Who pays for the title report and why should they?

I had a seller ask me yesterday, "why do i have to pay for the title report?" I said becuase you need to show and insure to your buyer you can provide clear title and report to them any burdens. What do you think?
  • January 24 2012 - Goldendale
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Answers (8)

Profile picture for KKSka14

This is a good question and a valid one for further exploration.

Good answer, Erik.

  • January 24 2012
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In my area, its a pretty strong tradition for the seller to pay for the title search/insurance. I think you answer was good. If it happens to be the buyer you need to explain it to, you can say its just like buying a car. The seller doesn't buy insurance for you; the buyer buys their own insurance.
  • January 24 2012
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Profile picture for the_country_hick
Erik, "If it happens to be the buyer you need to explain it to, you can say its just like buying a car. The seller doesn't buy insurance for you; the buyer buys their own insurance."

That is a bad analogy. It would be more comparable to a car seller giving you a bad title and you paying an insurance company so you can get your money back when it turns out you never really bought that car. I have never heard of insurance that covers a bad title on a car.
  • January 24 2012
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In my area it is standard for the buyer to pay for the title insurance. Although with foreclosure and short sale deals most of the time the banks will pay for it.
  • January 24 2012
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The most common instrument used to transfer title is the warranty deed. What this basically means is that the seller is warranting or guaranteeing the quality of the title they are transferring.  If there is a problem down the road, the seller would be liable to cure a defect unless there was title insurance issued.  This is the reason that it is customary that the seller pay: to relieve the burden of liability against the seller.
However, a seller is not required to pay for or provide title insurance.  If the buyer chooses to get financing from a lender that requires title insurance, just put it in the contract up front that the buyer can pay for that privilege. 
  • January 24 2012
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Profile picture for hpvanc
Because if the seller can't provide clear title to the property they can't sell it.  The banks have recently found themselves in that position a bit more often than they would like or would be healthy for the market.
  • January 24 2012
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They're not paying for the title "report," they're paying to insure the warranty deed. The warranty deed has no value if there isn't going to be someone there to pay up when needed.

If they don't want to pay for title "insurance," then they are going to have to find a buyer who is satisfied with less than a "warranty" deed, which is going to be difficult, considering that lenders are going to require that the buyer provide title insurance for the lender.

So the scenario the Seller is trying to create is one where, if the title proves to be defective, the buyer will have protected the lender, and the seller will get off without protecting the buyer.

Good luck with that.
  • January 24 2012
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Profile picture for Caveat Emptor
how about "because you are on the hook for a 200,000 dollar mortgage and unless you can provide a clean title, nobody will buy this home from you?"
  • January 25 2012
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