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Who pays for title insurance: Buyer or the seller?

Author: Jessica Bennet
Community Mentor
Ask Jessica
Posted on: 19th Jul, 2009 12:15pm
When you are purchasing a home with a huge sum of money, you need to ensure that there is no problem with the title of the property and the seller really owns the property. In case there is any dispute with the title of the property, it can lead to problems to your unfettered ownership of the property. It can also lead to financial loss for you. That is why title insurance is very important in case of purchase of a property.

Title insurance is an insurance policy that safeguards you, the property owner and the lender from the losses that may arise due to problems in property’s title or ownership. Before offering the title insurance protection, the title search company scrutinizes the property records so as to make sure that the property is free from the following hazards -

  • Errors in records

  • Clerical mistakes

  • Unknown liens attached to the property

  • Omissions in deeds

  • Undisclosed heirs

  • Frauds involving the property

  • This title search is very crucial because with this the title search company determines whether or not the seller really owns the property and is free to sell it. After this verification, the search company issues the title insurance policy. The policy guarantees that you legally own the property and can legally transfer the title of the property to someone else. This also protects the lender who is lending money to you to purchase the property. In other words, title insurance provides protection to both you as well as the lender. In case of any financial loss to you or the lender due to property title disputes, the insurance company comes forward to compensate for the loss.

    Who pays for the title insurance?

    Now the obvious question that may come up is who pays for the title insurance. Since the title insurance is a part of the closing costs, it is expected that the home buyer is liable to pay for it. But, there is as such no rule regarding this. As both the buyer as well as the lender are beneficiaries of this insurance policy, lender may also pay or partly pay for it. It’s negotiable and the costs may also be split between you and the lender.
Posted on: 19th Jul, 2009 12:15 pm
Who pays for title insurance - is it the buyer or the seller?
Hi dollylee,

There is no specific rule as to who pays for the title insurance policy. Since the policy is supposed to help the buyer and the lender, it is the buyer who pays for it. But in certain areas, the seller also pays for it. This is entirely negotiable and as a buyer, you can also split the costs of the title insurance with the seller.
Posted on: 20th Jul, 2009 12:58 am
title insurance is a closing cost - therefore, it is anticipated that a buyer will pay for its issuance. however, since seller concessions for closing costs are allowed on every product, it is certainly possible that a seller might pay for the cost of the title insurance. frankly, whether the seller pays for the title insurance or some other variety of closing costs ought to have no bearing on a deal; that concession can be used to pay a variety of costs.
Posted on: 20th Jul, 2009 08:15 am
Whether the buyer or seller pays for title insurance depends on the county, not even on the state. Usually, though, the seller and buyer may split owner's title insurance premium and the buyer pays for lender's title policy. In some areas the buyer pays both. However, often this charge is open to negotiation despite the local custom.
Posted on: 20th Jul, 2009 11:24 am
I will lke to add-

Some closing attorneys would use the title company they have business relationship with and split title charges between seller and buyer. If anyone would suggest using another title company, they are usually expected to cover title insurance fees.

Owner's policy is also called buyer's title insurance. The seller is typically not required to pay this cost. It is often assumed that the seller would cover title fees, but if they explicitly state that they don't want to and the buyer agrees on that kind of offer the seller doesn't have to contribute to title related charges.

In fact, title charges as many closing costs on a real estate transaction are negotiable. Homebuyers should be aware of that fact.
Posted on: 20th Jul, 2009 11:25 am
i am unaware of any need for a seller to pay for title insurance that will benefit only a lender, and i am unaware of any need for a seller to pay for title insurance that would only benefit a borrower. it makes no sense that a seller would be required to pay for either. i addressed the possibility that a seller concession could be used for the payment of the premium in the process of closing a loan.
Posted on: 20th Jul, 2009 12:04 pm
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