Title Insurance - The template says seller pays. Why?

On the templates provided in RE Tipster, in the purchase agreement for a deed of trust and land contract documents, the Title Insurance Required section says: “Seller shall provide to Buyer, at Seller’s expense, an Owner’s Policy of Title Insurance…”. Since that was a selectable option in the template, my buyer demanded the title insurance and that I pay for it. I couldn’t really say no since I was the one who provided it. My title agent suggested I change the language for the next deal. Wondering why this language is in there? Thanks.

@jamesrpett, in most “normal” real estate transactions I’ve seen, the seller pays for the title insurance policy because they’re essentially protecting themselves (assuming the seller is using a Warranty Deed, where they’re promise the title is clear). If a title issue arises from that moment backward, it’s the seller’s problem because they sold a property with a title issue. That’s why they’re paying for the policy… so, what you’re being asked to do isn’t abnormal per se.

Keep in mind, though, what’s “normal” can vary from state to state.

When we buy from a motivated seller, that isn’t a normal transaction. If title insurance is purchased at all, we, as the buyers are paying for it simply because the seller is getting paid a very low price.

In the future, if you know you don’t want to pay for it on the selling end, then yes you could change the wording so that the other party pays for it (or you could charge a big enough closing fee to recoup your costs, so the buyer is effectively paying for it through the fee). Anything can be negotiated in that purchase agreement.

@retipsterseth Great, thank you. That’s good information to know. It just caught me a bit off guard, especially after reviewing the language in the disclosures statement I needed to send next, which states in the first paragraph, “Buyer recognizes that the seller has not made, does not make and specifically negates and disclaims any warranties, representations, commitments or guarantees as to the title of the above mentioned property. Buyer acknowledges that seller is not providing a title commitment for the
property…” As a result, I had to change that language to say, “Seller shall provide to Buyer an Owner’s Policy of Title Insurance disclosing that the property is clear of any liens, encumbrances, mortgages…” However, I still kept the last sentence, which stated, “Buyer will not hold seller liable…”

By the way, Seth, your course has been fantastic. A true testimony to your forethought and due diligence to provide necessary information for us newbie land investors. Just got paid for my first deal yesterday. Paid $8,000 for 5 acres in Tennessee ($10,000 all in after closing costs and other fees) and sold it 2 days later for $23,000. Pretty sweet. Anyway, just wanted to thank you.

@jamesrpett ah, yes, I can see how that would be confusing.

That disclosure statement is sort of a “catch-all” that is supposed to keep you clear of any liability (at least, that’s the goal), in ANY selling scenario, which is why that’s included in there, for the situations where you aren’t providing title insurance. But you’re correct, in this instance, that would be an inconsistency between the two documents. It sounds like you handled it the right way.

And thanks for the helpful feedback on the course! That first deal sounds awesome! That’s a solid payday, and I’ll bet that gives you a nice energy boost to keep the wheels turning. :slight_smile: Thanks for letting me know about that! Super encouraging to hear.

@retipsterseth I appreciate the follow-up. Well-deserved recognition. I have several other deals in the hopper, including my first owner-financed deal, which I hope yield good result. Trying out Zimplemoney with that one. I’ll keep you and the group updated on the progress. Thanks again and have a great weekend!