Who Chooses The Title Company? The Buyer? Seller? Realtor? Lender?

In Maryland, where the buyer traditionally pays title insurance and title search costs, the buyer has the legal right to select the title company. Often, the buyer looks to their real estate agent for recommendation on who to use.

In some instances, real estate agents have “Affiliated Business Arrangements” (ABAs) with certain title companies. This arrangement is a legal way for realtors and title companies to share in the profits of the transaction. If you are purchasing a home through a real estate agent, look for forms you sign that disclose this arrangement and require you to use a particular title company. You do not have to sign these forms. As a buyer, you need to be aware that the only reason to use the title company affiliated with your real estate agent is if this is actually your best choice!

In other cases, a lender may influence which title company you use. The lender will recommend a particular company. If the buyer chooses another title company, an “attorney review fee” might be charged to review the buyer’s title company’s work. This fee can be a strong deterrent from exercising your right as the buyer to choose your own title company. If your lender is charging a review fee, be sure to ask Clear Title Group if they can help you absorb (some of) the buyer’s review fee, in the interests of handling the deal.

If the seller wants you to use their title company, keep the following points in mind: First, why is the seller making the request? Is there something in it for them? It can be very useful for a second set of eyes to take a look at the title which will increase the chances of catching any title mistakes. Second, under federal law, if a real estate buyer uses a (federally-related) mortgage loan to purchase a primary residence, a seller is prohibited from requiring the use of a particular title insurance company, unless the seller pays 100% of the insurance fees.

At the end of the day, buyers need to know their title company is fully in their court and not beholden to anyone else. That can be lost when a title company owes their allegiance first (or second) to a seller, a realtor or a lender.

And, in the state of Maryland, you DO have the right to choose your title company!