Homeowners often wonder who sets the fees charged for title insurance and title searches. Are they regulated by the state or by the individual title companies? Are these fees negotiable in any way? Buyers and sellers often accept these charges without question, accepting the fees as set forth by the title company or closing agent.
The answer is that title insurance fees are not all alike. The fees may vary from state to state, and may not be set by law in every state. In many states, each title company may set its own rates and then will file those fees with the state insurance commissioner. Once filed, those fees must be adhered to. In other states, there may be a rate, called a “promulgated rate” which is the minimum amount set by state law which a title company must charge for title insurance and title searches, but the title company is allowed to charge a higher rate, if it wants to.
Although this might sound confusing, the answer is to question your title or closing agent at the beginning of your escrow as to what the charge will be for title insurance. You might ask if your closing agent is charging the lowest rate allowed by state law. You might want to shop around for title insurance and closing fees. You may find that the fees vary from title company to title company.
Even a small savings of $50 to $100 would be worth your time and effort in shopping for the best title insurance rate. Since there are many closing costs which are not negotiable and which you will be required to pay for, any savings in these closing fees will be appreciated when you have to submit your final check to close the transaction. If you are the seller in the transaction and required to pay for the title insurance, any savings would be reflected in the amount of money you receive back with your sales proceeds.
Many title companies combine the title insurance premium together with the closing, search and exam fees. This may be the industry standard in your state. In the state of Florida, for example, many title companies typically charge a fee of $730.00 for a home with a purchase price of $131,000.
This fee includes the title premium, closing, search, and exam fees. The rate goes up proportionally with the sales price. There might be additional fees if any endorsements are required, which generally run about $35.00 a piece. Your title company or closing agent will be able to give you the exact fees they will be charging for your title closing costs.
Copyright © 2000 Sandy Gadow. This column may not be resold, reprinted, resyndicated or redistributed without the written permission from Escrow Publishing Company.
What is the special discount which can be given in Florida?
In 2000 the Florida state legislature passed a decision which stated that the existing statute stating that title insurance agents may not rebate a portion of their risk premium was found to be unconstitutional. What this means is that a title company, or closing agent, may now, at their discretion, discount the percentage of profit which arises from issuing title insurance. For example, when issuing title insurance coverage, the closing agent typically must give the underwriting insurer 30% of the title insurance premium and the closing agent keeps 70% for itself (or it’s company). The Butler Law allows the closing agent to discount that portion (70%) of the title premium. Mark Pilatowski of www.myclosingspace.com explained how his company discounts title premiums in Florida. For example, on a $300,000 purchase, let’s say the published title insurance rate for an owners or lenders policy is $2,000.00. The underwriting insurance agency gets 30% , or $600.00 in this case, which is needed to maintain the financial stability of the insurer to pay future claims. The remaining $1,400.00.00 goes to the closing agent. The model which Myclosingspace.com uses is to share the 70% portion with the consumer, giving them back 40% of the premium, or $800.00, and myclosingspace.com keeps 30%, or $600.00. It depends how much of the 70% your closing agent may be able to refund back to you, as it will depend on the agent’s costs to operate his title company (or law office).