Who Pays for Title Insurance in Florida Real Estate Transactions? (FAR/BAR Contracts Guide)

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When you’re buying or selling a home in Florida, one key element of the transaction is determining who pays for the title insurance. This insurance protects against any issues with a property’s title, such as claims, liens, or encumbrances. The question of who covers this cost is influenced by local customs and the type of contract being used, particularly the FAR/BAR contract. Let’s break down who typically pays for this insurance in Florida and how the FAR/BAR contracts dictate the process.

Understanding Title Insurance in Florida 

This type of insurance is essential in real estate transactions. It protects both buyers and lenders from future claims against the property. There are two main types:

  • Owner’s Title Insurance: Protects the buyer if someone challenges the ownership of the home due to title issues.
  • Lender’s Title Insurance: Protects the mortgage lender until the loan is paid off. The buyer typically pays for this.

Florida requires clear title on a property before it can be transferred. This type of insurance ensures that any hidden problems (e.g., unpaid taxes or previous claims) won’t affect the buyer’s ownership. The cost of this insurance depends on the sales contract and regional customs.

Overview of FAR/BAR Contracts 

The FAR/BAR contract is the standard real estate contract used in Florida, developed by the Florida Association of Realtors® (FAR) and the Florida Bar (BAR). It is widely used in Florida real estate transactions and contains clear provisions on who is responsible for paying for title insurance and selecting the title company.

Who Typically Pays for Title in Florida? 

In Florida, regional customs determine who pays for title insurance, and the FAR/BAR contract usually reflects this.

  • Seller Pays (in most counties): In most counties, including Miami-Dade, Broward, and Palm Beach, the seller pays for the owner’s title insurance and chooses the title company.
  • Buyer Pays (in some counties): In some areas, such as the Panhandle and some parts of Southwest Florida, the buyer is expected to pay for the title insurance and choose the title company.

County Breakdown:

  • South Florida (Miami-Dade, Broward, Palm Beach): Sellers generally pay.
  • Tampa Bay Area: Sellers typically cover title costs.
  • Panhandle (Escambia, Santa Rosa, Okaloosa counties): Buyers often pay. The FAR/BAR contract will generally follow these regional trends, but the parties can negotiate differently.

FAR/BAR “As Is” vs. Standard Contracts

  • FAR/BAR “As Is” Contract: The “As Is” contract gives both the buyer and seller more flexibility when negotiating who will pay for title insurance. In this case, it’s often negotiable, but sellers typically cover the cost in areas where it’s customary for them to do so.
  • Standard FAR/BAR Contract: In the standard FAR/BAR contract, the default setting follows county customs unless otherwise negotiated. For example, in areas where sellers typically pay for title insurance, the contract will reflect that.

Negotiating Title Costs in Florida Real Estate Deals 

Although there are customs for who pays for title insurance, it is important to note that these terms are negotiable. During contract negotiations, buyers and sellers can agree to adjust who will cover the title insurance and select the title company. If you’re a buyer, don’t hesitate to ask for the seller to cover title insurance, especially in counties where this is the norm.

Closing Costs Breakdown 

When buying or selling a home, title insurance is just one part of the closing costs. Buyers typically cover:

  • Lender’s title insurance,
  • Loan origination fees,
  • Appraisal fees, and
  • Inspection costs. Sellers typically cover:
  • Owner’s title insurance (in most counties),
  • Real estate commissions, and
  • Fees for clearing any outstanding liens or taxes on the property. The specifics of these costs will depend on the contract used and local customs.

How to Choose a Title Company 

Choosing a title company is another important aspect of the closing process. In most cases, the party that pays for the owner’s title insurance policy will also select the title company. However, it’s crucial to work with a trusted real estate professional who can guide you in selecting a reliable title company to ensure a smooth closing.

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When buying or selling a home in Florida, understanding who pays for title insurance is crucial. FAR/BAR contracts generally follow regional customs, with sellers often paying in most parts of Florida. However, this is negotiable, and buyers and sellers can come to their own agreements.

If you’re entering the Florida real estate market and want guidance on navigating title insurance, negotiating costs, or finding the right home, reach out for a free consultation today. Our team is here to help you with every aspect of your real estate journey!

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