A Seller may have violated RESPA without realizing it...
Updated: Jun 16, 2020
RESPA is the Real Estate Settlement Procedures Act. This Act was passed by the United States Congress in 1974 and codified as Title 12, Chapter 27 of the United States Code, 12 U.S.C. §§ 2601–2617. This governs all parties to a transaction, including third party professionals such as realtors, lenders and settlement agents (title agents).
When a buyer presents an offer to a seller for the purchase of real property, there is usually a title company already selected and written on the first page of the offered contract. A seller can accept the offer without suggesting or changing the title company for the transaction. This is normally how a title company is selected for a closing. A buyer has the right to shop around and select a title company to represent them in the closing as the title agent.
What happens if the seller counter-offers and changes who the title company is on the buyer's offer? This can only be done if the seller also pays for the buyer's title insurance policy. Otherwise, a seller forcing the change of the title company from the one the buyer selected is a violation of RESPA. It is perfectly okay for a buyer's realtor to recommend a title company or give the buyer several options and help them make the final decision. Remember, you as the buyer decides who represents you in a closing. The violation of RESPA comes when the seller requires the buyer to use the seller's settlement agent (title company) instead of selecting of allowing the buyer to select their own and refuses to pay the title insurance policy for the buyer.
Therefore, it is a violation of Section 9 of RESPA for a seller to require a home buyer to use their title company, "... [p]rohibits home sellers from requiring home buyers to purchase their settlement services from a particular company either directly or indirectly, as a condition of sale. Buyers may sue a seller who violates this provision for an amount equal to three times all charges made for the title insurance."
If a seller is forcing you to use a particular company, remember you have the choice of title company, not the seller. Seller can select an attorney to represent them in the transaction separate on the title company. Both parties do not have to use the same company. Think of it as each party has their own attorney for the transaction.
This information is not given as legal advice. Please contact an attorney regarding your specific situation. Throughout this post we are focusing on the area of Miami-Dade and Broward County, Florida.
*Disclaimer: Villa Title & Closing Services, LLC is not a law firm and is not providing legal or tax advice in this post. For Tax and/or Legal advice, please consult with a licensed Attorney.
The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. Contacting us does not create an attorney-client relationship.
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