How to change your chosen title company after you have a ratified sales contract

Most homebuyers know by now that it’s their legal right to choose their own title company and that shopping for title services is one of the most effective ways to reduce costs at the closing table.

(For those who haven’t heard this, read our content on Marketing Service Agreements and Affiliated Business Arrangements and see for yourself how these common deals jack up closing costs for consumers.)

But what happens if a homebuyer doesn’t learn about this important right until after her sales contract has been drafted, accepted and signed by all parties? And is it possible to change title companies once a title company has been designated in the contract and an earnest money deposit has been delivered to that designated title company?

The short answer is you can change your mind with the consent of the seller, through a simple addendum to the sales contract. View our a 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 delivered, with the addendum in place, the new title company would simply reach out to the old title company holding the funds and arrange for a wire transfer. That’s it!

How might a homebuyer find herself in a situation where she wishes to change her company 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 from several local title companies and compare 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 favorite 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 a right to choose her own title company and also has the right to change her mind and choose a different title company.

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. 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.

A better way to deliver EMDs

Delivery of earnest money deposit checks is about to become incredibly easy and more secure than ever.

We are excited to share with you the benefits of our new partnership with ZOCCAM, a revolutionary service that lets real estate agents and homebuyers send their EMDs directly to Federal Title's escrow account – with just a few taps on their smart phone.

Simply take a picture of the front and back of your EMD check, select Federal Title's escrow account, confirm the information on your check and hit send.

You and the homebuyer will immediately receive email notification that the EMD was received, plus you’ll have saved yourselves the time and hassle of driving a check across town.

ZOCCAM doesn’t contain or hold any financial account information, and all content is encrypted and sent using state-of-the-art security techniques that ensure every client’s non-public personal information is protected.

We're in the final stages of building our partnership with ZOCCAM and believe it’s only a matter of time before this superior method of delivering EMDs becomes standard practice in our business.

We look forward to providing this great benefit to all real estate agents and homebuyers very soon and will keep everyone posted when the service goes live.

Beware of possible malware attack

Several real estate agents and lenders who work with Federal Title recently received an email purporting to be from a Federal Title employee with the same name as a local real estate professional and with a file attachment for download. The email is a scam, and we implore you to delete the email immediately.

If you ever have questions or concerns about an email you received from Federal Title, please do not hesitate to contact us to verify its authenticity. Also, know that we will never ask for or provide personal / financial information through unsecure channels.

Our technology team suspects the email sent last Thursday at approximately 6 pm was a malware attack. Malware is software that’s intended to damage or disable computers and computer systems.

A malware program might log keystrokes of a user to obtain sensitive login information. Malware can create a computer zombie, allowing a hacker to use that computer to conduct other malicious attacks usually without the owner’s knowledge. An estimated 50 to 80 percent of spam sent worldwide is attributable to zombie computers.

This is not the first time a hacker has impersonated a title company, real estate professional – even a consumer – in an attempt to install dangerous malware or gain access to sensitive information. We want our clients to be aware of another common scam we have observed, one that attempts to steal the consumer’s down payment funds via a fraudulent wire transfer. This kind of attack is unfortunately becoming commonplace, and once the funds have been wired to the scammer’s account they are gone.

The Federal Trade Commission posted a bulletin that explains how scammers phish for mortgage closing costs. They offer a few ideas to help real estate professionals and their clients avoid phishing scams.

  • Don’t email financial information. It’s not secure.
  • If you’re giving your financial information on the web, make sure the site is secure. Look for a URL that begins with https (the "s" stands for secure). And, instead of clicking a link in an email to go to an organization’s site, look up the real URL and type in the web address yourself.
  • Be cautious about opening attachments and downloading files from emails, regardless of who sent them. These files can contain malware that can weaken your computer’s security.
  • Keep your operating system, browser, and security software up to date

We also want to remind you that Federal Title takes Internet security very seriously. We use military-grade email encryption technology and adhere to the American Land Title Association’s Best Practices for the proper handling of each and every individual’s non-public personal information, i.e., social security and bank account numbers.

Unfortunately we anticipate malware and phishing scams will remain a threat to our industry for the foreseeable future. The best way to defend against such attacks is to be skeptical of any email that contains an attachment download or requests sensitive information – and always exercise extreme caution when providing sensitive information online.

RSVP to our software demo of Create.io

Create is a Web-based application we recently discovered that is helping us improve how we do business. It occurred to me that other real estate pros might like to see how they can also benefit from this useful tool.

We have organized a live demonstration of Create and invite you to join us at our Friendship Heights office on Tuesday, March 1 at 10 a.m. to learn clever ways you can leverage this software to improve your real estate business. Click here to RSVP.

The application provides excellent insight into the District’s inventory of real property – residential and commercial. It's essentially a clickable 3D map of the city. Click on any building to get a highly detailed report of the property, including such things as ownership, zoning and permits.

Beyond the property itself, Create offers a snapshot of current market conditions and the people currently living in the neighborhood: average household income, educational attainment, cars per household, average commute times and more. We've found this information to be useful for tailoring marketing strategies to the specific audiences and neighborhoods where we work.

I reached out to the developer of this nifty tool, Stefan Martinovic – who told me Create is generating buzz with nearly every active brokerage, developer and investment company in town – and asked him to present a live demonstration at our Friendship Heights office on Tuesday, March 1 at 10 a.m. Click here to RSVP.

In the meantime, you can test the application for free by heading over to Create.io from your desktop browser. Stefan is also offering a 40% discount on the premium subscription with the promo code "CreateLove."

Close It! House of the Week: Completely transformed in Glover Park

Close It! House of the Week: Completely transformed in Glover Park

This week we're looking at a 4-bedroom, 4.5-bathroom attached row house in the Colonial style with a fully finished basement that can be used as an in-law suite or a rental to help offset the mortgage. It's near the Naval Observatory in Glover Park, and it's listed at $975,000.

This house features two massive decks, a fantastic kitchen with pantry and a beautiful exposed brick wall in the entry way. It includes two parking spaces, and there's a Whole Foods and Starbucks nearby.

Click here for more photos.

Assuming a homebuyer puts down 20 percent on a conventional loan, her cash to close number will be approximately $$223,117.96. Monthly payments will then be around $4,219.40 per month.

For a complete picture of the cash to close on any property in the D.C. metro area, including the seller's side of the transaction, try the Close It™ Web app or download the free Close It™ iOS app.

  • Ways to save at closing

    Title charges are the largest chunk of closing costs and can vary by hundreds of dollars.

    Learn more

  • What are closing costs?

    The real estate closing process involves loan steps, legal steps and title steps.

    Learn more

  • What's title insurance?

    Insure your legal ownership just like you'd insure the building, but for lots cheaper.

    Learn more

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Our blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. Rate tables and figures that appear on our blog are deemed reliable but not guaranteed. For current rates & policies, refer to our Quick Quote and Consumer Guide. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on our blog.