While the buyer typically pays the title costs in a real estate transaction, the contract ultimately dictates which party is responsible for the charges. However, because the buyer is the one who is actually obtaining title to the property, it is the buyer who most often pays the costs associated with insuring that title. That being said, some costs, including transfer taxes, could be borne by the seller, depending on the state in which the the property is located.
As with any real estate transaction, the negotiated contract dictates the terms of the deal, including who is responsible for various costs. In a boilerplate real estate contract, the terms typically state that the buyer is responsible for all costs associated with obtaining title insurance, unless the contract alters those obligations.
Buyer's Closing Costs
A buyer is responsible for several title charges, depending on the state in which title insurance is being obtained. In addition to miscellaneous closing expenses, such as as an appraisal report, credit report and an escrow service charge, the buyer is almost always responsible for paying at least a portion of the title insurance premium and state recording and filing costs.
Seller's Closing Costs
While every state has different tax regulations, the seller typically must pay any applicable transfer taxes. In a real estate transaction, the title company ultimately picks up those costs, and the seller is obligated to reimburse the title company. Additionally, if there was a mortgage on the property, the seller must pay the title company to record a document saying the mortgage has been paid.
Other Closing Expenses
Other title company expenses should be taken into account. For example, if real estate taxes are due within 30 days of a closing, the title company must pick up the taxes, and the buyer will reimburse the title company at closing. Additionally, a title company often charges a title closer fee for a representative of the title company to attend the closing, which the buyer also pays. It is also customary for the buyer to tip the title company representative at the conclusion of the closing.
- New York State Land Title Association: Title Insurance, The Industry Perspective
- Home Closing 101
- New York State Department of Financial Services: State of New York Insurance Department
- Consumer Financial Protection Bureau. "What is owner's title insurance?" Accessed August 1, 2020.
- Old Republic Title. “What Is Title Insurance and How Does It Work?” Accessed May 22, 2020.
- Zillow. "What Is Title Insurance and Do I Need It?" Accessed August 1, 2020.
- GovInfo. "Public Law 93-533-Dec. 22, 1974," Page 1728. Accessed August 1, 2020.
Ryan Stearns has contributed to various online legal publications. He received his J.D. from New York Law School and his B.A. in political science from SUNY College at Buffalo.