"Who Chooses the Title Company in Illinois? The Side That Pays for the Policy Also Picks It"

Your offer on a home in Illinois goes out on a Thursday, and the title insurance line is already filled in. The seller will provide your owner's policy, and the seller's attorney has typed in the name of the title company that will issue it. That same afternoon your loan officer sends over the lender's list of title companies, and the name at the top is a different one, so you have two companies in play for one closing. In Illinois, the statute that settles which name stays is one short section, and it hands the choice to whoever is paying.

In Illinois, the side the sale contract makes pay for title insurance chooses the title insurance company and the title agent. That is state law, 215 ILCS 155/18.1, and it also says your lender, the real estate brokers, the attorneys, and anyone who sends title work to a company cannot condition a loan or a service on a different one. So whoever pays for the policy picks the company.

I'm Jeff Moran, a mortgage broker in Bluffton, South Carolina, originating since 1996, NMLS #483943, through C2 Financial Corporation, licensed in fifteen states, including Illinois. If you are coming to Illinois from a state where the buyer always picks the title company, the rule works differently here, and it is worth seeing before the counteroffer comes back.

Who chooses the title company in Illinois?

The Illinois Title Insurance Act answers this in Section 18.1, which states the public policy of Illinois on the question. The party a residential sale contract obligates to provide and pay for title insurance has the right to choose the title insurance company and the title insurance agent. In plain terms, if your contract makes you pay for a policy, you get to pick who issues it. If the contract makes the seller pay for it, the seller gets to pick.

The second half of the section is about your lender and everyone else at the table. Your lender cannot make the loan conditional on your using a title insurer other than the one the paying side chose. The same goes for anyone the Act calls a producer of title business, which means somebody in a position to send title work to a company: the real estate brokers, the attorneys, and the lender. So once the contract settles who pays, nobody else in the transaction can take the choice away.

In Illinois, the side that pays for the policy also picks the company

The Illinois State Bar Association, in its guide to buying a home, says that in most Illinois communities the seller commonly provides the buyer with an owner's title policy, and it recommends writing that obligation into the contract. You ordinarily pay for the lender's policy your financing requires. The Illinois mortgage page covers that custom and the lawyers-on-both-sides closing that goes with it.

The custom and the statute together give you the Illinois answer. In the common Illinois contract the seller is obligated to provide and pay for the owner's policy, so under Section 18.1 the seller holds the choice of company for that policy. You are paying for the lender's policy, so you hold the choice for that one. In practice one title company issues both policies at the same closing. Each title company files its own rate schedule with the Illinois Department of Insurance under Section 18.2, so prices differ from one company to the next. The charge for a lender's policy issued alongside an owner's policy comes from that same schedule.

So in Illinois, whoever the contract makes pay for the owner's policy also gets to pick the title company. If the seller provides the owner's policy, the seller names the company, and your attorney reviews what that company produces. If you want to be the one naming the company, the clean way to get there is to be the one obligated to pay for the owner's policy, and to say so in the same clause. The difference between the owner's policy and the lender's policy has its own article.

Other states do this differently. In Alaska, the Division of Insurance has said the buyer chooses the title insurer even when the seller pays for the policy, and that rule has its own article. Illinois ties the choice to the obligation to pay, so the Alaska rule does not apply to an Illinois purchase.

Can my lender make me use its title company in Illinois?

No. Section 18.1 is written to stop exactly that. A lender cannot condition the loan on your using a title insurer other than the one the paying party chose.

Once you apply, your Loan Estimate lists title services in the section called Services You Can Shop For. Under 12 CFR 1026.37, a service belongs in that section only when you are free to pick a company that is not on the lender's written list. Your lender still has requirements for the policy itself, so once the company is settled in the contract, please let your loan officer know the name as early as you can.

RESPA Section 9, the federal rule on a seller and the title company

Clients get told that a seller is never allowed to pick the title company. The rule behind that is Section 9 of the Real Estate Settlement Procedures Act, 12 U.S.C. 2608. It applies to a home bought with a federally related mortgage loan, which covers most ordinary home loans. A seller cannot require you, directly or indirectly, to buy title insurance from a particular title company as a condition of selling you the home. A seller who does it anyway owes you three times what you were charged for that title insurance.

Read that next to the Illinois custom and the two rules fit together. The federal rule is about a seller making you buy a policy from a named company. In the common Illinois contract the seller is the one buying the owner's policy, and Illinois law says the one paying for it picks the company. So a seller who provides and pays for your owner's policy and names the company is doing what Section 18.1 describes. A seller who tries to make you pay for your own policy from a named company as a condition of the sale is running into Section 9. Your own Illinois attorney is the right person to read both against your contract.

Writing the choice into your Illinois offer

1. You'll want to be pre-approved before you are writing on a specific address. What an Illinois pre-approval involves covers the costing side. A documented pre-approval lets you write the offer with the numbers settled.

2. You can decide whether the choice is worth paying for before you write it. Each title company has its own rate schedule on file with the state, so two companies can come to different totals for the same closing. Please ask each company for a written quote with the owner's policy premium, the lender's policy premium when issued alongside it, and the settlement fee on separate lines. The settlement fee is the title company's fee for running the closing.

3. You'll want the clause that says who pays and the clause that names the company written as one term. If the seller provides the owner's policy, the seller names the company, and you keep your attention on the lender's policy and the settlement charges. If you want to name the company, you can offer to pay for the owner's policy in the same sentence, so the obligation and the choice stay together the way Section 18.1 has them.

4. Your attorney will read the commitment the chosen company issues. A title commitment is the title company's written report on the property and its offer to insure it. Please ask the title company for the complete title commitment, all schedules, including copies of the documents listed on Schedule B. Schedule B lists what has to be cleared before closing and what the policy will not cover, and reading it is your attorney's work in Illinois.

5. You can check the Closing Disclosure title lines against the written quote. The owner's policy premium, the lender's policy premium, and the settlement fee near the end of the file should match what the company quoted. If a line moved, please ask the title company why before closing day.

Mistakes that give the choice away, or pay too much for it

Assuming the choice is yours because you are the one borrowing. Illinois ties the choice to the obligation to pay. If the seller provides the owner's policy, the seller holds the choice for it.

Negotiating the payment and the company as separate items. In Illinois they move together. If you accept the seller providing the policy and then ask for a different company, you have already agreed to the term that decides the company.

Treating the lender's list as the limit. The list is a starting point, and Section 18.1 says the lender cannot condition the loan on a company other than the one the paying party chose.

An example, with invented numbers

Numbers below are made up to show the mechanism. They are not a quote and not a real file.

You are buying a home in DuPage County for $425,000 with a $340,000 loan. The counteroffer says the seller will provide your owner's policy and names Company A. Your attorney has worked with Company B and asks both companies for written quotes with the lines separated.

The lines you are paying for at Company A. The lender's policy issued alongside the owner's policy comes to $475, and your share of the settlement fee is $825. Your side is $1,300.

The same lines at Company B. The lender's policy issued alongside the owner's policy comes to $450, and your share of the settlement fee is $600. Your side would be $1,050, which is $250 less.

The cost of naming Company B yourself. To be the one naming Company B, you would offer to provide and pay for the owner's policy, which Company B quotes at $1,675 at this price. Your side becomes $2,725 instead of $1,300. In this invented file, paying for the owner's policy yourself so you can name Company B costs you $1,425 more than accepting Company A.

So you accept Company A and keep the seller's obligation to provide the owner's policy exactly as written. Your attention goes to the two lines you control, the lender's policy and the settlement fee. The arithmetic can come out the other way when a seller offers a credit toward closing costs instead of providing the policy. Then you are the one paying, you get to pick the company, and it is worth comparing what each company charges before you do.

Your next step on an Illinois purchase

See pricing for an Illinois purchase with no credit pull, no account, and nobody calling you. It shows rates for your own scenario, your debt ratio, and closing costs priced for the Illinois jurisdictions the home is in. Choose the option that works best for you, and know that the selection can change as the file comes together.

If you are refinancing rather than buying, there is no seller in the room, so you are the party paying for the lender's policy and the choice is yours under the same section. Refinancing in Illinois covers the rest. If the home is inside a village with its own transfer stamp, who buys the stamp and what has to clear first is the other Illinois line worth reading before the offer goes out. For the rest of the country, who pays for title insurance, state by state is on one page.

Nothing here is a loan approval, a denial, a commitment to lend, or legal advice. No letter from anyone is a loan commitment; final approval depends on the property, the appraisal and full underwriting.

Common questions

Who chooses the title company in Illinois?

If your contract makes you pay for the policy, you pick the title company and the title agent, under Section 18.1 of the Illinois Title Insurance Act, 215 ILCS 155/18.1. If the contract makes the seller pay for it, the seller picks. In the common Illinois contract the seller provides the owner's policy, so the seller chooses the company for it, and you, as the one paying for the lender's policy, hold the choice for that one.

Can the seller pick the title company in Illinois if the seller pays for the owner's policy?

Yes. Under 215 ILCS 155/18.1 the choice follows the obligation to provide and pay for the policy, and the Illinois State Bar Association reports that in most Illinois communities the seller commonly provides the buyer's owner's policy. Federal law, 12 U.S.C. 2608, separately bars a seller from requiring you to buy title insurance from a particular company as a condition of the sale. If a seller tries to make you pay for a policy from a named company, that is the rule to raise with your attorney.

Can my lender require me to use a specific title company in Illinois?

No. The second part of 215 ILCS 155/18.1 says your lender cannot condition the loan on a title insurer other than the one the paying side chose. The same bar covers anyone else in a position to send title work to a company. Your Loan Estimate also lists title services under Services You Can Shop For, and under 12 CFR 1026.37 that section applies only when you are free to choose a company that is not on the lender's list. Your lender still has requirements for the policy, so please let your loan officer know the name as early as you can.

Who pays for title insurance in Illinois?

The purchase contract decides. The common pattern, as the Illinois State Bar Association describes it, is that the seller provides the owner's policy while you pay for the lender's policy your financing requires. It is a custom rather than a statute, so the contract can put the cost on either side. Because 215 ILCS 155/18.1 gives the choice to the side that pays, whoever ends up paying also picks the company.

Who chooses the title company on an Illinois refinance?

You do. On a refinance there is no seller, so you are the party obligated to pay for the lender's policy, and 215 ILCS 155/18.1 gives you the right to choose the title insurance company and agent. The lender cannot condition the refinance on a different company. Each title company files its own rate schedule with the Illinois Department of Insurance under 215 ILCS 155/18.2, and any credit for a prior policy comes from that company's own schedule rather than a statewide rule. Comparing two written quotes is how you find the lower total.