In a Michigan home sale, the seller customarily pays for the owner’s title insurance policy and the buyer pays for the lender’s policy. That is the usual answer to who pays title insurance in Michigan, but it is a custom rather than a legal rule. The Michigan Department of Insurance and Financial Services confirms that either party can purchase the owner’s policy, and the purchase agreement is what ultimately decides it. Market conditions and local practice regularly push one side or the other to pick up costs they would not normally cover.
The Two Policies and Who Pays for Each
Two separate title policies show up at a Michigan closing, and they protect different people.
The owner’s policy protects the buyer’s ownership rights and equity against defects like undisclosed liens, forged deeds, or conflicting ownership claims. It lasts as long as the buyer or their heirs hold an interest in the property. The seller almost always pays for it, because the seller is the one warranting clear title through the deed.
The lender’s policy protects the mortgage company’s financial interest, not the homeowner. Because the lender requires it as a condition of funding the loan, the buyer pays for it as part of closing costs. The logic is clean: the seller demonstrates the title’s history is clean, and the buyer funds the forward-looking protection the lender insists on. A cash buyer with no mortgage can skip the lender’s policy entirely. The owner’s policy still stays with the seller under standard practice.
Regional Customs Across Michigan
Michigan has no statute dictating who pays for title insurance, and local custom varies. In southeast Michigan, including Wayne, Oakland, and Macomb counties, the seller paying for the owner’s policy is deeply ingrained, and purchase agreements in metro Detroit are drafted with that assumption built in. Buyers there should expect it as the default.
Western and northern Michigan counties sometimes handle things differently. Costs may be split between the parties or allocated in ways that would look unusual to someone used to southeast Michigan norms. Agents in those areas draft offers reflecting whatever the local expectation happens to be. None of these customs carry legal force, but deviating from them without explanation can create friction early in a deal. Ask your agent what is standard in the specific county where you are buying or selling.
What the Purchase Agreement Actually Controls
Whatever regional custom suggests, the signed purchase agreement overrides it. Buyers and sellers are free to negotiate any arrangement they want, and the result is binding once both parties execute the document.
In a competitive seller’s market, buyers sometimes offer to pay for both the owner’s and lender’s policies to strengthen their bid. That reduces the seller’s closing costs and can tip a multiple-offer situation. In a buyer’s market with heavy inventory, sellers may offer to cover all title-related fees as an incentive. Neither side should assume the default custom applies without checking the contract language.
Loan type can affect these negotiations. For VA-backed loans, the VA caps total seller concessions at 4% of the home’s appraised value, but fees the seller customarily pays in the local market, like the owner’s policy in Michigan, generally do not count toward that cap. The distinction between a “concession” and a “customary cost” matters, so VA buyers should make sure their loan officer and agent are coordinating on which closing costs fall into which bucket.
Who Chooses the Title Company
In Michigan, the seller has traditionally chosen the title company. The reasoning is practical: the seller needs to demonstrate clear ownership, most of the closing funds belong to the seller through sale proceeds, mortgage payoffs, and broker commissions, and sellers want a closing agent they trust handling that money.
Federal law puts one firm limit on the arrangement. Under RESPA, a seller cannot require a buyer to purchase title insurance from a specific company as a condition of the sale when the buyer is using a federally related mortgage. A seller who violates that rule is liable for three times the total charges for the title insurance. The penalty is steep enough that sellers and their agents rarely test it. In practice, the seller often recommends a title company and the buyer goes along, but the buyer always keeps the right to choose a different one.
What Michigan Title Insurance Actually Costs
Title insurance rates in Michigan are regulated. Every title insurer must file its rate schedule with the Michigan Department of Insurance and Financial Services, and the insurer cannot charge rates that differ from its filed schedule. That prevents arbitrary pricing. It does not mean every company charges the same amount, because different underwriters file different schedules. Shopping around produces real savings.
The owner’s policy premium is a one-time fee based on the purchase price, calculated on a tiered per-thousand basis. Using one major underwriter’s filed schedule as an example, a standard owner’s policy on a $300,000 home comes to roughly $1,660. An enhanced homeowner’s policy from a different underwriter on the same property runs closer to $2,025. The lender’s policy premium works the same way but is based on the loan amount rather than the purchase price.
Two discounts are worth asking about directly:
- Simultaneous issue rate. When both the owner’s and lender’s policies are purchased at the same time from the same underwriter, the lender’s policy cost drops substantially. This is standard practice, but confirm it appears on your closing disclosure.
- Reissue rate. If the property was insured by the same underwriter within the last several years, a reissue credit may reduce the new premium. Under at least one major underwriter’s filed schedule, that credit is 10% of the basic rate for policies up to $10 million in coverage, with the prior policy’s effective date required to be within five years of the new order. A refinance rate may apply when a new lender’s policy is needed without a sale. You will typically need to provide the prior policy or its commitment number.
Whichever side of the transaction is paying, ask the title agent which policy type is being quoted, what the price difference is between a standard and enhanced owner’s policy, and whether any reissue or simultaneous rate applies to your deal.
Title Insurance Is Not Legally Required in Michigan
Michigan does not legally require anyone to purchase title insurance. No statute mandates it the way auto liability insurance is mandatory for drivers. The lender’s policy is effectively required in practice because almost no mortgage company will fund a loan without one, but that is a lender requirement, not a state law. The owner’s policy is optional from a legal standpoint. It is a near-universal custom for the seller to provide one, and skipping it would raise serious concerns for most buyers, but no law compels it. If anyone in your transaction presents title insurance as a legal obligation rather than a strong market expectation, that framing is inaccurate.