How to change your chosen title company after you have a ratified sales contract
You can change title companies with the consent of the seller, through a simple addendum to the ratified sales contract. View our settlement agent-change sample addendum.
What happens if a homebuyer doesn’t about their right to choose a title company until after their sales contract has been drafted, accepted and ratified by all parties, and missed their chance to order services with Federal Title?
Is it possible to change title companies once a title company has been designated in the contract and an earnest money deposit has been deposited to that designated title company?
The short answer is, yes, you can change title companies with the consent of the seller, through a simple addendum to the sales contract. View our settlement agent-change sample addendum.
Once the addendum is completed and signed by all parties, the homebuyer can then use the new title company listed on the addendum.
Even if the earnest money deposit was already deposited, with the addendum in place, the new title company would simply reach out to the old title company and arrange for wire transfer. That’s it!
How might a homebuyer find themselves in a situation where they wish to change title companies after all parties have signed a sales contract with a designated and undesired title company?
First and foremost, we encourage every homebuyer to get closing cost quotes and compare title companies’ costs and online reputations to avoid this situation. We also remind homebuyers that title companies don’t necessarily include all the same services in their settlement fee. Sometimes additional services, i.e., document fees, processing fees, amount to hidden costs, so it’s important to ask what services are included and what extra costs may be charged.
And while it’s technically illegal for real estate agents to fill in the name of a preferred title company if their brokerage has a professional affiliation with that title company, the practice persists. In these cases, homebuyers may not realize until after they have a ratified sales contract that they could have chosen their own title company.
It’s important to ask your agent if his company has a professional affiliation with the title company he’s listed in your sales contract and what benefits or incentives the real estate agent or brokerage may be receiving by recommending that title company. Sometimes the answer is there is no affiliation; the agent is familiar with a certain company and recommends that company from the perspective of good service and pricing.
There’s nothing inherently wrong with an agent directing their client to use their preferred title company, except that it may lead a homebuyer to falsely believe she does not have a choice, or once a title company’s name is written into the contract and that contract is ratified, the decision is set in stone and the title company can’t be changed.
A homebuyer maintains their right to choose their own title company and also has the right to change their mind and choose a different title company.
Two primary reasons a homebuyer may choose to change title companies might be she’s found a title company that charges lower prices and/or provides better customer service than the company initially listed on the sales contract.
This isn’t an invitation to change title companies several times prior to closing or to change for no good reason. Keep in mind any addendum to a ratified sales contract must be signed by all parties, including the sellers. You may risk delaying closing, annoying your sellers or even causing your deal to fall through by abusing your right to change title companies after you have a ratified sales contract.
We put this post together specifically to help those who learned after the fact they could have chosen their own title company and would like to exercise that right.