Q&A - Selecting a Title Company
Selecting the right Title Company (i.e., title insurance company or title agent) that provides title insurance and closing settlement services is one of several key elements to a successful real estate transaction. The largest single financial transaction that a person makes is often the purchase, sale or the refinance of their home. The importance of any settlement service to a real estate transaction cannot be overlooked; and the use of a qualified Title Company will go a long way in making sure that your real estate transaction and closing will be a smooth and enjoyable experience. Deciding how to proceed when choosing a Title Company should be a result of careful consideration and not just based on the mere recommendation of another.
Q&As to help you understand the need to shop your title insurance & closing services
Can shopping for title insurance and closing services save you money?
Yes, it pays to shop. It is important to know that even though the title industry is regulated their filed title insurance rates can vary substantially among title companies, based on each individual transaction. For example, your transaction could be eligible for a discounted premium (i.e., reissue, or short term rate) at one company, but not at another. Depending on the discount program and your transaction, you may save hundreds, if not, thousands of dollars on your title insurance and closing costs. In addition, filed closing fees can also vary from one company to another. See for yourself and run a comparison quote
Why is there such a great difference in costs from one company to another?
Many in the title industry claim these differences represents the level of service that is being provided, which could consist of the company's marketing practices, office locations, employment costs and other business expenses. Regardless of the level of service, it's should be understood that all title companies use the same AmericanLand Title Association® (ALTA) title insurance policy forms that provide the same basic coverages and protections; and the real estate closing format and disclosures are strongly regulated by the Colorado Division of Real Estate and the Consumer Financial Protection Bureau (CFPB).
Do the protections of closing services vary among title companies?
Yes, Colorado's regulatory environment is quite outdated and consequently provides little protection for consumers, especially for sellers; as title companies are not required to undergo a criminal background check or have any form of business coverages (i.e. fidelity, crime, cyber security, errors & omission and general liability insurance) that would be essential in protecting your money, identity and the real estate closing process. Also see Q&A 7
Who selects and pays for the owner's title insurance policy and the lender's title insurance policy?
When selling or buying your home, the Real Estate Commission approved "Contract To Buy And Sell Real Estate" allows the seller and buyer to negotiate who selects and pays for the owner's title insurance, under sections 8.1.1 & 8.1.2. of the Contract. When a buyer is obtaining a loan, the mortgage lender will require a lender's title insurance policy that is typically paid for by the buyer/borrower. An owner who is refinancing their home generally pays for the new lender's title insurance policy; and is allowed to shop and select the title company.
When my real estate broker or mortgage lender recommends a title company, can I assume they shopped and compared services, protections and cost?
No. Real estate broker and/or mortgage lenders are not required to shop and compare services and costs. Some may, but many don't, so ask them if they did. Also, it's known that many real estate brokers and mortgage lenders are associated with certain title companies for their own personal or financial benefit.
Have consumers been harmed by title companies?
Yes. Many consumers are unknowingly harmed by paying more than necessary for their title and closing services, by not shopping and comparing services and costs. Other consumers have lost their entire sales/closing proceeds, due to cyber theft and the embezzlement of the consumer's monies by the owners of title companies. See Q&A 7
How can I better protect my money, personal information / identity and real estate closing process?
As, a seller, buyer or one refinancing their home, it's essential that you request a "Closing Protection Letter" (CPL) that provides you additional protections and assurances directly from the title insurance company / underwriter and not their authorized agent.
Whose responsibility is it to shop and select the title company; and can my real estate broker or mortgage lender insist on using a certain title company?
Consumers are ultimately responsible for shopping and selecting the title company, as provided by the Real Estate Settlement Procedures Act (RESPA) a federal consumer protection law. RESPA also provides that a real estate broker or mortgage lender cannot require the use of a certain title company.
Is it easy for me to shop and compare title companies?
Yes. Simply click on the "Start Comparison" button below and receive a Free comparison of title companies and their costs in a matter of minutes; or, just ask your real estate broker or mortgage lender to shop and compare title companies for you.