From your profile details, Iâ€™m assuming you are living in San Jose and buying in Fremont. Iâ€™m also assuming that you question is not, â€œWhat is title insurance?â€ but â€œWhy do I, as the buyer, have to pay for it?â€
If that is indeed the case, then I can understand your confusion. Contrary to some of the answers below, you live in a city where the customary practice has the SELLER paying for all title and escrow fees. Yet you are looking to buy in a city where the BUYER customarily pays the fees. In Fremont, you will be expected to pay for these fees under normal circumstances.
Q: â€œWhat is approx cost when paying both lender's and owner's title insurance for a $540k single family home?â€
A: Ownerâ€™s title insurance is based on the value of the PROPERTY â€“ in this case, $540,000.00. You could reasonable expect to pay $1,587.00 for OWNERâ€™s title insurance; if the property has had a title insurance policy within the past 5 years, the cost might be lowered to $1,443.00. (costs shown are approximations only)
The Lenderâ€™s insurance policy is based on the value of the LOAN â€“ for the sake of this example, Iâ€™m going to assume that your loan is 80%, or $432,000.00. You could reasonable expect to pay $632.00 if the Lenderâ€™s title insurance is purchased concurrently with the Ownerâ€™s title insurance policy. (costs shown are approximations only)
Q: â€œCan the cost be negotiated during the 17 day contingency window?â€
A: IF the offer was written stating that the buyer was to pay title and escrow fees, then NO, typically you cannot renegotiate these terms during the 17 days. The negotiation during the 17 days is usually limited to property condition issues.
If the offer has not yet been written, then you can try to negotiate in the normal offer/counter offer process. As CJ noted, if you are in a multiple offer situation, then having terms in your offer that are outside the norms will hamper your offerâ€™s ability to be competitive.
IF, by your question, you were asking, â€œAre the actual fee amounts charged by the title company negotiable,â€ then the answer is YES. You can contact the title company holding the escrow and negotiate with them to get your fees reduced. Title and escrow fees are regulated by law in California, however, Iâ€™ve found that frequently the title company can work with the fees â€¦ if asked. NO GUARANTEES, however.
An owner's title policy protects you from various items that the lender's title policy does not - including past heirs coming out of nowhere to claim an interest in the property you now own (or a "missing spouse", etc.), falsified/forged deeds/documents, incorrect legal descriptions, improper recording, building permit violations, encroachments, pre-existing violations, past clouds on title (such as a missed judgment or tax lien from a prior owner when the initial title search was done),
Owner's title insurance is optional, but it is a great way to protect your investment.
Lenders title insurance is required by lenders, so if you are getting a mortgage, there is no way around not getting it.
Under California law, every title insurer, underwritten title company (agent for one or more title insurance companies), and controlled escrow company must file its schedule of rates, forms, and rate modifications with the Insurance Commissioner at least 30 days before the rates become effective. Since each company's loss experience and expenses differ, the rates will differ as well, so you can save money by comparing rates.
You can compare rates on nearly 100 Title insurance companies in California via a Website like http://www.clta.titlewizard.com, which utilizes a software-generated system to deliver up-to-date Title rates. Sellers, home buyers, and homeowners looking to refinance their homes will be able to search by zip code and other factors to find the most competitive provider in their area.
Be sure that any title company you select meets your standards and those of your lender. Ultimately, the choice of which title insurance company to select is yours, so be sure to contact more than one title insurer or underwritten title company to compare costs and services. Check to see if you qualify for any discounts.
It is "customary" for buyer to pay escrow fees in Alameda County. This includes title insurance for seller. However, all things are negotiable and if it is an issue for you, you should speak with your agent before writing the offer. The title insurance ultimately protects the collateral (house) against liens on the home not found by title search. Owners title insurance protects the owner against claims and the buyer's title insurance basically protects the lender against liens.
For all buyers and sellers and estimated cost sheet can be generated by your agent prior to ever writing an offer. When you are reading your offer contract, make sure you know how much a fee you are agreeing to before the box is checked. Even if it "customary" , you should know all facts.
Recognize if you are in a multiple offer situation, your offer could be considered weaker if you leave out customary terms for that county/city.
Somettimes foreclosure properties make you pay both especially if you choose which cmpany you want to use. Below is a link of the best title web-site I know. Maybe it can answer more for you. Good Luck
Multiple companies sell title insurance. You may find one offering a slightly lower rate than others. So shop around.
I haven't heard of the cost being negotiated but--as is noted below--it's less expensive to buy both at the same time.