One of the most overlooked yet crucial aspects of a real estate transaction in Florida is understanding who “picks and pays for title” under the FAR/BAR (Florida Realtors/Florida Bar) contracts. For both buyers and sellers, having clarity on this issue is essential, and it is critical that a real estate agent guide them through this part of the transaction. Properly explaining this aspect of the contract to a buyer or seller not only builds trust but also helps avoid confusion and surprises at the closing table.
Understanding Title Selection and Payment in FAR/BAR Contracts
What Does “Picking and Paying for Title” Mean in Florida?
Paragraphs 9(c)(i), 9(c)(ii), and 9(c)(iii) of the FAR/BAR contracts outline who is responsible for picking the Closing Agent and paying for the Owner’s Policy and Charges. The costs included in the Owner’s Policy and Charges are:
- The Owner’s title insurance premium.
- The cost of the municipal lien search.
- The closing agent’s settlement fee.
- The cost of the title search.
Determining who “picks and pays” for title can vary depending on the property’s location. However, it is important to remember that this is negotiable between a buyer and a seller, regardless of the customary practice in the area.
Financial Considerations of Title Insurance and Other Costs
Title insurance premiums are generally based on the purchase price and range between 0.5% and 1% (Use our Title Calculator for calculating title premiums). With real estate transactions often involving significant sums of money, knowing who bears this cost can affect the negotiation process. Misunderstanding or a lack of awareness about this responsibility can lead to disputes and delays at closing.
Advantages of Choosing and Paying for Title
Although many buyers and sellers look primarily at the financial impact that picking and paying for title will have on their transaction, there are important benefits to picking and paying for title. A party that picks and pays for title has the ability to choose the Closing Agent that they feel will handle the transaction efficiently. The Closing Agent will be able to coordinate and communicate with their title underwriter and third -party vendors (such as the lien search provider and surveyor), which will allow for a smoother closing process. Additionally, suppose the Closing Agent is a law firm, then the law firm will represent the party in the transaction that is picking and paying for title which adds an extra layer of protection for that party in the transaction.
The Role of Real Estate Agents in Title Selection and Payment
Avoiding Surprises at the Closing Table
As a real estate agent, it’s critical to ensure that your clients—whether buyers or sellers—fully understand who is responsible for selecting the Closing Agent and paying for the Owner’s policy and Charges. It is important to explain how this decision impacts the transaction, including the financial obligations it creates. We often see situations where a party was unaware of the financial implications of their decision to “pick and pay for title,” which can often lead to uncomfortable conversations either a few days before closing or even at the closing table. By understanding and being able to explain what “picking and paying for title” means and the cost associated with this decision, a real estate agent can ensure that their client(s) make informed decisions, avoid surprises, and ensure a smoother transaction.
Conclusion
By clarifying this essential part of the FAR/BAR contract, a real estate agent can ensure that a buyer or seller is prepared and confident throughout the transaction while simultaneously avoiding any last minute issues at the closing table. Ultimately, a well-informed client leads to a successful and seamless real estate transaction.
