Who hires a title company? The buyer or the seller?

Question

Hi again BP. Another newbee post here about a typical home buying process.

Who hires a title company for closing? The buyer or the seller? is it safe to use the seller's title company to close if I'm buying a house

How do I go about the building code inspection? Should I hire a building code inspector for code violations on top of a house inspector?

Thank you

Russell Brazil · Answer

You know this could not be more true.  I hate when I am selling a house to someone who picks an awful title company, or if I am working with a buyer who insists on using a title company I know is going to screw things up. And I am not working on complex transactions...very very basic stuff, so if they are screwing up a normal retail sale, they are bad.  This also goes to their choice of lenders too. Everyone who has never bought a property thinks they know better than the people who have been involved in 100 transactions.

Ned Carey · Answer

As you have read this can be a negotiation. I am happy to use the sellers title company if it is an experienced seller, I might learn of a new investor friendly title company. Otherwise I choose the title company whether selling or buying.

It seems like every time I let a buyer choose the title company it gets screwed up. Most title companies just aren't prepared to handle investor properties.

Jay Hinrichs · Answer

@Ned Carey  This Is such a regional thing...

And one must understand how escrow and title works in different parts of the country to understand what poor performance is as opposed to good performance.

West coast is Totally opposite of what you folks have to deal with out there.. when you have buyers that have their own attorney and sellers have their own attorney and then the attorneys are just agents for the title underwriter.. Along with getting title commitments or preliminary title reports as we call them .. up front .

Generally speaking any Title and Escrow company in the Northwest is the underwriter and title insurer all in one.. IE you go into a Fidelity office or a Fatco office or a Ticor office or a Chicago office ... WFG etc etc. its all done in house and very proficiently.. can there be mistakes yes.. but in my experience of closing on East coast and west coast and in the mid section of the country.. our title and escrow in the northwest is pretty bullet proof and I agree with you out your way its anything BUT that ... I have experienced extreme displeasure with some of these Attorney closing agents and the lack of efficiency on their part.

When closing in States that are attorney driven and the buyer has their own attorney and the seller has their own.. these are basically clusters in my mind.. way to many people in the pot and very inefficient.. but its the customs.. so know you have for one transaction a listing broker a selling broker an attorney repping the buyer an attorney repping the seller , the buyer and the seller... 6 people to deal with... ugh... I told one closing attorney this is like doing divorce work... when negotiations have to go through all these parties.

Now in our state of Orygun it is not legal to steer business to one title company or the other but it is customary to do so.. its right on the MLS listing .. title preference with the name of the escrow officer and this is chosen by the Seller and in a Sellers market no one argues but its not mandatory to use them.. The seller may not sell to you though.. Just like with my new construction I have a master file at WFG I will not let anyone use another title or escrow company they use my gal at WFG she handles seller buyer and lenders all at ONE desk.

Account Closed  this is the main difference in how you transact and how we do.. We get a title commitment or prelim within 72 hours of opening an order.. the Onus is on us to review the title and if we have questions we start asking title to explain remove or in some manner clean it up... Were as in many cases out east your just sitting there waiting for the closing attorney to let you know if title is clear and they just tell you clear or not clear. They do that work for you so for sure your wanting your closer or attorney or whatever to be very sharp .. Because they may tell you its fine only find out they made a bad boo boo.

AS for who pays for what in the SFR realm which the OP is just talking about buying a SFR I think to live in .. this is almost always according to local customs that the Real Estate community has been doing for decades and Realtors guide their buyers and sellers.

Rick H. · Answer

@Mark Creason

Another erroneous assumption based on local practices.

The correct answer: it depends!

Title companies provide both title insurance and closing agent services in most locales.

I've purchased many properties without paying for it and without receiving the benefit of either services. I do not suggest this for the new investor.

Title insurance benefits both buyer and buyer's lender against specific losses. Closing agent services may be provided by a title insurance company, attorneys who regularly provides this service, independent 3rd party escrow companies and even some licensed real estate brokerages, at least in my state, CA.

Even within a state, like California, tradition is different between Northern and Southern counties.

Historically, by custom but not by statute, buyers and sellers split the cost of escrow evenly. But this may be negotiate to put the burden elsewhere. Or, I could offer seller a net price and pay all closing costs. Or, seller could inflate the price a few bucks and offer to pay both sides.

Unless specifically made by statute (or policy, as would a VA no down or some FHA loans) you'd negotiated your best deal and pay pursuant to your written agreement.

Mark Creason · Answer

Contractually, title is supposed to be picked by the seller.  It doesn't always work that way.

I think a good home inspector would be able to find code violations.

Mark

Fred Heller · Answer

In Texas, it's customary for the seller to select the title company if he is paying for the title insurance. If not, then the buyer can pick whatever title company he wants.

Frank S. · Answer

Andri,

Like everyone above indicated, the answer is  "ït depends". Perhaps, you should to indicate the actual area of your property, some experienced investors in that area may be able to help further.

From my engineering background (in Chicago), I would caution you against contacting a City Inspector or any code official, let the contractor do that once you own the place. If a Home Inspector detects deficiencies, they will tell you.  Then, you can get a contractor to give you an actual price to get it repaired at your own discretion. However, a city code violation may jeopardize the closing on your deal if the mortgagee requires this violation to be cleared before closing.  Even worse, you may have to repair it after the closing and this can drain your cash reserves.   If you are concerned with your safety or the safety of your tenants, you should address any and all code deficiencies, code is the minimum requirement.

Get a good home inspector, ask for references.  It's worth the expense.  If you still have concerns reach out to a licensed contractor. Maybe you could schedule both at the same time.

Most overcharges seem to occur with the title insurance, see if you can get your own. Here is suggestion and discuss it with your lender.

http://www.entitledirect.com/

Is this an FNMA property? if so, read the addendum, and read it a few times.  FNMA has a bullet proof addendum. If you "rat them out" with a code violation you could lose money.

"The Purchaser shall not directly or indirectly cause any inspections to be made by any government building or zoning inspectors or government employees without the prior written consent of the Seller, unless required by law, in which case, the Purchaser shall provide reasonable notice to the Seller prior to any such inspection."

Crystal Smith · Answer

Either the buyer or seller can hire the title company for closing.  Generally, given a Title Company's independence, it should be safe to use a seller's title company.

For building code inspections you should call the city building department, not a  house inspector.

Cory Kohut · Answer

In terms of the building code violations this is something yo should confirm with the city.

An inspector can usualluy tell you what is not up to current code, but that doesnt mean it is a violation.

Many citys have a pre closing inspection and there can be violations that need to be corrected before the property can transfer.  Most of the time a buyer can sign an affidavit that they were made aware of the violations and still close

If you are worried about the condition of the building your home inspector is who you should defer to, but if it is a matter of city code violations you want to verify with the city directly.

John M. · Answer

Typically the Seller will engage the real estate agent to initiate the marketing of the property. The Seller's agent will then use a Title company to check ownership and liens. Title Companies provide this service for free in order to get the Insurance contracts (Seller and Buyer) at the close of sale. Since this usually happens way before a Buyer enters the situation, the Seller's Title company is used by default for insuring both the Seller and Buyer at time of sale.

However it can also go another way in California. If the Buyer demands his own Title Insurance Company then that can be done through the Buyers real estate agent or specific instructions to Escrow. In this kind of deal the Seller uses a different company for Title Insurance than the Buyer. Escrow companies are familiar with this even though it doesn't happen as often.

Who hires a title company? The buyer or the seller?

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