heard me right switch right at the signing table.
I recommend this book for anyone getting the a mortgage loan to read this book first. This should be a college text book. Ive read and i go back make my own notes. The book is that informed and that good.”