Attorney Thomas B. Burton answers the following question:
Can a Wisconsin Realtor Force Accelerated Purchase Title Insurance for New Owner?
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Today’s question is about real estate and the reader asks:
“Can a Wisconsin realtor force accelerated purchase title insurance for new owner? Why can't the new owner purchase their own title insurance? Are the realtor and or the Wisconsin Title company supposed to inform seller with details about closing costs? In my case my specific closing costs questions weren’t answered.”
So this is a great question and one I see often providing confusion in real estate practice in Wisconsin.
So most realtors use the Wisconsin standard offer to purchase and in that offer to purchase contract, the default language imposes the cause of title insurance on the seller. So I can tell you this is very standard practice in a real estate closing that the seller is expected to provide good title to the buyer and provide title insurance as part of that. Now realtors are not lawyers. So they are not allowed to draft legal contracts under Wisconsin law. Instead, they have attained an exception from the Wisconsin legislature that allows them to use certain standard forms without running afoul of the unauthorized practice of law statutes and or exposing themselves to possibly being prosecuted for the unauthorized practice of law.
What this means is if your realtor uses the standard offer to purchase form, the cost of that title insurance are going to be imposed on the seller unless you as the seller specifically negotiate to impose this cost on the buyer instead. And from the transactions I see, this is very rarely done.
So if you had a realtor helping you and your side, they should have explained to you, how the contract work and the closing costs or if you had a lawyer, they could walk you through the contract and explain this they could also discuss a few strategies if you wanted to instead drafted so let the buyer pays those costs.
These Provisions in the standard offer can be negotiated, but they are often not negotiated since many sellers just accept paying for the costs. And because it is the prevailing practice in the majority of real estate transactions in Wisconsin.
So when something is sort of the default rule where people usually do it this way, nine times out of ten, that's how it ends up.
I'm sorry that this was not explained to you clearly by your realtor or the realtor representing the buyer, but if there was only a realtor representing the buyer, just be aware, they do not represent your interest, only the buyer. If the realtor was hired by you, it seems reasonable, they should have talked to you about this before you sign the contract.
For this reason, if you have further questions, I recommend you just go to any legal contract only with a licensed attorney who is authorized by law to draft and enter into and draft legal contracts in the state of Wisconsin and can explain to you the specific legal ramifications of each section of the contract.
Great question and thank you for asking.
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