Title Insurance Review

I read in the St Petersburg Times yesterday that the State is investigating Title insurance and at the same time I encountered a 'situation' that seems to coincide with some uncertainty regarding the industry.

The situation that I encountered was with a new client of mine who is relocating and sold his previous home with another agent in a different city. I was going through a net sheet (showing him all of the estimated costs relating to an offer I wrote for him) and the title insurance costs were reviewed. I mentioned that it is customary for the Seller to select title companies in Florida, we can always write it in and select it ourselves. I asked if he preferred a company since he just sold his condo, and he mentioned that his agent selected the company and didn't even talk to him about it. I don't want to say that is wrong, but it should have at least been discussed.

I have always had a policy of obtaining 3 quotes for title insurance for my clients or more if the client has a preference. Who they choose if their choice, but I will relay my experience with the various companies since it isn't always the same level of satisifaction. As it turns out, most of my closings are done with one company. They almost always are the least expensive, will always match or beat any other quote, and are always top notch in terms of service and performance. the only financial benefit I recieve is a cookie from their office from time to time. The most important benefit is that my clients receive great service and product, and associate that experience with my performance.

Now, the regulators. I can't say that I understand how the fees are set so I can't comment on a review of them. What I would like to see, however, is a review of the relationships between builders, real estate agents/brokers, and lenders and where any money exchanges hands. Our office used to have a relationship with a title company and could have some ownership, but all of us (agents) had to disclose this up front and have the client sign this disclosure. That title company was simply one of the quotes I would obtain and they would always try to match or beat other quotes, so again it came down to the client and service. Their service went from great to poor and the market has a way of sorting that out and they closed the office.

I would like to know who is obtaining any financial benefit from that title policy (on behalf of my client as well) being issued. Not that it really matters as long as they are among the best priced and offer the best service.

My real issue is the issue of title issuance itself. I very much understand the need for the insurance. I have come across challenges of title in my career. What I don't understand is how there can be so many policies written for one transaction. I understand that there are different risks for different parties, but isn't the search and assurance the same? I mean, there are lenders policies, sellers policies, and buyers policies? Aren't they all insuring clean title and claims against that title? The article mentions 14% of the closing costs are for title. I am assuming that means the sum of each of these policies. I just don't know if that number is the fair number. How open is this market? I understand that the rates are 'set', but by whom and does everyone have to honor them?

My rates are not determined by a governing body, by any stretch. Is this the same for title insurance? I don't know but I guess we will soon.

Why is it so high in Florida, as the article suggests? Maybe it is because our property taxes and insurance is so high? Kidding, of course, but it seems everything can be blamed on those!