When selling a home, there will be a point in time throughout the transaction that you will need to sign some paperwork for the Title and Escrow company so they can proceed with the transfer of ownership. During that process, you will be presented with a HUD-1 Settlement Statement showing where all of the proceeds of the sale will be allocated.
On the HUD-1 (Housing and Urban Development), section 1100 defines all title related fees. Line 1101 is the “Settlement or Closing Fee” for the particular title company that’s being used. In most cases, this fee will be split between the buyer and the seller.
Likewise, there’s another line, 1108 which is labeled “Title Insurance.” This is a policy that protects your real estate ownership rights. Should someone down the line have a legitimate claim to your land, then the title company will payout any damages to that person should it come to that. This cost is paid for by the seller. Why is there a number in the buyer’s column? It’s most likely because they opted for additional coverage.
So, why is the seller paying for any of this?
The simple answer? It’s in the default contract. If you review section 3b of the Arizona Residential Purchase Contract, you’ll see on line 104 the following:
“Buyer shall be provided, at Seller’s expense an American Land Title Association (ALTA) Homeowner’s Title Insurance Policy.”
Likewise, in section 3d, line 114 (iv) it states that “Escrow Company fees, unless otherwise stated herein, shall be allocated equally between Seller and Buyer.”
Although these fees are negotiable, they are often not negotiated and most of the time the boiler plate contract stands. So, that’s why, as a seller, you’re being charged half of the escrow fees and the entire title insurance policy. In Arizona, this is very common.