I understand when you are buying a home, you buy lenders title insurance. But when you are selling a home, why does it say seller pays for "owner's title insurance" (optional)? Shouldn't the buyer pay for owner's title insurance or is it something to do with Orange County, where the seller pays for it? If so, is there harm in not paying for it (since it states optional) if I am the only owner of the home?
Owner's title insurance - optional? paid by seller?
- Thread starter shadyoc
- Start date
sgip
Well-known member
Owners Title Insurance is a coverage that can be paid for by either the Seller or the Buyer. Standard Title Insurance is required by the lender with various endorsements for this or that which often come when there are easements or HOA's. If the seller pays the Owners Title Insurance it is on behalf of the buyer.
A helpful article on the subject:
https://www.stewart.com/en/customer-type/real-estate-closing-title-services/all-about-title-insurance.html
As a note if you are in a battle for a purchase between your offer and all the rest, why not pay both the Owners Title and the Transfer Tax so that the sellers net is greater? Beats having a higher price, no?
A helpful article on the subject:
https://www.stewart.com/en/customer-type/real-estate-closing-title-services/all-about-title-insurance.html
As a note if you are in a battle for a purchase between your offer and all the rest, why not pay both the Owners Title and the Transfer Tax so that the sellers net is greater? Beats having a higher price, no?
usctrojancpa
Well-known member
Typically the resale seller pays for the owner's title and an owner's title policy is required in order for a lender's title policy to be obtained (which is required by the lender). The buyer pays for the lender's title policy (cost is about 1/3 of the owner's title policy but varies depending on the loan amount).
USCTrojanCPA said:
Yes, I am selling the home and I thought it would be the buyers who have to pay for the owner's title insurance not the seller who pays. On the escrow estimate, it is indicating that I, as the seller, should pay for their owner's title insurance. It also says "optional" besides it so I am inquiring to see if it is indeed optional. I am trying to verify if in California, owners title insurance is mandatory or optional. Since I am the first owner, I know there are no claims against the home, so I don't think owner's title insurance is necessary.....but if it is mandatory in California, I don't think I can get out of it.
qwerty
Well-known member
shadyoc said:
What do you mean you can?t get out of it. It is customary for the seller to pay fir the new owners title insurance. It is not required.
Just have the agent put in the notes to the listing that you will not be paying for the owners title insurance and then account for that in your listing price because of the price is X, most buyers will try to offer you X less the title insurance that you are making them pay. Just part of the psychological warfare between the buyer and seller
usctrojancpa
Well-known member
shadyoc said:
A lot of sellers get confused by the "optional" wording and think that they don't need to have a title policy purchased. I'll put it to you this way, I would never let my buyer purchase a home without an owner's title policy because a seller may claim that there are no issues with title but that can not be verified without an owner's title policy. Plus a lender will require an owner's title policy in order to close on the loan. Have you asked your realtor (who I'm sure is using their title rep) if they can get you an owner's title policy discount? Because I also ask my title rep and my escrow officer if I can get a discount for my sellers. If you have a desirable property and get multiple offers, you can ask the buyer to pay for stuff that normally they won't like owner's title, HOA transfer fees, county transfer tax, home warranty, etc because everything is negotiable.
USCTrojanCPA said:
So why does it say optional, when it is mandatory?
There is also a lot of what I believe, are admin fees:
-a few hundred for document fee (isn't that part of what I pay for escrow fees and are considered costs of doing their job?)
-a few hundred (courier/postage/mail/wire fee (really, that much for this stuff??)
-a separate fee for messenger fee (shouldn't this already be covered under the courier/postage/mail/wire fee that they are charging a few hundred from above, already??)
-another wire fee (counted twice?)
shadyoc said:
Welcome to real estate transactions. It really doesn't cost $250 for a notary to sign documents with you but that's how much they charge. If you choose to get your own notary to do it they probably will still charge you $200 for "doc prep" fee instead. There are just a lot of extra fees and padding built into a real estate transaction.
usctrojancpa
Well-known member
shadyoc said:
Not sure why they had that optional part for the owner's title policy but the reality is that you won't do a transaction without it. Don't get me started on those garbage title and escrow fees, that's how escrow and title companies make their money. This is why I tell my buyers and sellers to expect 3rd part closing costs, excluding commission, to be around 1% (lower if you are a cash buyer). Don't forget all the lender fees on the buy-side (processing, underwriting, etc) and then on the payoff side (payoff statement fee, reconveyance fee, etc), guess everyone has their hand out for money. haha
usctrojancpa
Well-known member
shadyoc said:
Buyer closing costs can be around 1% (assuming no lender impound account and 0pts on the interest rate) if they are financing the purchase...lender's title, escrow fees, title fees, lender fees, appraisal, home inspection, recording fees, home insurance policy, prepaid interest, prorated HOA/property taxes, one month of prepaid HOA/s, notary, etc. The higher priced the property is the lower the closing cost % will tend to be. Cash buyers have closing costs of around 1/2%.
Seller 3rd party closing costs can also be around 1%...NHD report, termite inspection/repairs, escrow fees, owner's title, title fees, county transfer tax, HOA docs/transfer fees, home warranty policy, lender payoff fees, recording fees, accrued unpaid interest, prorated HOA/property taxes, notary, etc. This does not include repairs or credit in lieu of repairs and agent commissions.