When a seller doesn't have an RPR, the contract is often amended to say, "seller to pay for buyer's title insurance." This wording exposes the seller to an open-ended Title Insurance commitment, no matter the cost.

There is a general perception that Title Insurance is cheap, which is partially true. For most straightforward transactions sales under $500,000, a standard Title Insurance policy covering the borrower and likely the lender would be about $175-$250.

On a recent sale covering three connected townhouses where the seller agreed to pay for Title Insurance, the cost was over $1,500! Now, this was not a single family dwelling and it involved a private lender, characterization of the sale as commercial rather than residential, and some extra lender endorsements. So, on analysis, there are reasons for extra cost. But the seller was not expecting anywhere near this amount!

Title Insurance policies' cost and coverage can vary widely. 

Some of the factors that affect the cost of Title Insurance premiums are:

• Value of the property and amount of any mortgaging
• Characterization of the property as commercial or residential
• Private lenders usually want more coverage at greater expense
• Title Insurers often charge more if there is a private lender
• Special endorsements, for example, super-priority lien coverage

As the listing realtor, try to get some details of the buyer and their financing before committing your seller to writing a blank cheque for Title Insurance. I know that's likely tough to do from a privacy standpoint, and that information may not even be available when the offer is being written.

You could call (toll-free!) a Title Insurance company such as First Canadian Title or Stewart Title and ask to speak to an underwriter. Explain your seller's situation and they might be able to give you at least a rough quotation for the cost of Title Insurance. The quote will be approximate but getting an approximation is better than hoping or doing nothing. 

At the very least, put a limit on the dollar figure the seller will pay. "Seller will pay for buyer's Title Insurance to a maximum of $250".

On the other hand, if you are the selling realtor, and if the seller has agreed to pay for Title Insurance, you do not want a limit on the cost. Again, if your buyer is purchasing a fairly standard home under $500,000 with a mainline lender like RBC or TD, you are likely fine if the seller wants to limit the cost to $250.

BUT, if you do have any of those five factors listed above, do some more investigating. You could also call a Title Insurance company and speak to an underwriter. Try to get at least a rough idea of the Title Insurance cost before accepting a limit in the contract. 

Protect yourself.

Cheers,

Barry

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