Who traditionally pays for the Owners and/or Lender's Title in Texas?

Asked by Ptex, Fort Worth, TX Tue Aug 19, 2008

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Wed Aug 20, 2008
Thanks for you question. I know you have already received some great answers, but I wanted to share my thoughts as well. It seems in the area of real estate "tradition" sometimes over steps the bounds of negotiation. I live in north Texas and in my particular area the seller almost always pays for the title policy when we are working a resale. Although when we work with a builder, traditionally, the cost is many times a buyer cost. In today's market though it seems that the word "negotiation" is taking on it's true meaning. The title policy is negotiable as is the title co etc. The lender's title cost is a basic buyer "lender cost" and as we all know, more and more the seller's are contributing toward buyer costs......I used to see buyer cost contribution limited to less expensive homes. Now we are seeing seller's contributing toward buyer costs even in much more expense homes. We are in an ever changing market and it certainly is not for the faint of heart! If you have more questions.....check out our web site.

As a buyer/seller and as agents I think your question
2 votes
Thank you! That was very helpful!
Flag Sat Jun 11, 2016
Pat Patton, Agent, Austin, TX
Mon Feb 2, 2015
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.
1 vote
Tracienguyen, Home Buyer, Fort Worth, TX
Sat Jan 16, 2016
When I bought a house I paid for owner title policy now I sell the house can I transfer title ppolicy to the buyer?
0 votes
The Jones Te…, Agent, Richardson, TX
Mon Apr 6, 2015
It is negotiable, but the Seller typically pays!
0 votes
Robyn The Re…, Agent, Dallas, TX
Mon May 12, 2014
In today's tight market, we see buyers paying more than list and paying ALL their costs of purchase including title policy. The days when sellers have to contribute anything to help sell their homes is gone.
I am speaking from my own experience in the Dallas/Fort Worth Texas area. Sellers have multiple offers to pick from. If you want to be the offer chosen, you might consider this is one area that can
Make or break your deal.
0 votes
sheaschank, Home Buyer, Fort Worth, TX
Sun Sep 1, 2013
who picks the title company? Buyer/Seller
0 votes
If the seller is paying for the title policy usually the seller will which title company they want to use. The seller will usually pick whom ever their agent prefers and has a relationship with to ensure a smooth closing. The title policy fees are set by the state and are based on sales price. If the buyer wants to pay for the policy they can ask to close at which ever title company they prefer.
Flag Sat Apr 12, 2014
arellanobert…, Home Buyer, Sunnyvale, CA
Tue May 7, 2013
who pay for the survey the buyer or the seller in austin texas
0 votes
Scott Godzyk, Agent, Manchester, NH
Wed Aug 20, 2008
Who pays for what differs accross the country, here in NH the buyer pays for the title insurance policy UNLESS they ask the seller to pay it as part of their negotiated offer. The key is when negotiating your offer to purchase, the buyer can ask the seller to pay anything they want, whether they accept it is the question. Most lenders will let the seller pay up to 3% of the buyers closing costs. Why not take advantage of it in this market. It also helps buyers who may not have alot of savings to buy a house they would not have been able to get into. Good luck with your purchase.
Web Reference:  http://www.ScottSellsNH.com
0 votes
I am not from TX i am in NH oops.
Flag Tue Jun 19, 2012
Is Owners insurance the same as title insurance. Buyers are now asking us to pay for it after the agreement was signed and we were told we wouldn't have to help with closing costs. Buyers said they were not aware that they would have to buy this thought the chain of title was solid because before us it was vacant land and developer built on it. So confusing and not getting much help.
Flag Tue Jun 19, 2012
Bruce Lynn, Agent, Coppell, TX
Tue Aug 19, 2008
It is a negotiable expense. On resales it is normal for the seller to pay this expense and that is the larger one. The rates are set by law and therefore should be the same at all title companies. The buyer typically pays for the lender's title policy and this is a much smaller expense. The exception is new homes. It is still a negotiable expense but I also see most buyers pay this instead of the builder/seller.
Web Reference:  http://www.teamlynn.com
0 votes
Tommy Burris, Mortgage Broker Or Lender, Baton Rouge, LA
Tue Aug 19, 2008
It is 'Normal & Customary' for seller to pay for the Insured (borrowers)Title Policy. There is also a 'Lenders Policy' which protects the lender the same as the borrower. It is a fraction of the Insured Policy and is required. It is also paid for by the borrower.
However... this is negotiable and some builders refue to pay them.
0 votes
Josh Thomas, , Austin, TX
Tue Aug 19, 2008
Traditionally, the title insurance policy is an item the seller will pay for. The reason for this is to put the buyer at ease that there is no other claim to the title. Or more importantly, if there IS another claim to the title, that the buyer is not financially responsible for any issues that arise.

In short the policy is for the buyer, but bought by the seller.
Web Reference:  http://www.dealoftheweek.org
0 votes
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