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.

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.

Fewer hands in the pie means more pie to go around

Happy Pi Day! What better day than Pi Day to remind homebuyers about all the hands in their "pie" so to speak when it comes to real estate closings.

It's no surprise that everyone wants a piece of the proverbial pie, from the real estate agent's commission to the lender's fees to the government's taxes and, yes, even the title company's charges.

Having to share some of your pie is a fact of life. Having to give up all of your pie is a tragedy of life.

Just like homebuyers, we don't like having to give up our entire pie. That's why we have held firmly as an independent title company – we will not share our pie, or profits, with referral sources through Affiliated Business Arrangements or Marketing Service Agreements.

Not all title companies feel the way we do. They happily share their pie with their referral sources because they believe they can make it up by taking more pie from unassuming homebuyers. Unfortunately, they are often right.

Homebuyers who understand how much dough is at stake, however, are often surprised by the cost difference between one title company to the next. When made fully aware of these differences, most homebuyers choose to spend less.

With fewer hands in the pie, as our company founder Todd Ewing likes to say, there's more pie for everybody. In this case it means a cost savings of up to $750 for our clients.

The cost savings we extend to our homebuyers is part of our revolutionary REAL Credit™ program, which reflects costs passed through to consumers who close with other, affiliated title companies. To date, the cost savings hovers above $8 million.

That's a lot of pie.

Income, purchase price limits for DC Tax Abatement increase

Income, purchase price limits for DC Tax Abatement increase

The purchase price and qualifying income limits for the District of Columbia's popular tax abatement program have gone up, according to the Office of Tax and Revenue, which should be good news for local homebuyers who have seen median home prices soar over $500,000 in recent months.

Under the latest guidelines, purchase price may not exceed $408,000. Somewhere in the neighborhood of 400 homes are currently on the market in Washington, DC at a list price that meets the purchase price qualification for DC Tax Abatement, based on a quick search on Home Snap.

Limits on household income, the other major qualifying factor for DC Tax Abatement, also increased. Review the income qualification table below:

Persons in household
Household income limits
1.
$57,120
2.
$65,280
3.
$73,440
4.
$81,600
5.
$88,140
6.
$94,680
7.
$101,220
8.
$107,760

For those who haven't stopped by in a while, we recently revamped our page on the DC Tax Abatement program. There we answer several commonly asked questions about the program and address some of the finer points on qualification criteria. The topic of household income, for example, is a popular one.

The DC Tax Abatement program is one of our favorite topics to write about. Check out our collection of articles on DC Tax Abatement to learn more about how the program works and how to qualify.

What to do when the home seller has dementia?

A Power of Attorney allows a person with dementia ("the principal") to name another individual ("the agent" or "attorney-in-fact") to make financial and other decisions when the person with dementia is no longer able. 

As with any Power of Attorney, the decision in regards to who to appoint as the attorney-in-fact should be made after careful consideration.

In addition, a successor agent should be named in the event the original agent is unavailable or unwilling to serve.  

The Power of Attorney does not give the appointed person the authority to override the decision making of the person with dementia. The person with dementia maintains the right to make his or her own decisions as long as he or she has legal capacity.

However, just because there is a Power of Attorney, it does not mean that the title company will allow it to be used for the sale of the property. If you plan on using a Power of Attorney for an individual with dementia, be prepared to answer the following questions: 

  1. When was the Power of Attorney executed?
  2. When was the principal diagnosed with dementia?
  3. What is going on with the current transaction?  
  4. How are the funds to be disbursed?
  5. Who is the attorney in fact and what is that person’s relation to the principal?

When dementia is involved, there is always a concern that the principal may not have been competent at the time the Power of Attorney was executed. 

The best way to persuade the title company to use the Power of Attorney is to obtain an affidavit from the principal’s physician setting forth the approximate date that the principal was diagnosed with dementia and a statement that at the time of the execution of the Power of Attorney, the principal was mentally competent and did have the capacity to understand the nature and significance of the Power of Attorney that he or she signed.  

Without this document, most title companies will hesitate to allow the use of a Power of Attorney for an individual with dementia, based on a fear that the Power of Attorney might in the future be declared invalid if it was executed after the principal lacked the capacity to make decisions. In the event of a future challenge to the validity of the Power of Attorney, the title company will want to prove that it properly vetted the validity of the document. 

So what can be done if the title company will not allow the use of the Power of Attorney and the individual is no longer able to make his or her own financial decisions?  

A guardian or conservator will need to be appointed by the court.   

A guardianship or conservatorship is not common, but it can be granted by the court when it finds that a person is totally or partially legally incapacitated. 

Since the procedure for obtaining a guardianship or conservatorship varies per jurisdiction, you should consult with an attorney if you are considering this possibility. 

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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.