Title Tip: Buying a Home — a State-by-State Comparison

By Lydia Blair
Special Contributor

Well butter my butt and call me a biscuit. Grab a seat fellow Texans. You may need it when you hear about the way they finalize real estate sales in some of our fellow united states. Let’s start with a peculiar Yankee custom that’s a changin’.

A recent revision to New York property transactions stipulates that it is no longer allowable for buyers or sellers to tip to the title closer. Yes, you heard that right. The long-held tradition in the Northeast of buyers tipping the real estate closer with cash, gifts, tickets, etc., has been squashed by the New York Department of Financial Services. Anyone else getting a chuckle out of the mere thought of tipping your closer?

In New York (and a few other states) the buyers, sellers, attorneys and brokers all sit down at the closing table together with the title closer to finalize the transaction. New York buyers generally pay most closing costs, including title insurance premiums and taxes. And the past custom has been that they tip the closer $100-500. Sellers pay the state and city transfer taxes.

New York real estate buyers and sellers are represented by attorneys in addition to their brokers. Closings are also conducted by attorneys in Connecticut, Delaware, Georgia, Kentucky, Maine, Maryland, and Vermont.

Every state has their own rules about who can conduct closings and handle escrow funds. In some places, like Texas, a title company handles both the escrow and the closing. In others, like Indiana or Illinois, an attorney, a title company, or lender may conduct the closing. In Iowa, Michigan, Minnesota, Nebraska, Oklahoma, and Wyoming, closings may be conducted by attorneys and even real estate agents. Kansas also allows lenders and independent escrow firms to conduct closings.

Who pays for what varies all over the country as well. Closing costs are almost always negotiated, but each state has its own customs. If you’re in Alabama, Alaska, or Arizona, it’s likely the closing costs are split between buyer and seller – though not always split 50/50. At the other end of the alphabet, Wisconsinites usually divide the closing costs with sellers paying the biggest chunk.

California is entirely different in the real estate world – but then, aren’t they always? Their closing procedures differ between Southern and Northern California and vary from county to county. The closing might be through an attorney, a lender, or an escrow officer.

The cost to close a real estate sale also varies from state to state. In most states, consumers can shop around and compare closing costs just like they do for a mortgage. Texas and Florida are the only states where title policy premiums are stipulated by the state. All Texas title companies are required to charge the same for a title policy.

While Texas title policy premiums might be higher than some states, our total closing costs are often lower. Because in addition to the title policy, closing costs can include transfer taxes, mortgage tax, documentary taxes, etc. … none of which we have in Texas.

Unlike Texas, the escrow, legal, and closing fees are wide and varied from state to state, and sometimes from county to county within a state. We prefer our rates nice and steady in the Lone Star State. Texas might be part of the wild west, but we don’t take kindly to any wild ideas about tipping escrow officers. And I don’t think you’ll find real estate agents conducting closings any time soon.

You can hang your hat on that.

The opinions expressed are of the individual author for informational purposes only and not for the purpose of providing legal advice. Contact an attorney to obtain advice for any particular issue or problem.