In many states it is customary for the Seller to provide the Buyer with an owner’s policy of title insurance. It is then the responsibility of the Buyer to purchase the policy of title insurance covering the lender. Customarily, the two policies of title insurance are issued “simultaneously” by the same title company and the Buyer profits from obtaining a discounted or “simultaneous issue” rate on the lender’s policy.
When purchasing property from a builder, you may find that the Builder is paying a special rate of only $25-$35.00 for the Owner’s Policy of title insurance and you will be paying a full non-discounted rate for your Lender’s policy. This is a common practice in many states in new construction. Title companies often file this Builder discounted rate of $25-$35.00 with the state insurance division for their state. After all, Builders may bring quite a bit of business to the title company and the title search may take a shorter amount of time than normal, allowing for a discounted rate.
You might want to try negotiating with the Builder on the payment of title insurance fees. Ask what rate you will be paying for the lender’s policy of title insurance. If you are being required to pay the full, non-discounted rate, you may be able to negotiate and arrange for the Builder to pay for a portion of this higher rate.
Although many builders may insist that it is customary for the Buyer to pay for all title insurance closing costs in new construction, keep in mind that title insurance fees are negotiable. Be sure to make your negotiations with the Builder clear before you sign the Purchase Agreement.
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