The question often comes up regarding who chooses the title company and pays for the owner’s title policy. First, let me clarify that there are two types of title policy. One protects the lender and one protects the property owner. Sellers frequently ask about the latter when going over offers received. In Texas, who pays for the owner’s title policy is a negotiable item and can be paid by either the buyer or the seller.
The owner’s title policy protects the owner, up to the property value at purchase, against liens, encumbrances, and other defects that were not discovered during the initial title search. When title is opened, the title company will search for liens, judgments, mortgages, outstanding property taxes, wills, divorces, and any other potential claims against the property.
Therefore, the buyer benefits from the protection offered by the title policy against potential future claims. The seller has the obligation to pass a clear title to the buyer. Both of these factors can become points of negotiation. Typically, who pays for the owner’s policy is usually determined by who chooses the title company. It’s not uncommon for the seller to request a specific title company. When buyers prefer to use a different title company, they may do so if they pay for title policy. It is important to note that the seller cannot require a specific title company as a condition of the sale.
Remember, as with any part of the real estate contract, who chooses the title company and pays for the policy is negotiable. Choosing a knowledgeable Realtor® is important to ensuring that you negotiate the best deal on the purchase or sell of your home. Let’s talk if you’re planning to buy or sell in the Clear Lake City, League City, Friendswood, Pearland, Seabrook, Kemah, Dickinson and Houston Bay areas.