Who picks the title insurance company?

by | Mar 12, 2019 | Blog

When your offer on a home is accepted, title insurance provides the assurance that you will be able to take ownership of the property without any unresolved title defects. So you know it’s an important part of buying a property. But you may not know who gets to choose the title insurance company you work with, and that’s just as important. In the end, you want a title insurance company with a solid reputation, one that you know you can trust for this essential step of the home buying process.


The two kinds of title insurance

There are two kinds of title insurance: lender’s title insurance, which protects the lending institution for the value of the mortgage, and owner’s title insurance, which protects the property buyer from liens and encumbrances on the property title, ensuring there are no defects for which the homebuyer could be held liable.


Federal law on title insurance

Federal law and section 9 of the Real Estate Settlement Procedures Act (RESPA) says a property seller may not require the buyer work with a specific title company, if the buyer is paying for title insurance, according to, “Who picks the title company in a Real Estate closing?”, published on LinkedIn. And according to REALTOR Magazine, “RESPA Rules on Agents,” those found in violation of RESPA can face fines, often amounting to three times the title insurance cost. It’s important to note that RESPA prevents a seller from requiring title insurance be purchased through a particular company, but it doesn’t keep them from requiring a closing agent they have selected. RESPA does not apply if the seller is paying for the insurance.


In Wisconsin, the state-approved Residential Offer to Purchase form requires the seller to provide and pay for owner’s title insurance as evidence of clear title. In Minnesota, however, the buyer typically pays. Generally, whoever foots the bill selects the title insurance company, but in some instances in Minnesota, the buyer can even negotiate to have the property seller cover the costs of title insurance as part of their offer—a tactic that sometimes works when inventory is heavy. In that instance, however, the buyer essentially forfeits the right to choose the title insurance company.


Select a title insurance company you trust

Real estate agents and brokers often have title insurance companies they frequently work with, but you are not required to select that company. And while many homebuyers and sellers alike have no particular ties to title insurance companies, it is worth your while to do some research, ask trusted friends and family and select a title insurance company that is reputable. It’s also important to note that in Minnesota discounts are available if both the lender’s title insurance and the owner’s title insurance are purchased through the same title insurance company. And in both Minnesota and Wisconsin, discounts are available for providing a copy of the previous owner’s policy.


Exercise your right to choose your title insurance company

When paying for title insurance, you have the freedom to select a company you know and trust, even if it’s different from the company issuing the lender’s insurance. In the end, what’s most important is that you work with a reputable company who will ensure that the buyer has a clear title to their new home.