Let's review some basic guidelines . . .
Sec. 9 of RESPA
No seller…shall require DIRECTLY or INDIRECTLY, as a condition of selling the property, that title insurance be purchased BY THE BUYER from any particular title company. While the general conclusion in Texas is that the choice of title company is negotiable, it cannot be "forced" on the Buyer.
Numerous negotiations evolve with the Seller purchasing the Buyer's Title Policy, and the Buyer/Borrower paying for the Lender's Title Policy. However, as per Federal Law under RESPA, a licensed Broker or Agent in the State of Texas could be held liable for "forced utilization".
Directly from TREC Guidelines (MCE Legal Update - Edition 6.0)
Choice of Title Company
Section 9 of the Real Estate Settlement and Procedures Act (RESPA), provides that no seller of property that will be purchased with the assistance of a federally related mortgage shall require, directly or indirectly, as a condition to selling the property, that title insurance be purchased by the buyer from any particular title company.
In most residential transactions in Texas, the seller typically pays for the owner’s policy for insurance and the buyer typically pays for the lender’s policy. Additionally, title companies in Texas not only provide or place the title insurance but also offer escrow and settlement services.
A debate has lingered as to whether the buyer has the absolute right under Section 9 to choose the title company in a residential transaction. In most transactions in Texas, the choice of the title company is negotiable between the parties because
• most sellers in Texas do not require the purchase of title insurance as a condition to sell and, instead, buyers seek to obtain the insurance;
• the owner’s policy is not purchased by the buyer in most transactions;
• the buyer is not prohibited from purchasing title insurance directly if the buyer pays for the policy; and
• the services of the title company can be severed into parts other than the issuance of a title policy.
Although licensees may suggest particular title companies to their clients, they should not insist on the use of a particular title company due to their own preferences and any such preferences should not hinder negotiations.
If a seller (especially, an institutional seller) insists on using a particular title company and such insistence creates a problem during negotiations, the licensees should only communicate each party’s preference and advise their principals to seek the advice of counsel.