Utah's real estate market shows no signs of slowing, and neither does the flow of questions about home sales to my inbox.
A reader named Brad recently asked about title companies and the fees they charge.
"This week I sold a small condo, and many questions came up," Brad wrote. "For example, why do I, the seller, have to pay title insurance if the buyer is already paying title insurance? Is this a law, as I was told, or just another profit center? Do title companies all charge the same? Can they compete on price, or is it a regulated business?
"On this little transaction, $90,000, I figure about $2,400 went to the title company between buyer and seller. Maybe you could shed some light on this subject for me and your readers."
Well, Brad, I'll try. For help, I called Gerri Jones, market conduct examiner for the Utah Insurance Department.
Gerri says there is a reason most real estate transactions involve two different title insurance purchases.
"There are two policies," she says. "There's an owner's policy, which is based on the sales price of the property. Then, if the new buyer is getting a loan, there is a lender's policy (based on the loan amount) that guarantees they are in the first-lien position."
If the transaction is all done in cash, Gerri says, that second policy won't be necessary. But cash deals are not the norm.
"It's a negotiable item as to who pays for (title insurance)," she says. "But it is customary in Utah that the seller buys the owner's policy for the buyer, which guarantees clear and marketable title. Then the buyer pays for his lender's policy. That's why there are two different policies."
That means, Brad, that buying two versions of title insurance is apparently legit.
Regarding Brad's next question, Gerri says title companies are not required by law to charge the same amount. However, Utah is a "file and use" state, which means all title companies are required to have their rates on file at the Insurance Department.
Anybody can make an appointment to look at those rates, she says. If you'd like to check them yourself, you can call Kris Redmond at 538-3860 to make an appointment.
"Usually it's competitors wanting to see what their competition is doing, more than the consumers. They try to stay pretty competitive with each other," Gerri says.
"Once they file their rates, they may not discount them. That's a marketing violation."
She says complaints about such violations come to her department. But they often come from competing title companies, as opposed to consumers.
"We really don't have very much problem with the policies themselves," Gerri says.
If you do have a complaint about a title company, you have several options. You can file it online at www.insurance.state.ut.us/complaint_Inst.html. Or, you can put it in writing, along with any exhibits and your contact information, and send it to the attention of Gerri Jones or Sheila Curtis at the Utah Insurance Department, State Office Building, Room 3110, Salt Lake City, UT 84114. Or you can e-mail it to Gerri or Sheila at gjones@utah.gov or utah.gov. Or, if it's not too long, you can even fax it to them at 801-538-3829.
"We get complaints from everybody," Gerri says with a laugh.
And while she says she can't comment on the total amount that went to the title company in Brad's transaction, it sounds like the company used routine procedures.
Which isn't meant to diminish the frustration Brad felt during closing. It's not so long ago that I purchased my house, and I'll never forget the way everybody seemed to be getting a chunk of change out of me. Fortunately, our loan officer was someone I knew I could trust completely, so I was sure all of the fees involved were legitimate, even if paying them was annoying.
If you've had a good or bad experience closing on a house, drop me a line. I think this is a topic that has broad interest, and I'd like to share your experiences in a future column.
Or, if you have other financial questions, please send them by e-mail to gkratz@desnews.com or by regular mail to the Deseret Morning News, P.O. Box 1257, Salt Lake City, UT 84110.
E-mail: gkratz@desnews.com