Can the Seller Choose Their Own Title and Closing Agent?

Can the Seller Choose Their Own Title and Closing Agent?

Just about every transaction brings up this question, "can I use my own closing agent or do I have to go with the buyers?"

This is an interesting topic in that who pays for what and who gets to choose mutual closing agents. Obviously, both sides of the party will use the same closing agent but the title insurance is slightly different. The title company and the closing agent do not have to be the same but often times, sellers try to save money by requiring buyers to use a specific title company and/or escrow (closing) agent. According to the Real Estate Settlement Procedures Act (RESPA), “Section 9 prohibits the seller from requiring that title insurance be purchased from a particular company, but it doesn't prohibit the seller from requiring the use of a particular closing agent (unless that closing agent is owned, in part by the seller)”.

If the seller is willing to pay for the lenders title insurance for the buyer then they can require a specific title company. The seller typically pays for the sellers portion of the title insurance but the lenders require an additional title insurance as well.

Sellers can require that the owner's title insurance policy be from a particular company so long as the buyer chooses the title company for the lenders policy and as long as they are paying for it.

We do get the question though that since the sellers have already had their title company performed the title search and compiled documents to issue an owner's policy they can save money by using the same title company for the lender's policy as well. The buyer is free to go anywhere they want but there could be economic disadvantages to the buyer going elsewhere for the lenders policy.

This can be a sticky situation but pretty much if the sellers pay for the owners and the lenders title insurance policies, that seller can require the use of a particular title company. If buyers are going to pay for the lenders policy they can be free to choose their own title company even if it costs more for their own company versus the seller's title company.

This also covers conflict of interest; as long as the sellers do not own the part of the title company in any way, they can require the use of a particular and preferred title company.  Simply understanding the laws and the rules can help us be better prepared for our clients when situations and questions arise is this.  For more information on Columbus real estate, rules and duties of a listing agent or buyers agent give me a call. [Adapted from Source]