Who legally has to pay for the title insurance?

Question:
When we recently closed our home loan, we were shocked to find out that we
had to pay for the title insurance policy. When we previously purchased real
estate in another state, the seller always paid for it. Which is correct, or
is it negotiable?-LL

Answer:
The bottom line is that title insurance can be paid by anyone---buyer,
seller, or third party. In fact, title insurance is not mandatory in most
states, even though it is suggested for the parties' safety in the
transaction. Buyers often assume title insurance is mandatory since it is
required by most lenders and investors who purchase mortgages.

Area customs have the greatest affect on who pays many costs of closing,
including the standard title insurance policy. In fact, purchase agreements
used by REALTORS may contain boilerplate language providing that one party
provide and pay for title insurance. However, such a form could be changed
by mutual agreement between the buyer and seller. Yet other forms leave a
blank so that the parties may negotiate who is to pay the cost.

If you obtained a new mortgage loan in the past, you could have been paying
for the lender's policy (also known as the mortgagee's title insurance or
ALTA policy.) Although this protects the lender, it is typically paid for by
the buyer.

The next time you purchase a property, keep in mind that many closing costs
are negotiable between the parties (unless prohibited by the lender or
disallowed by a particular type of financing.) You can make your preferences
known to the seller in the first draft of your written offer.