American Land Title Association (ALTA) Practice Exam 2026 – Your Comprehensive All-in-One Guide to Success!

In real estate transactions, the responsibility for paying for title insurance can vary based on local customs and negotiations between parties, but it is common for the seller to cover the cost of the owner's title insurance policy while the buyer pays for the lender's title insurance policy.

The owner's policy protects the buyer’s interest in the property, ensuring that they receive clear ownership free from claims or liens that may arise after the purchase. Since this is primarily for the benefit of the buyer, it is customary for the seller to pay for this coverage. On the other hand, the lender's policy protects the lender’s interest in the property and is generally considered the buyer's responsibility because the buyer is the one obtaining the financing.

This division of costs reflects the differing purposes of each policy, aligning costs with the respective parties who benefit from them. Thus, recognizing this customary practice helps clarify the responsibilities of each party in the context of a real estate transaction.