Real Estate Settlement Procedures Act
With regard to foreclosed properties where the Selller is actually a lender or financial institution, I have seen numerous instances whereby listing agents are indicating that the title company for a transaction is to be dictated by the Seller. Going further, language in the listing or through communication with the seller representative is indicating that the Seller will not do a deal without the Buyer using the Seller's chosen title company. In effect, Sellers may very well be willfully violating the Real Estate Settlement Procedures Act which specifically prohibits this kind of behavior.
Indeed, I have seen the language specifically stating, "Buyer must use -------- title company..." As well, I was told on one transaction that the Seller would not do the transaction withouth using their title company choice. In this case, the title company performed very badly and close was pushed out a week and a half due to the severe workload at this title company. In effect, my clients were injured.
Per RESPA, the Buyer is given the choice of title company in a real estate transaction. The Seller can suggest, but not insist.
The Real Estate Settlement Procedures Act states:
"Section 9 of RESPA prohibits a seller from requiring the home buyer to use a particular title insurance 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."
As you can see, it is up to Buyers to pursue damages for violation here. Whether buyers can be pulled together as part of a Class Action is a legal question here and may be one that we see going forward.
I have seen instances where the Seller will ask the Buyer to sign a form that states that selection of the title company by the Seller is not a condition of sale. In effect, they are asking for the Buyer to acknowledge the activity but waive the interpretation of that activity. In addition, the form stated that the Buyer would be subject to paying for any closing costs that were higher than the Seller's chosen title company if the Buyer did opt for their title company. So, the Buyer is faced with a potential liability in terms of title company costs if they the Buyer does insist on their own title company.
My hope is that we will see action being taken on this as I believe that Buyers are being seriously injured through this process with respect to biased treatment on the part of title companies affilifated with the Seller/Lenders and through poor performance by those title companies.
David - www.LortiHomesArizona.com
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Date: Wednesday, June, 18th 2008 @ 12:15:59 PMViews: 331
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