Title Companies.. they are not all the same

In Maryland, the buyer has the right to choose the title company that will handle the closing of the transaction.  Very few buyers have a close relationship with any title company, so they seek the advice and/or counsel of their real estate agent.  Seems like a reasonable thing to do.  After all, real estate agents should have a good idea about title companies.

The first thing you should know is that the amount of money you can be charged for title insurance in Maryland is pretty much set by the State.  It will not or should not vary much from one title company to another.

Title companies can charge whatever they want for other fees associated with the transfer of property. Of course, the current HUD-1 in use in Maryland (a breakdown of how the money flows in the transaction) reveals the title companies charges on page two. I know that the settlement charges to the buyer and seller appear on page one, but that figure is a gross figure that includes all the charges.

The actual breakdown is on page two, where the buyer’s charges appear in one column and the seller’s charges appear in another. You just have to go down to the 1100 section Title Charges and see what is being charged each side. The biggest numbers involve title insurance. There is lender’s title insurance (required by the lender) and there is owner’s title insurance (optional). I will forever fall on the side of the equation that believes purchasing owner’s title insurance is absolutely necessary. It is a small price to pay for coverage of any lies, deceit or malfeasance that may have occurred prior to the buyer taking title.

Of course, it is always a good idea to ask your agent if there is a title insurance policy on the home you are buying that has a re-issue rate available.

Beyond those charges, there are minimal fees for closing the transaction. Note, the buyer usually catches a break here because they have chosen the title company. (If the title company wants to realize $250 per closing, they will just dump the cost on the seller’s side and leave the impression that they have done a wonderful thing for the buyer. “See the benefit of choosing our firm to handle the transaction?”)

There will be other costs. An abstract or Title Search fee will be there. Larger title companies have folks that do this in-house and smaller firms contract out for the service. You pay what the title company decides you should pay, regardless of the actual cost of having the search done.  I often wonder if there were a six or seven layers of contractors in title searches if the cost to the consumer would be so beefed up they would need a second trust to cover it? Sort of layer 7 charges layer 6 $X for doing the search and then layer 6 charges layer 5  $X+10%=Y, and layer 5 charges layer 4 $Y+10% and do on.  I am not sure there is no law preventing that from happening. Laws are written by lawyers and you know how that goes.

The final fee is Deed Preparation. This fee remains $100 +/- with most firms.  Even though, boiler plate deeds are available and computers have replaced typewriters and deeds can be whipped out in minutes, you are paying whatever the market will bear. Don’t fall for the old, “I am liable for any mistakes” statement. During closing, you will be asked to sign a form allowing the title company to make any corrections necessary to any of the documents.  Just understand, Deed Prep is priced according to the desires of the company.

Don’t get me wrong, The title company should be paid. It is real estate and everyone should get paid. Oh, and everyone does get paid.

So, what is the difference in title companies?  Some actually offer support. Some actually go overboard when making sure the transaction closes when and where it is required.  Some readily answer any and all questions. Some are available to “hold hands” or “resolve differences” or “work through challenging issues”.

I have had the good fortune to work with many of the title companies in the area. It is no secret that many brokers have a “close” relationship with some title companies. A little thing called RESPA (a federal law that frowns on “kickbacks for referrals, etc.”) caused a stirring of the pot in those broker/title company relationships. Some brokers still own a piece of a title company, and for the “convenience of the consumer” offer them office space in the broker’s building. Others just label the title company that shares a cozy relationship with them as “preferred providers”.  NOTE TO CONSUMERS: Preferred provider label indicates preferred by broker.

When my buyer clients ask me for the name of a title company, I always share Capitol Settlements. 240-599-2200.  Every time my clients either choose someone else or find themselves contractually forced to use another title company, my support of Capitol Settlements grows. I don’t have a dog in the fight. I have a client that deserves the absolute best in service. Capitol Settlements provides that service to both sides equally.  They answer phone calls. They handle closings off site. They work with folks locally and out of the area. They get the job done.  They are the go to title company for many banks in the area. The fees they charge both sides are usually equal to or less than what other firms quote.

So the money is the same. Why go with anyone else? I would not dare recommend anyone else.

Capitol Settlements  240-599-2200