Who pays for Title Insurance when buying a condo in Florida?

By: Melissa & Denise Stewart

Recently we were asked this question:

"My Realtor told me that I am required to buy title insurance, Is that true, and who has to pay for the Title Insurance Policy?"

This is a very good question, and the answer may surprise you.

In Florida, as a buyer, you are not required to buy an "Owners Title Policy". However, if you are getting a loan, your lender will require that you pay for a Mortgageee Title Policy to protect the Lender, and the cost of purchasing the Owners Title Policy will be greatly decreased, making the decision to purchase a lot easier. As a practical matter, if you are obtaining financing, the cost of obtaining an Owners policy is almost nominal in comparison to your other closing costs.

First question, Is buying an Owners Title Policy necessary? The answer is technically "No", but you need to understand what the consequences are of not having an Owners Title Policy. Let's use a $200,000 single family home as an example... In this case, the price of the Owners Title Policy will be approcimately $1,150. If the question is "Whether or not it is prudent to buy an Owners Title Policy" the answer will almost always be go ahead and purchase the Owners  Policy because it is a 1 time premium, and your entire $200,000 investment will be protected. This protection is mainly against fraudulent activities that might have accured prior to your purchasing the property. The answer may also depend on whether you are forced to buy a Mortgagee Policy to protect your Lender. This is because of the how the pricing works. If you buy both an Owners Title Policy and a Mortgageee Title policy, the price is greatly decreased because of the "Simultaneous Issue" pricing. This makes the cost drastically reduced as long as both policies are purchased at the same time, which usually is the closing. 

So let's acknowledge that it is prudent to buy an Owners Title policy, the next question is: Who should pay for the owners title policy?  The answer is: It depends which county you live in. 

If you live in Dade County or Broward County, the general rule is that generally the Buyer of a property will be paying for the Owners Title policy. Understsnd that this is totally negotiable between the parties, but it is "Customary" for the buyer to pay. In Palm Beach County, the opposite is true, meaning that it is customary for the seller to buy the Owners title policy as part of the closing procedure. Is it necessary for the Seller to pay in Palm Beach County? Absolutely not, it is only typical or customary that the seller will pay.... Can you demand as a Buyer in Broward County that the Seller pay for the Owners title policy? Absolutely, but just make sure if you have a real estate agent that is drawing up your offer that the agent know this, because the contract is what will controll who pays for what at closing time... If the contract says that the buyer will pay for the owners title insurance policy, you will be bound to follow this as part of the closing. 

If you have any questions about title insurance or other closing costs, please contact Denise Stewart at 954 881 9148 or denise @condo.net