PSI Oklahoma Real Estate Practice Test

Who is responsible for paying title insurance?

1. The seller.

2. The buyer.

3. The lender.

4. The title company.

The correct answer is: The buyer.

In real estate transactions, the responsibility for paying title insurance can vary, but it is generally the buyer who pays for the title insurance policy that protects their interest in the property. Title insurance provides a safeguard against potential disputes over property ownership and ensures that the title is clear of any liens or claims. This insurance is often required by lenders as a condition for providing a mortgage, but the buyer typically pays for the policy to secure their own interests in the property. While it's true that sellers may sometimes pay for the title insurance as part of negotiations in a sale, standard practice in many regions assigns this cost to the buyer. The lender may also have its own policy to protect its investment, but this does not change the buyer's obligation for their own title insurance. The title company is responsible for issuing the title insurance, but they do not bear the financial burden of the cost associated with it. Understanding this standard helps future real estate professionals navigate transactions effectively and communicate clearly with their clients.