ATTORNEY LETTER OF OPINION VS TITLE INSURANCE POLICY
In short, an Attorney Opinion Letter (AOL) may save the consumer money on the front end, HOWEVER, unlike a Title Insurance Policy, the Buyer/Homeowner has virtually no recourse and will be responsible for any liens associated with the property that may have been missed during the title search. Please review the comparison table below.
Whether you are selling your home For Sale By Owner or via a licensed Real Estate Agent, Real Estate Broker, Realtor, it is important to note the DIFFERENCES between an Attorney Opinion Letter (AOL) and varying coverage offered by the three different Title Insurance Policy options.
- Should a TITLE ISSUE arise on a property covered by an Attorney Opinion Letter (AOL) only, the buyer would need to prove negligence on the part of the attorney to pursue the claim with them. See RISKS of Alternatives to Title Insurance.
- If not proven, a claimant HOMEOWNER would likely need to pay the legal costs involved to litigate the title matter, posing a financial burden and a significant risk.
WHO SHOULD PAY FOR IT
The subject of a Title Insurance Policy leads to an interesting question. WHO SHOULD PAY FOR IT – the SELLER OR BUYER? A purchase agreement is to be negotiated between the Buyer and the Seller and every aspect therein is NEGOTIABLE! Clearly the way title insurance is addressed within the purchase contract needs to be a discussion point. Which party pays varies throughout the state. In northeast Ohio most purchase contracts have the Seller and Buyer splitting the cost of title insurance 50/50, in central Ohio most purchase contracts have the Seller paying for it in its entirety and in Southern Ohio most purchase contracts have the Buyer paying for it. The Cincinnati and Dayton Boards of Realtors revised their contract to reflect 3 options for the Buyer to choose from 1. No title insurance policy 2. Seller to contribute $300 toward a title insurance policy 3. Buyer to pay for title insurance policy.
There is a lot of talk about creating a statewide purchase agreement for use by ALL the Boards of Realtors. As a Real Estate Broker, I believe the Buyer and Seller, whether For Sale By Owner, Full Service or utilizing an Ohio Flat Fee MLS Listing Service as offered by Ohio Broker Direct, should be made well aware of ALL of their options and understand they have the right to negotiate who pays for each item on an individual basis. Should this come to fruition, as a Real Estate Broker, I would like to see 4 options as checkbox selections on the purchase agreement. This selection may not be binding as it can always be modified via counter offers during the course of negotiation.
- Buyer does not a select Title Insurance Policy
- Buyer pays for the Title Insurance Policy (specifying which type of policy they prefer)
- Both Buyer and Seller each pay half of the Title Insurance Policy (specifying which type of policy they prefer)
- Seller pays for the Title Insurance Policy (specifying which type of policy they prefer)
If you are interested in learning more about Title Insurance, you might consider consulting with a real estate attorney, your local title insurance company or viewing the numerous resources available online.
Joan Elflein, Broker / Ohio Broker Direct
Ohio Broker Direct & its Brokers or Associates assumes no responsibility or liability for any errors or omissions in this blog, we advise all participants in buying or selling real estate to enlist the services of a Real Estate Attorney.