When you sell a home, you may ask who pays for title insurance? Usually, the seller is responsible for the owner’s title insurance policy, while the buyer covers the lender’s policy. However, this division of costs can change based on local customs and what is agreed upon in the sales contract.
Whether you’re selling a home in Austin, TX, Seattle, WA, or Atlanta, GA, this Redfin guide will walk you through who pays for title insurance, how it protects both parties, and what to expect at closing.
What is title insurance?
Title insurance provides crucial protection for both homeowners and lenders against possible problems with a property’s ownership history. This coverage ensures confidence that the title is valid and transferable, guarding against issues such as boundary disputes, unpaid taxes, or undisclosed heirs.
There are two types:
- Owner’s Policy: Covers the homeowner’s investment and protects against title defects.
- Lender’s Policy: Protects the mortgage lender’s interest in the property.
>> Read: When Selling a House, Who Pays for What?
Who pays for title insurance?
Typically, the seller is expected to pay for the owner’s title insurance policy, while the buyer covers the cost of the lender’s policy. However, this division of cost is not one size fits all. Who pays for title insurance often depends on local customs and the specifics negotiated in the purchase agreement. Therefore, it is crucial to review the closing disclosure and negotiate the payment terms before the final contract is signed.
Regional differences in payment responsibilities
Payment responsibilities for title insurance can vary widely by region, depending on local traditions and market norms. For instance:
- Seller-pays states: Florida, Texas, and Washington often expect the seller to pay for the owner’s policy.
- Buyer-pays states: In places like California and Oregon, the buyer typically handles both policies.
- Split-cost regions: In some markets, buyers…