In the course of buying a home, the topic of title insurance will come up a number of times. If you are a homebuyer, odds are you are probably expecting to finance your purchase with a mortgage from a bank or other lending institution. In most cases, your lender will require you to purchase a lender’s title insurance policy at closing in an amount equal to the loan. In addition, buyers often ask a seller to pay for an owner’s title insurance policy as well. These policies protect the named insured (owner or lender) against the costs of previously unknown title defects that might have existed at the time of purchase.
In Florida, both the buyer and seller in a real estate transaction are allowed to pay the cost of the lender’s and the owner’s title insurance policies. As such, who pays in each transaction is subject to agreement by all the parties in the Purchase and Sales Agreement.
So what exactly is the Butler Rebate? How does it affect me?
The premiums charged for title insurance in Florida are established and regulated by the Florida Office of Insurance Regulation. However, in the year 2000, a Gainesville developer named S. Clark Butler filed suit against the State of Florida because he wanted the ability to negotiate fees for title insurance with local agents. Florida law at that time prohibited agents from giving back or rebating any portion of the premium they received as a commission. Butler’s attorneys argued successfully that it was unconstitutional for the State of Florida to set the compensation received by a title agent, as that was as much 70% of the premium charged for a policy by title insurance companies. The Florida Supreme Court agreed, and thus was born what folks refer to today as the “Butler Rebate.”
If you are buying or selling real property in Florida today, the Butler Rebate means you can negotiate a rebate on your title insurance costs at closing. Your title insurance agent should be willing to negotiate his commission and/or provide a rebate at settlement to the party responsible for paying for the lender’s and owner’s title insurance policies.
The Pujol Law Group is pleased to offer the Butler Rebate to our clients. For more information, please contact us.