A few days back, a question about who must pay for title insurance in Florida landed in my inbox. For a comprehensive answer to this question, there are a few things that should be addressed, especially if we consider that title insurance works a little bit differently in the Sunshine State compared to other states.
Who Pays for Title Insurance in Florida?
Though in some areas of Florida, it’s customary for the buyer to pay for title and closing services, in most cases, the seller is the one who covers the cost of title search and owner’s policy, while the buyer purchases the lender’s policy (to find out how the owner’s policy differs from the lender’s policy, I invite you to read my previous blog post, What Is Title Insurance?). What many people don’t know is that who pays for title insurance is actually a negotiable item in home purchase agreements, meaning that title-related expenses can be covered by either party.
Another essential aspect is that, according to Section 9 of RESPA, sellers can’t require home buyers to use particular title insurance companies. The party paying for the title search and owner’s policy is entitled to select the title company.
Making an Informed Decision
Whether you’re selling or buying, there are three important things to consider before negotiating the contract.
First, depending on the value of the property, the owner’s title premium can be expensive. Title rates are established according to Rule 627.7825 in Florida Statutes. Currently, the title policy premium is: 5.75‰ for the first $100,000; then, 5‰ should be added over $100,000 up to $1 million; 2.5‰ over $1 million up to $5 million; 2.25‰ over $5 million up to $10 million; and 2‰ over $10 million coverage.
Second, the person who pays for the owner’s policy gains control over the closing process. If you agree to pay for the owner’s policy, you have the right to choose the title insurance company. Since most companies also provide escrow and closing services, you can ensure a quick and secure transfer of property.
Third, you may qualify for a reissue rate and get a substantial discount. To be eligible for a reissue rate in Florida, the previous title policy must have been issued no more than three years prior to the reissue date. The reissue rate is calculated according to the same Rule 627.7825, as follows: 3.3‰ for the first $100,000; then, 3‰ should be added over $100,000 up to $1 million; 2‰ over $1 million up to $10 million; and 1.5‰ over $10 million coverage.
How much can you save if you qualify for a reissue rate? Let’s say you buy a home for $100,000 and get an owner’s title policy for the full value of the property. Within 3 years, you decide to sell and close escrow for $150,000. The insurance rate for that value would be $825 ($575 for the first $100,000 plus $5 for each $1000 thereafter, calculated to be $250); if you qualify for a reissue rate (up to the existing owner’s policy amount of $100,000), you’ll only have to pay $580 (a savings of $245.00). Reissue rates are calculated by taking the Full premium of the existing policy of $100,000 ($575.00) minus the Reissue Rates ($330.00). That figure ($245.00) is subtracted from the new sales price premium rates of $150,000.00 ($825.00).
Title insurance issued by Guardian Title & Trust provides a broad range of benefits to all the parties involved in real estate transactions, including sellers, buyers, creditors, real estate agents and builders. To benefit from excellent service, personal attention and dedication, call our team today at (904)-992-1162, email firstname.lastname@example.org or submit a title quote request online.