BIFURCATING TITLE FOR REAL ESTATE TRANSACTIONS

Save Your Buyer Money on Closing Costs

In this Crash Course you will learn:

What’s the Law on Bifurcated Title?

Per Illinois Law, 215 ILCS 155/18.1 Buyers of residential property, as consumers, have a right to choose their own title company, because

  • Saves the consumer money by increasing competition
  • Prevent fraud and fee gouging by title companies and other parties in a transaction.
  • Prevent parties to force persons to pay for services from specific vendors against their will, ie steering or cross-profiting.

This law coincides with the Real Estate Closing Disclosure affiliation rules in a residential real estate closing.

What is Bifurcating Title?

Buyers right to choose title company statute (215 ILCS 155/18.1) Sec. 18.1. Choice of title insurance company. It is declared to be the public policy of this State that parties to a contract for the sale of residential real property who are obligated to provide and pay for title insurance have the right to choose the title insurance company and title insurance agent that will provide such title insurance. No lender or producer of title business, as the term is defined in this Act, shall, as a condition of making a loan, providing services of any kind, including, but not limited to, services as a broker, agent, lender, attorney, or otherwise, require a party to a contract for the sale of residential real property who is obligated by that contract to furnish and pay for title insurance at their expense, to procure title insurance from a title insurance company or title insurance agent other than a title insurance company or title insurance agent that is chosen by the party paying for the title insurance. (Source: P.A. 95-570, eff. 8-31-07.)

Bifurcating Title is when the buyer on a real estate residential closing chooses their own title company for their side of the transaction.

In effect the real estate closing is split between two different title companies.

One title company provides services to the Seller,

Second title company provides services to the Buyer.

Why Should I Bifurcate title?
BUYER SAVES MONEY

Done right, the consumer can save from $500 - $1000 in closing costs.

  • Reduced escrow fees,
  • Reduced lender’s title policy and
  • Reduced endorsements fees

Birfucating a Real Estate Closing.pptx.pdf

BUYER’S ATTORNEY MAKES MORE MONEY

Buyers’ lawyers on average charges from $400 to $750 per closing. A buyers attorney may spend 30+ hours of work on a file, and it may not close.

In a bifurcation, at no cost to the consumer, the Buyer’s attorney becomes the Buyer’s Title Agent for some of Buyers closing costs to collect fees ordinarily paid to sellers Attorney.

** Note sellers attorney still collects the more significant Seller Title proceeds

How do I Bifurcate title?
  • Tell Your attorney that you want to Bifurcate Title
    1. If your attorney won’t bifurcate find an attorney who will
  • In attorney Review, or at contract signing is best
Bifurcate title
What are Objections to Bifurcation?
  • Too Complicated
    1. Not if you know what you are doing
    2. Not if you have a good buyers title company
  • This cant be legal
    1. Totally false, it is very explicitly allowed under Illinois Law
  • This will blow up the deal
    1. Seller cannot cancel for this reason. If they do they are subject to damages and specific performance lawsuit at their expense
  • This will create HUGE delays
    1. It will cause some delay, but if everyone cooperates it shouldn’t add more than 1 week to 10 days. Delays to AI benefits buyers
Who are the Obstacles to Bifurcation?
  • Sellers Attorney
    1. Makes less money ($2500 vs. $3500 normally)
  • Seller’s Title Company
    1. Doesn’t want to lose escrow fees and other title fees
  • Real Estate Brokers
    1. Only gets paid if it closes
  • Lender
    1. Lender LOVES thi
    2. They get to save the client money, and maximize any closing cost credits to other costs.
Overcoming the Obstacles to Bifurcation
  • Sellers Attorney
    1. Illinois Law encourages it
    2. They CANNOT put their own interests ahead of Sellers
  • Real Estate Brokers
    1. Saves their clients money
    2. Helps close the deal because Buyers can bring less money to the table.
    3. Great for FHA loans
  • Honey vs Vinegar
    1. Don't be combative. (firm ask, vs. demand)
    2. Courtesy goes a long way
  • Early Bird and the Worm
    1. Get it in the contract with Buyer’s offer.
    2. Raise it in Attorney Review,
      1. Slows down AI, to benefit Buyer
      2. Sellers can plan and cooperate
  • Everyone On the Bus
    1. Buyer, Buyers broker, Buyers Lender
  • Teach them to Fish
    1. Clear benefits & explanations in Client Agreement
    2. One pager on Buyer benefits and Processs