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Can a Lender MAKE a Buyer use their Title Company??

By
Real Estate Agent with Remax Plus

Well, they certainly try to scare our buyers into thinking so.  They often times include a paragraph or two in their bank addendum stating the purchaser must use their title company. 

There are major problems that arise with this and here are a few that come to mind -

First -

All too frequently the title company is out of state and has little to no idea what is required to get a deed recorded in the local jurisdiction the property is located.  They may or may not figure it out as they are trying to also muddle through other local laws and court systems just to get the deal to settlement. 

Secondly -

According to Maryland law - the buyer has the right to choose their own title company.  When a bank refuses to accept an offer only because the buyer and buyers agent have struck the offending paragraph and written in their own title company, they are breaking the law.

Thirdly -

If your buyer does decide to use the banks title company - pay very close attention to their fees.  They can get a bit out of hand.

I know locally there are agents and local title companies gathering evidence to present to MAR to hopefully put a stop to all of this.

In the meantime and back to the original question - right now, yes, some banks are getting away with it from lack of enforcement.  The buyer wants the house and this is the only thing standing in their way so they give in.  Sometimes a bank will sweeten the pot with incentives and that does help somewhat but most just want to save the brain power of the employee pushing the paper to make the deal work - therefore, no changes to the contract.

James Lockard
RE/MAX Properties - Saddle River - Allendale, NJ
Realtor, Allendale, NJ

Here in Northern New Jersey the majority of buyers use attorneys to facilitate the closing. The attorney usually is the one to order the title from a title company.  I know title insurance is state regulated as to what can be charged and I think most of the other title charges are also.  

Nov 18, 2008 09:55 AM
Cristal Drake
Circa Properties - Fullerton, CA
Realtor - Fullerton Real Estate

Hi Kathy,  In CA it is negotiated in the purchase contract.  It is a negotiating tool but seller typically wants choice of services.  Happy Thanksgiving!

Nov 26, 2008 02:15 PM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

NO !  Pls. view our Re/Max RELO message -  http://actvra.in/4jHG

Aug 08, 2014 05:15 AM