Title Insurance and Escrow: Choice of Buyer or Seller?
As a home buyer, you get to choose the property and location, so why can’t you choose which escrow company and title insurance?
Buying a home for the first time can be confusing and many first-time home buyers today may not be aware of the fact that they actually have the right to choose which title insurance company to go with and can easily think that it is a Realtor’s job to do so. While I would be more than happy as a Realtor to assist you in finding a title and escrow company, the decision is initially yours to make as the buyer.
Typically in a sellers market, the seller and listing agent will recommend that their escrow company will handle the file. This is not in violation of RESPA; however, the seller can not make it a condition of the sale for the buyer to purchase title insurance from any particular title company.
What is RESPA?
Under Section 9 of RESPA (Real Estate Settlement Procedures Act) rules and regulations, it prohibits the seller from making it a condition of the sale that the buyer purchases title insurance from a particular company. Therefore, you are able to choose which ever title insurance you feel most comfortable with.
RESPA (Real Estate Settlement Procedures Act) is a federal body of law that regulates the closings of real estate transactions. There are other federal, state and local laws that regulate real estate sales as well, but in this discussion it’s RESPA that in my opinion is being interpreted incorrectly.
This is something that has been a hot topic of discussion and has been the cause of several debates and is currently a buzz in the real estate media. Everyone may have their own thoughts and opinions on this subject, so on the same note, I don’t actually direct any buyer to purchase title insurance from anyone in particular. We are simply just directing the escrow to a person or company that will make sure all parties in the escrow are in good standing and taken care of.
However, in some cases a real estate professional, such as a Realtor, can help choose a title company if the buyer is relying on them to find one for them. It is one of those decisions that you may not feel comfortable making on your own being a first-time homebuyer. This is certainly something that your Realtor can help with.
Some buyers may want to choose for themselves and are willing to go on the hunt themselves for a trustworthy title company and may feel that the Realtor is only choosing a particular escrow officer for referral points. And it is definitely o.k. to do so. Most often when a Realtor refers you to a particular escrow officer is because they have already established a trusting relationship with them based on past transactions.
How to File a Complaint with RESPA
By all means necessary, if you are a buyer and feel as though this right of yours has been violated, RESPA rules and regulations gives individuals at least one (1) year to file a private lawsuit. Lawsuits for violation of section 9 can be brought to any federal district court in the district that property is located, in which the violation would have taken place.
To file a complaint with RESPA, you may file by phone, email, or in writing. RESPA contact information for complaint filings are:
Director, Office of RESPA and Interstate Land Sales
U.S. Department of Housing and Urban Development
451 7th Street, SW
Washington, DC 20410
Phone: (202) 708-0502
As an experienced Realtor, it is my duty to provide fair service and treatment to all of my clients. And their rights as a buyer should not be hindered in any way.