Who pays for Owner's title policy at closing?

Question

We are negotiating with seller's counsel on closing costs. They are saying the purchaser pays the premium for the issuance of the title policy, including cost of title search and recordation of title documents. I know its not a huge expense, but I thought the seller typically paid for this?

Russell Brazil · Answer

@Jimmy Klein In Maryland it is customary to split transfer and recordation taxes 50/50.  The buyer pays for the lenders title insurance.  If the buyer wants owners title insurance the buyer will pay for this.  In my experience, I would say that only about half the people get owners title insurance. So typically asking for something that many people forgo is going to be a no go.  Also it really isnt typical for negotiate specifics like that.  Typically in Maryland, DC and NoVa you are negotiating a number on the seller subsidy.  The amount you ask for back in the subsidy is going to quite variable too depending on price point and neighborhood.  Some price points and neighborhoods you can get a pretty large subsidy, and others it is going to be zero.

You agent/Realtor should be able to best advise you on what he thinks you can negotiate for the subsidy.

Steve Vaughan · Answer

It's customary here the owner's title insurance and transfer taxes are paid by the seller.  They aren't generally small expenses, either ($800 TI, 1.7% transfer tax).

I would offer to pay for recording fees and let the seller pay for normal seller stuff.

I hope their attorney is easier to deal with than ones I've had to in the past.  Perfectly simple transactions completely stalled while each t crossed was subject to attorney approval.   Ugh.  Good luck @Jimmy Klein!

Jimmy Klein · Answer

@Joel Owens

Thanks Joel. I know transfer taxes are now generally paid by the buyer. We sent a LOI and they revised so that we pay for all transfer taxes and title costs. I just wanted to know if this was reasonable or if this was completely wrong. Obviously we will try and negotiate, but will have to settle somewhere.

Joel Owens · Answer

While there are customary expenses placed on each side it is whatever you negotiate to happen.

Used to in GA the seller paid the transfer tax but now unless you specifically mention they will cover it they place on the buyers side. So I try to get the seller to cover as much as possible when I buy something regardless of what their attorney is saying.

Most deals with clients our LOI has buyer and seller to split costs 50/50 and pay their own attorneys fees and then it gets more specific on the purchase and sale.

After we start renegotiating the purchase price down in the purchase and sale agreement from the LOI stage the seller and buyer start splitting hairs on who will pay what until we come to an agreement.