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RESPA Section 9, Buyer can choose the Title Company!

By Adam Malachi

Real Estate Agent with A 2 Z Realty LLC

September 02, 2010 12:40 PM

Therefore do not let the seller's broker/agent dictate to your buyers where to close and which title company to choose!

Your buyers can choose the title company!

Here's the reason:

As stated in Section 9 of RESPA!

(a) No seller of property that will be purchased with the assistance of a federally related mortgage loan shall require directly or indirectly, as a condition to selling the property, that title insurance covering the property be purchased by the buyer from any particular title company.

(b) Any seller who violates the provisions of subsection (a) of this section shall be liable to the buyer in an amount equal to three times all charges made for such title insurance!

Seller's broker/agent be aware and be afraid!

This is just FYI only!

Thanks

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Sheila Newton Team Anderson & Greenville SC

Berkshire Hathaway HomeServices - C. Dan Joyner - Anderson, SC

Selling the Upstate since 1989

It is a common misconception that the seller can't choose the closing atty.... but actually the owner of a property (bank or not) CAN make it a condition to use their closing atty... you are correct that they can not make a buyer buy title insurance from a particular place. however, just like any "right", you can give up that right in an addendum. if the buyer signs an addendum stating they are willing to use the sellers closing atty, then they gave up their right to use their own.. that still doesn't mean they can't have their atty look over the paperwork and even attend the closing... but is DOES mean the closing will be in the office of the seller's atty. usually in that case, if the buyer is willing to pay for their atty to be present, (they still have to pay for the closing atty too), then they would get title insurance from their own atty.

I have been selling REO properties for over 20 years and it is a common practice. the legal way this happens is that because the buyer signed an addendum agreeing to close with seller's atty and also that the selller can't "prohibit" the buyer from having an atty present... hope this helps clear that up.. i have even been to the real estate commission over the issue so i know this to be true.

i would be happy to talk with you further on the issue if you like.. or if anyone has questions about it.. this is one area i am very familiar with.

Sep 02, 2010 12:54 PM

Adam Malachi

Castle Rock, CO

Mary Douglas

United Country Ponderosa Realty, Red Feather Lakes, Colorado - Red Feather Lakes, CO

REALTOR, Red Feather Lakes, Colorado

Hi Adam, interesting news and actually quite a different approach from what we are used to. Thanks for the info.

Sep 03, 2010 12:19 PM

Adam Malachi

A 2 Z Realty LLC - Castle Rock, CO

QSC,CDPE,CIPS,CNE,CRB,CRS,GRI,MRE,SFR

Hello Sheila,

I do understand what are you saying! But according to SESPA Section 9 please read it carefully before some buyers report you to RESPA for violation! REO bank own is a different story! They use their own contract and their own lawyers they can dictate where to close, but also the buyers needs to agree to that, if he/she purchasing a property with government help or government loan!

Thanks for sharing your comments!

Adam

Sep 04, 2010 02:55 PM

Adam Malachi

A 2 Z Realty LLC - Castle Rock, CO

QSC,CDPE,CIPS,CNE,CRB,CRS,GRI,MRE,SFR

Hello Mary,

You're very welcome Mary! That's the law! But most of the time the sellers do not even know the title company, all of the time the listing broker/agent violate that rule by dictating on the MLS which title company to be used! Always with no consequence to the listing broker/agent!

Thanks for sharing your comments!

Adam

Sep 04, 2010 03:01 PM

Kelly Milligan

First Title Real Estate, LLC - Slidell, LA

Hi Adam, this is a hot topic. I have wondered when the seller is paying a percentage of the purchaser's closing costs (3-6%) would the seller then have input to where they close? They are already meeting and most of the time exceeding the RESPA requirement. I think they can in this situation. What is your opinion?

Thanks for the post.

Sep 06, 2010 04:34 AM

Adam Malachi

A 2 Z Realty LLC - Castle Rock, CO

QSC,CDPE,CIPS,CNE,CRB,CRS,GRI,MRE,SFR

Hello Kelly,

It's very hot topic! Closing cost is part of the purchase price! Most of the time the seller does not know any title company unless they are investor or REO! All the time the listing agent/broker dictates to us where to close, they have no right doing it! But they do it anyway!

Thanks for stopping by!

Adam

Sep 06, 2010 07:52 AM

Anonymous

Le Thi Velazquez

Thank you for emphasizing the information. I agree with you 100%. It's a common every day practice of listing agent/Seller directing Buyer to particular title company right here in Texas. I have been talking about this matter for years; however, no one listens to me. Hope all agents cross the country know and comply with this law.

Le Thi Velazquez/Keller Williams Realty Heritage

Mar 28, 2011 05:19 AM

Anonymous

Diana Huntress

If it's an all cash sale, must the buyer still choose the title co?

Feb 24, 2014 11:52 AM

Adam Malachi

A 2 Z Realty LLC - Castle Rock, CO

QSC,CDPE,CIPS,CNE,CRB,CRS,GRI,MRE,SFR

Hello Diana,

RESPA Section 9 says: "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".

Yes the buyer can still choose the title comapny,

Thanks for stopping by with you comments.

Adam

Feb 24, 2014 12:54 PM

Anonymous

Charles

Question: What if a broker refuses to use the buyers choice of title company?

Sep 03, 2014 06:27 PM

#10

Adam Malachi

A 2 Z Realty LLC - Castle Rock, CO

QSC,CDPE,CIPS,CNE,CRB,CRS,GRI,MRE,SFR

Hello Charles,

The broker is not part of the contract transaction! The sellers and the buyers are! Also the broker cannot refuse the buyer's choosing of the title comapny!

Thanks,

Adam Malachi

Sep 04, 2014 02:30 PM

Anonymous

Ed Hartung

If the Seller cannot "require" a Buyer to use ( and pay ) for a particular title company I would likewise say the reverse is true as well - a buyer cannot "require" the seller use ( and pay) for a particular title company.

Jun 09, 2016 12:27 PM

#12

Adam Malachi

A 2 Z Realty LLC - Castle Rock, CO

QSC,CDPE,CIPS,CNE,CRB,CRS,GRI,MRE,SFR

"No seller of property that will be purchased with the assistance of a federally related mortgage loan shall require directly or indirectly, as a condition to selling the property, that title insurance covering the property be purchased by the buyer from any particular title company".

The seller has to pay for title company regardless who choose it or order it? yes the buyer can choose the title company also and the seller's can pay for it!

Thanks Ed for stopping by with your comments.

Jun 13, 2016 04:56 AM

Anonymous

what about banks that requires their own Bank attorney's to handle the closing transaction

Jul 07, 2016 06:41 AM

#14

Adam Malachi

A 2 Z Realty LLC - Castle Rock, CO

QSC,CDPE,CIPS,CNE,CRB,CRS,GRI,MRE,SFR

If the buyer's agree, that will be okay.

otherwise the seller's will be in violation of Section 9 of RESPA {12U.S.C.& 2608} States:

(a) No seller of property that will be purchased with the assistance
of a federally related mortgage loan shall require directly or
indirectly, as a condition to selling the property, that title insurance
covering the property be purchased by the buyer from any particular
title company.

(b) any seller who violates the provisions of subsection (a) of this
section shall be liable to the buyer in an amount equal to three times
all charges made for such title insurance.

Thanks for stopping by with your comments.

Jul 10, 2016 09:13 AM

Anonymous

Mike

Surprised at how many imprecise answers there are in this thread. First, according to HUD, the Seller CAN dictate who to use for the services they are paying for. That being said, the Seller cannot dictate that the Buyer use the same title company for services they are paying for. The Buyer always has the right to split the escrow. In many states, where the Seller, by custom and Realtor contract, pays for the Owner's Policy the Seller can chose who they will be using and the buyer is pretty much trapped as the only way the Buyer can receive a simultaneous issues rate for the lender's policy is for them to use the same title company. The choice for the Buyer is do they want to pay more.

Jul 31, 2019 12:34 PM

#16

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