Who Picks the Title Company for Closing?

A title company plays a significant role in real estate transactions, acting as an impartial third party to facilitate the transfer of property ownership. Their primary responsibility involves ensuring the property’s title is clear of any liens, encumbrances, or disputes before the sale is finalized. The question of who selects this company is common, and the answer can vary depending on several factors. Understanding the process of choosing a title company is important for a smooth closing.

Common Practices and Local Customs

Title company selection varies significantly across different regions of the United States. In some areas, it is customary for the buyer to choose the title company, especially when the buyer is responsible for purchasing the lender’s title insurance policy. This practice ensures the buyer has control over a service directly impacting their new loan.

Conversely, in other regions, the seller often selects the title company. This occurs when the seller traditionally covers the cost of the owner’s title insurance policy, which protects the buyer’s equity in the property. These regional customs are not always legally mandated but have evolved from market practices and traditions. The “who pays” aspect often influences the “who picks” aspect.

Negotiating the Choice

Despite regional customs, title company selection is frequently negotiated between the buyer and seller. The purchase agreement, which outlines the terms of the real estate transaction, can explicitly state which party is responsible for choosing the title company. This contractual agreement overrides any local customs that might otherwise apply.

Buyers and sellers may agree to arrangements, such as splitting closing costs, which can influence who ultimately makes the selection. For example, one party might concede the choice of title company in exchange for other favorable terms in the contract. Clear communication and mutual agreement early in the transaction can help prevent disagreements later.

Lender Requirements and Agent Recommendations

Third parties influence the selection of a title company. Lenders often maintain a list of approved title companies. These companies undergo a vetting process by the lender to ensure they meet compliance and due diligence standards. While borrowers generally have the right to choose their own title company, opting for one not on the lender’s approved list might introduce additional review time or requirements.

Real estate agents also provide recommendations for title companies. Suggestions are usually based on the agent’s past experiences, the company’s efficiency, and reputation for reliable service. Agents aim to facilitate a smooth closing process, and recommending a trusted title company contributes to that goal. These are merely recommendations, and clients retain the ultimate decision-making authority.

Factors for Selecting a Title Company

When choosing a title company, several factors should be considered to ensure an informed decision. One important aspect is comparing costs and fees, which include title insurance premiums, closing fees, and escrow service charges. Obtaining quotes from multiple companies can help identify competitive pricing.

The experience and reputation of the title company are important considerations. Research companies with a strong track record of successful closings and positive client reviews. A company’s responsiveness and clear communication contribute significantly to a smoother experience. Assessing the company’s efficiency in handling paperwork and meeting deadlines can help avoid delays.