In Washington, who pays for title insurance usually breaks down this way: the seller pays for the owner’s policy that protects the buyer, and the buyer pays for the lender’s policy that protects the bank. This split is custom, not law, so your purchase contract can assign the costs however you and the other party agree. For a home priced between $400,000 and $700,000, the owner’s policy generally runs $1,000 to $2,500, and the lender’s policy costs considerably less when ordered at the same time.
Why the Seller Usually Pays the Owner’s Policy
According to the Washington Office of the Insurance Commissioner, most sellers pay for the owner’s title insurance policy.1Office of the Insurance Commissioner. Title Insurance The reasoning is simple. The seller is the one claiming to deliver clean title, and paying for the owner’s policy backs that claim with a financial guarantee to the buyer.
The owner’s policy protects you as the buyer against problems buried in the property’s history: undiscovered liens, forged documents, inheritance disputes, and recording errors.1Office of the Insurance Commissioner. Title Insurance Before the policy issues, the title company searches public records for unpaid taxes, judgments, and anything else that could cloud ownership. Most problems get caught and cleared before closing.
You pay the premium once at closing, and coverage lasts as long as you or your heirs own the property. The exact premium depends on the purchase price and the insurer’s filed rate schedule. Washington law requires every title insurer to file its premium rates with the state insurance commissioner, and no rate change takes effect until at least fifteen days after filing.2Washington State Legislature. RCW 48.29.140 Premium Rates – Required Filings – Transition Date Set by Rule You can ask the title company how its rate was calculated and confirm it matches what was filed.
Why the Buyer Pays the Lender’s Policy
If you’re financing the purchase, your lender will require a separate title policy that protects the bank’s investment. That cost falls on you as the borrower, because the policy exists solely to satisfy the lender’s requirement for releasing mortgage funds.1Office of the Insurance Commissioner. Title Insurance Without it, the loan does not close.
Lenders are particular about the form. Fannie Mae, for example, requires lender’s policies to be written on a 2021 ALTA Loan Policy form or an equivalent state-promulgated form.3Fannie Mae. General Title Insurance Coverage These are extended-coverage policies that go beyond standard coverage, picking up risks a physical survey or inspection would reveal, like boundary encroachments or unrecorded easements.
The lender’s premium is calculated on the loan amount, not the full purchase price, so it costs less than the owner’s policy. When both policies are ordered through the same title company at the same time, you get a reduced “simultaneous issue” rate that typically brings the lender’s policy down to roughly $400 to $800.
One point worth being clear on: the lender’s policy only protects the bank. Its coverage shrinks as you pay down the loan and ends when the mortgage is paid off. If you want protection for yourself that lasts as long as you own the home, you need the owner’s policy too.
How the Purchase Contract Can Change This
The standard residential purchase agreement used across much of Washington is the Northwest Multiple Listing Service Form 21. It has checkboxes where the parties decide who pays for the owner’s policy, the lender’s policy, and escrow fees. The default sends lender’s title insurance to the buyer, but the rest is open to negotiation.
In a strong seller’s market, a buyer might offer to cover both policies to make an offer stand out. Picking up the seller’s customary $1,500 or $2,000 expense can be more attractive than nudging the offer price up by the same amount, because it reduces the seller’s guaranteed closing costs. In a buyer’s market, the reverse happens: sellers may agree to cover the lender’s policy as a concession.
Whatever the parties negotiate ends up on the settlement statement, and the escrow agent distributes funds accordingly. The written contract controls. If it says the buyer is covering the owner’s policy, that is what happens regardless of local custom.
You Get to Pick the Title Company
Federal law adds one rule the parties cannot negotiate around. Under the Real Estate Settlement Procedures Act, a seller cannot require you to buy title insurance from a specific company as a condition of the sale. The statute is blunt: no seller of property purchased with a federally related mortgage loan can directly or indirectly require the buyer to use a particular title insurer.4Office of the Law Revision Counsel. 12 USC 2608 Title Companies Liability of Seller
A seller who breaks this rule is liable to the buyer for three times all charges paid for the title insurance.4Office of the Law Revision Counsel. 12 USC 2608 Title Companies Liability of Seller If you paid $2,000 for a title policy and the seller improperly forced you to use a particular company, you could recover $6,000. The protection matters most when the seller is a developer or builder with a financial relationship to a title company.
Washington reinforces this with its own anti-kickback rule. RCW 48.29.210 prohibits title insurers and their agents from giving fees, kickbacks, or anything of value as a reward for referring title business.5Washington State Legislature. Washington Revised Code Chapter 48.29 Title Insurers If your real estate agent, mortgage broker, or escrow officer is pushing hard for a specific title company, it is fair to ask why.
Refinancing: The Cost Is All Yours
Refinancing creates a new mortgage, which means the lender needs a new title policy. There is no seller to split with, so the full cost falls on you. The title company runs a fresh search to confirm nothing has attached to the property since your original purchase.
The savings most borrowers miss is the reissue rate. If you can provide a copy of your existing owner’s policy or prior lender’s policy, most title insurers will issue the new policy at a reduced premium. The discount varies by insurer and the age of the prior policy, but it can meaningfully cut the bill. It is not applied automatically. If you do not ask or cannot produce the documents, you pay the full premium.
Lender’s policy premiums on a refinance typically run $500 to $900 depending on the loan amount. Pulling your prior policy out of the file before you start the refinance process is a few minutes of work that can save several hundred dollars.