Home Buying > Should Buyers Decide Where To Close?

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Here in North Texas, we typically use a title company to coordinate all parties to the real estate transaction including buyers, sellers, mortgage lenders and their real estate representatives. One of the most important roles that a title company does is to insure and issue Title insurance policies. To the new homeowner, the Title Company issues an Owner's Title policy while a Mortgage Title Insurance is required by the mortgage company to protect its interest in the policy. Upon title searches and examinations, the title company issues an Owner's Title policy to protect the new homeowners (ie. Buyers in the transaction) from unforeseen claims, hidden risks or fraud against the property. In short, the end result is that the Owner's Title Policy is in benefit of the Buyers (ie. soon-to-be homeowners). Something that they will hold for their protection for as long as they own the property, or until they re-finance the mortgage.

It is a negotiation between the buyers and sellers which title company both parties want to select to close. More often than not, it has been the Seller's final decision on where to close. Unless there had been special circumstances about the property and title work was started at a title company, it is my personal opinion that Buyers should decide where to close. After all, it is the Buyers (ie new homeowners) that will have a lasting impact of this decision.

Note under HUD RESPA Section 9 ruling, Section 9 of RESPA prohibits a seller from requiring the home buyer to use a particular title insurance company, either directly or indirectly, as a condition of sale. Buyers may sue a seller who violates this provision for an amount equal to three times all charges made for the title insurance.

With the new standardized instructions from HUD/ RESPA on the Good Faith Estimate put out by Loan officers effective January 2010, it is my hope that Buyers and their Loan Officers will strive to see that this ruling is enforced and Buyers have more weight in deciding where to close on the sale of their home, especially when the end-result is a Owner's Title Policy that will last a long time.

Although this ruling have been in place for a long time, no one really enforces it. The worst are Home Builders and Banks (with REO sales) who are notorious for violating this ruling. Some day when they hurt a real estate attorney who is also a buyer in the transaction, someone may be hurt financially for enforcing such violating ruling.

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