WHO CHOOSES THE TITLE COMPANY?

There are many myths and misconceptions surrounding the RESPA guidelines

when it comes to selecting title and escrow services in a real estate transaction.

Let's take a closer look and clear up the confusion. MYTH: RESPA (the Real Estate Settlement Procedures Act) dictates that the Buyer chooses the Escrow Agent.

MISCONCEPTION: The Seller has no choice in the selection of the Settlement Agent.

MYTH: Naming a preferred Escrow Agent in a listing publication is a violation of RESPA. MISCONCEPTION: It's a violation of RESPA for the Listing Agent to "counter" the choice of Title Company. THE REAL ESTATE SETTLEMENT PROCEDURES ACT does not address the choice of Escrow Agent, nor does it restrict either party from negotiating their choice of Title Insurer. RESPA says only that the Seller, as a condition of the sale, may not require, directly or indirectly, the Buyer to purchase Title Insurance from a specific Title Insurance company. Since Escrow Service and Title Insurance are two separate functions, RESPA does not address the choice of Escrow or Settlement Agent at all. Only by requiring a Buyer to obtain title insurance from a specific source would a Seller be in violation of RESPA. Since many Escrow Agents are able to provide title insurance through several different Insurance Underwriters the choice of an Escrow Agent is even less likely to fall under RESPA guidelines. The Seller would have to dictate, as a condition of the sale,which underwriter the Buyer must purchase their Title Insurance through. The choice of Settlement Agent is a negotiable point in the transaction. As such it is perfectly acceptable for the Seller or Seller's agent to state a preference in the Listing Offering. It is equally acceptable for the Seller to include a choice of Escrow Agent in a counter offer as long as it does not force the Buyer to obtain Title Insurance through a company unacceptable to the Buyer as a condition of the Sale. In other words, the Seller cannot dictate, against the will of the Buyer, that Title Insurance be purchased from a particular source. However, negotiation which is ultimately agreeable to all parties, is not a violation of any State or Federal guideline.

Provided by MAGGIE CLARK Sr. Business Manager, Scottsdale Branch, Equity Title Agency