In Washington, it’s customary for the seller to pay for the owner’s title insurance policy and for the buyer to pay for the lender’s policy when a mortgage is involved.
Title insurance protects homeowners and lenders from costs relating to title claims or disputes. The final split is not required by law in every transaction, though, and buyers and sellers can negotiate a different arrangement in the purchase contract.
Whenever a home is bought or sold in Washington, government officials will create a record of that transaction. These records are generally filed in the public archives. In some cases, a house might also have records relating to liens, levies, or other events that affect the ownership of the home.
As a home buyer, the last thing you want to do is purchase a house that has some kind of claim or dispute associated with it. You want to buy a house that is “free and clear.” And that’s where title companies come in.
When you purchase a title insurance policy for a home you are buying, the title company will closely examine all available records pertaining to the property. Specifically, they are looking for potential ownership issues, and they will attempt to remedy any issues they discover.
Despite the thoroughness of this process, there is always a chance that problems could arise later on down the road. And that’s where the title insurance policy comes into play. This special type of insurance offers some degree of protection from financial losses stemming from title-related issues.
In Washington, the customary split is fairly straightforward: the seller generally pays for the owner’s title policy, and the buyer usually pays for the mortgage lender’s policy. The lender’s policy is the one most commonly paid by the buyer in financed purchases, while the owner’s policy is usually covered by the seller.
That said, this is a matter of custom rather than a fixed rule for every sale. Buyers and sellers are free to negotiate a different allocation of title insurance costs in the purchase contract.
“An Owner’s Policy is typically issued in the amount of the real estate purchase price, and remains in effect for as long as the owner, or his or her heirs, retains an interest in the property. In addition to identifying risk before a transaction is completed, the Owner’s Policy will pay valid claims and all defense costs against attacks on the title.”
This means if you have to go to court to defend your right to your home, the title insurance policy helps defend your rights and covers the legal costs associated with the battle.
Are you curious about mortgages, or are ready to apply for one? Sammamish Mortgage can help. We’ve been serving borrowers across the Pacific Northwest since 1992. We currently lend in Washington, Oregon, Idaho, Colorado, and California. Our experienced loan officers can answer any mortgage-related questions you have, and can also provide you with a rate quote. We offer a wide variety of mortgage programs and products with flexible qualification criteria. Contact us now to learn more, or visit our website to get an instant rate quote.
Yes, buyers and sellers can negotiate who pays for title insurance during the purchase agreement.
Lender’s title insurance protects the mortgage lender’s interest in the property.
Title insurance costs vary by property value and title company but typically range from a few hundred to a few thousand dollars.
Yes, title insurance is paid once at closing and provides coverage for as long as you own the home.
No, it only covers issues that existed before the policy was issued.
If covered, the title insurance company will defend your ownership and may cover financial losses.
Yes, title insurance premiums are part of the closing costs paid at settlement.
No, title insurance policies are not transferable and must be purchased by each new owner.
In Washington, it is customary for the seller to pay for the owner’s title insurance policy and for the buyer to pay for the lender’s policy when a mortgage is involved.
No, that payment split is customary but not required in every transaction. Buyers and sellers can agree to a different arrangement in the purchase contract.
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