Thread: Being forced to use particular title company in a short sale?

No one can force you to use any particular title company. However, what they can do is not pay closing costs that the seller customarily pays. Closing costs and who pays what varies form state to state but here it is normal for the seller to pay the owner's title policy. What banks will do is say you can use any title company you want but if you don't use X company we will not pay the owner's policy.

This is usually enough to coerce people to use the title co. of their choice. They may own part of the title company or not, but most likely the real reason they want you to use them is because that particular title co. has worked with them before and the process will go much smoother for them.

Listen to your agent as long as it is not in writing. The law says they can not force you to use a specific title company if you are paying for it.

If the seller is paying for it then they can use whoever they want and you will have to oblige.

Here in Minnesota my understanding is that neither a Title Company nor an Agent can dictate where you close, however the seller can dictate. When in doubt I would write and addendum up front stating the buyer will close with the title company of their choice.

I don't see the problem. Of course the seller cannot dictate where the buyer gets their title policy from, but why wouldn't you just roll with it?

I specialize in short sales and I have quite a few listings. If a buyer (or their agent) requests a certain title company, I usually counter it back with my title company. The reason for this is because I have mostly likely opened a file for that property with the title company already. They have ordered the preliminary title report and started the process. And if I close all of my short sales with one title company, don't you think it would be a smoother transaction for everyone involved? Plus the fees are typically the same no matter where you go. Another thing to remember is that some title companies don't have an escrow officer specializing in short sales. There are others that do. This means that the ones that do will have more knowledge of the process.

If I were you, I would just go with their title company. If the seller's agent is pretty adamant about the title company, that must mean something. It probably means that they will do a good job with the transaction. I hope my outside opinion helps.

Since this is a short sale it is my guess that it's not the seller but the seller's mortgage company dictating this. I am sure the lender wants this transaction to go as smoothly as possible as well, banks are not in the business of owning real estate as we all know.

RESPA - The Real Estate Settlement Procedures Act states the buyer can choose their own title company. As long as the fees are not a huge difference, it may be in your best interest to close with a title company who is familiar with the short sale process. The dynamics of closing a short sale are much different than a traditional real estate transaction. A late HUD delivered to the bank can delay the closing, especially in a state that table funds.