Little confusing isn’t it? Both seller and/or buyer can purchase title insurance. There are two types of title insurance – owner’s title policy and lender’s title policy. Owner’s policy is part of the contract in order to convey a lien-free title from seller to buyer. Lender’s policy is required only in the instance that a buyer is obtaining a loan to purchase; this is part of the buyer’s loan closing costs.
Often it comes down to local market customs although a seller is not required to pay for owner’s title insurance. Traditionally here in Lee county the seller pays for owner’s policy. This is specified in the purchase contract under Section 9 (c).
RESPA (Real Estate Settlement Procedures Act) dictates that whomever chooses the title company pays for owner’s title policy. It is a violation of Section 9 for a seller to require a buyer to use a particular and pay for owner’s policy. A seller may elect to pay for owner’s policy and use a title company of their choice though.
Simple way to remember who pays for owner’s policy: seller chooses seller pays or buyer chooses buyer pays.
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© Danielle Sharp | Sharp Homes Realty | email@example.com | 239.541.5363 | Who Pays For Title Insurance?