Who gets to decide which title company will be used?

Question

My broker asked why i chose a certain title co. He wrote, “we are not using Xxx title co.” I dont think its up to him is it? Im the seller and doing 1031 exchange to avoid a $50K tax bill and i dont want the broker interfering with that end of the sale!!

Andrew Garcia · Answer

Hi @Jane S., Dave had a great response above.

It is not up to the broker to decide which title company to use.

They often have a preferred title company but you are in no way obliged to use them.

I am sorry that you are in this situation. Let me know if I can be of any assistance.

Dave Foster · Answer

in most cases it is the party who will be paying for the title insurance who gets to decide which title co to use.  This can vary from state to state.  And even within cities and counties inside a state.

But in no case can the broker dictate which title company you use.  They work for you.  It is entirely possible that the broker has an ownership interest in that particular title company - or maybe not.  Maybe they just like and trust them.   If you trust your broker you might want to consider using the title company they recommend.

The broker doesn't make or break your 1031.  But they can be helpful.  But do make sure that the title company understands 1031s.  We do a lot of educating with title companies sometimes.  But it is always better when everyone's up to speed.

Dave Foster · Answer

@Jane S., forgot to tag you on my response.

Chris Mason · Answer

On page 2 of this document, the CFPB thinks the buyer gets to pick. https://www.consumerfinance.go... -- it's a document for the buyer, it says "services YOU can shop for," in this case "you" is the homebuyer, and right below that it lists title/escrow services. So the gov't, at least one arm of it, thinks the buyer picks.

(EDIT: note that in the SF Bay Area and Northern California title and escrow are amalgamated, and we do not use lawyers. So when I say "escrow" or "escrow officer," folks in your area might say "title" or "title rep," or they might say "real estate lawyer," the general catch-all term is "settlement service provider," just auto-translate for your state what's below)

But pragmatically, listing agents act like they get to pick, and often do. That's the norm in California, at least.

My $0.02, if I were dictator of real estate:

- Whomever is picking should pay. Listing agents will not like reading this, but that's my opinion. I have absolutely nothing against listing agents picking - provided they are agreeing to pay for it. What's stupid and annoying is when they pick Slow Sally b/c she gave them avocado toast at their last sales meeting, she's slow to get stuff to us, and then everyone wonders why things aren't moving as fast as they should be.- And if you want to pick up some speed/efficiency for a faster close more assured to be stress free, then the escrow officer you pick should be "whoever the loan officer's go-to." My processor has done several hundred transactions with my go-to escrow officer just in the last couple years, their systems are about as fully integrated as they could possibly be. However great any other escrow officer is, they can't make that claim (well, 1 escrow officer can...).

- On a 1031, my $0.02, it's worth not screwing up, so even though I like my go-to escrow officer, I'd rather escrow be with the 1031 intermediary's go-to. You screw up 1 thing on a 1031 and it's poof there went your massive tax savings.

OP, I'd dig your heels in, go with whom you trust, no reason to go with the escrow officer that purchased avocado toast at your realtor's last sales meeting. Using the listing agent's go-to escrow officer, with someone other than them paying the escrow fees is the least preferred option, even though it's the most common.

Jane S. · Answer

Thanks again all!

Peter Walther · Answer

I believe the CFPB was advising a borrower that they and not a lender gets to choose, not as between the buyer and seller.

Jane S. · Answer

It was in the offer i got

Seller chooses was checked

Phew!

Thanks all

Who gets to decide which title company will be used?

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