Buyer's Choice Act hits California!
The Governor just signed emergency legislation that insures the Buyers the Right to Choose Title and Escrow on home purchases.
This applies to residential purchases of less than four units. If the seller fails to comply they can be held liable for up to three times the cost of Title and Escrow. Failure to comply does not invalidate the transaction.
The seller can still recommend Title and Escrow services, but they need to have the buyer sign a disclosure.
This of course is all directed at the banks dictating the services to buyers. Now will it really change anything?
I doubt it. Most banks pay Title & Escrow for the right to choose it. Most buyers are happy to let the bank pay for it in exchange for letting them choose it. Furthermore if I buyer gets it in their head that they should use a different Title & Escrow companies who is to say why the bank picks the other buyer instead. Finally when things get screwed up in Title & Escrow, as they frequently do, it is nice to be able to throw the blame at the banks Title and Escrow Company in order to avoid those nasty late fees.
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Now if we could just get the listing agents of short sales to play nicely. I am so sick of listing agents "requiring" the use of a specific title company!
In INdiana it is Buyers Choice. However the Banks or Lenders tend to make the choice. Probably becuase most Buyers have no idea which title company would be best to use.
It may not change a lot of things, but it's still good information for the consumers to be aware of my friend.
Gene, in our area, the seller usually pays so they choose. However, this may change next year when the new RESPA requirements take effect that require the lender's good faith estimate to disclose the title charges to the buyer up front. As I understand it, buyers will actually have a couple of days to "shop" around.
I've read several posts about this legislation. I'm wondering what kind of problems caused the legislature to pass "emergency" legislation. What kind of abuses were going on?
Rich,
I do not think it will make that much difference. I think people are just getting tired of the banks dictating every aspect of the transaction. My advise to clients is still going to be to give on issues like this and cooperate with the banks.
Gene - Yours is about the third or fouth post I've read that says since the seller pays title & escrow then they should get to choose the services. Since when does the seller pay for title & escrow? Maybe it's just my market here in Los Angeles and Ventura counties where buyers still have to pay for their own title & escrow even though the seller dictated the services.
On another note, I too don't see this as helping the buyer for the exact reason you're stating, the seller will just not accept the offers where the buyer hasn't agreed to the sellers services.
Donne,
Generally you are correct about who chooses and who pays, but the banks around here were asking (strongly) to choose the title & escrow and agreeing to pay for that option.
I also agree it will not really help the buyer. The Seller will just choose the person that is most cooperative; they do not need to say why.