What are title fees, and how much are they?

Title fees are the costs tied to researching, insuring, and transferring a home's ownership. They make up a meaningful share of your closing costs. In short, they help ensure the title is clear and correctly recorded in your name. Learn more about what title fees include, typical price ranges, and who usually pays them, so you can avoid surprises when you close on a house.

Key takeaways:

• Title fees are required to help ensure a clean legal transfer of ownership and to protect the buyer and the seller from unknown claims on the property.
• Title fees include the title search, title settlement, lender’s title insurance, owner’s title insurance, attorney fees, abstract fees, and recording fees.
• The buyer and seller can negotiate who pays the title fees in a transaction, though customs vary depending on the home location.

What are title fees?

Title fees cover the cost of reviewing, insuring, and transferring the title when a property is sold.

In real estate, title is the legal concept of ownership and includes a bundle of rights: Possession, control, exclusion, disposition, and enjoyment. There are several steps and documents required to transfer title when a home is sold.

The process begins with a title search. A title company reviews all public records to ensure the title is free of encumbrances, liens, legal issues, or competing claims to ownership.

Your lender will require you to insure it against title issues, so you'll need to buy lender's title insurance. You have the option of paying for owner's title insurance, which will protect you in case of any unexpected liens or claims to ownership that the title search missed.

You'll receive a document known as the deed that shows the seller has transferred the title to you. You'll have to pay any recording fees required to make the sale official. You may also have to pay any courier, notary, or attorney fees that arise during this process.

You pay all title fees as part of your closing costs.

How much are title fees on average?

The fees for a title search can vary significantly depending on the property and the state you're buying in, ranging from a few hundred dollars to several thousand dollars. The Urban Institute recently reported a range of $358 - $3,496 for lender's title and title insurance-related fees.

Title insurance alone typically costs 0.5% – 1% of the home’s purchase price.

Home buyers can expect to pay 3% – 6% of their loan amount in closing costs, which include all title-related fees. For instance, on a $500,000 home, you might expect to pay between $15,000 – $30,000 in closing costs.

The mortgage approval process can provide you with a ballpark estimate of potential costs here. However, should you encounter any issues with the title, the actual costs may be higher.

Types of title fees

Title fees are the overall cost of the title-related services needed for your home purchase. Let’s look at the average title fees that you can expect to pay at the time of closing on a property, what these expenses cover, and the typical costs associated with the purchase.

Title search fee

A title search on a house investigates a property’s public records or chain of title to verify legal ownership and make sure there are no liens or encumbrances that must be addressed before the title can be transferred.

For a residential property, the average title search costs $75 – $200. If a property requires a more thorough search of historical records or is complicated by other factors, the cost can exceed $300.

Title settlement fee

You can expect the title company to charge a settlement fee - sometimes called a closing fee - that's between $300 and $800, depending on the home and location. This fee covers the administrative costs associated with closing, including:

• Escrow fees related to the handling and disbursement of funds
• Land survey fees
• Notary fees
• Deed preparation fees
• Attorney fees
• Other costs associated with a title search

Lender’s title insurance

Lender’s title insurance protects the lender from any claims that may arise on a property that’s up for sale. Mortgage lenders generally require lender’s title insurance. The coverage lasts the life of the loan, so if you refinance, you’ll need a new lender’s insurance policy.

Lender’s and owner’s title insurance are generally purchased together and typically range from 0.5% – 1% of the home’s purchase price. With a $500,000 home, you might expect to pay a $5,000 title insurance fee.

Owner’s title insurance

Owner’s title insurance protects the owner against any liens on the title or overlooked claims that may arise after the sale closes. The policy should cover up to the purchase price of the home. Although owner’s title insurance is optional, it’s highly recommended. The policy remains in effect until you sell the home or refinance it.

Attorney fees

If you hire a real estate attorney – it’s required in some states – you have to pay the attorney's fees at the house closing. Expenses cover any charges for a lawyer reviewing paperwork for the sale, including the title.

Attorneys charge an average of $500 – $1,500 as a flat fee for the work, depending on the complexity of the closing. Attorneys may charge an hourly rate of $150 – $500 or more.

Abstract fees

An abstract is the title company’s summary of title search results. It includes the details found in the search and any official related documents. Updating a title abstract generally costs $200 - $400. It can cost $1,000 or more to create a new abstract of title.

Recording fees

Recording fees cover the filing of the deed or other government documents required for the sale into the public record. You can expect to pay around $125 for these costs.

Where to find your title fees

Here are some of the documents that will detail your title fees:

• Loan Estimate. Your lender will provide this document within 3 business days of receiving your mortgage application. It estimates your loan terms and closing costs, with a line-by-line breakdown of expected charges, including title fees.
• Closing Disclosure. This document contains your final loan details and closing costs. Your lender will provide it to you at least 3 business days before closing. It includes the final title fees you must pay at closing, as well as how much cash you need to close the sale.

Title service fees can be found on the second page in Sections B or C of your Loan Estimate or Closing Disclosure. If you buy owner’s title insurance, you’ll find that fee in Section H of your Loan Estimate.

If you see title services listed in Section C, you are not required to use the provider that your lender chooses. You can review and compare competing title service providers to determine which offers the best price.

Who pays the title fees at closing?

Wondering who pays closing costs? The buyer often pays the title fees at closing. However, who pays the cost usually is negotiable between the buyer and seller. In some parts of the country, it's customary for the seller to pay the owner's title insurance premium and for the buyer to pay the lender's title insurance premium.

Regardless of local custom, a buyer and seller can negotiate who pays which fees. This should be included in the purchase and sale agreement.

For instance, if conditions are favorable, a buyer may be able to negotiate for the seller to cover all or a portion of the closing costs, including title fees. When a seller agrees to pay the buyer's closing costs, it's an example of a seller concession. Such concessions may apply if a property owner has been sitting on a home for a long time or needs to sell it quickly.

Are title fees negotiable?

If you’re paying the title fees, you usually can choose the title company. This gives you the chance to shop around to find the best deal. However, title fees are generally required, so you typically can’t negotiate once you choose a company.

The bottom line: Title fees cover important transfer services

Title fees are paid at closing and cover the cost of reviewing, insuring, and recording the title. The title search verifies that the title is free and clear of liens, encumbrances, or unexpected claims to ownership. Title insurance protects the lender or owner in case the title search missed anything. And recording fees cover the cost of adding the title change to the public record. You may also have attorney fees or abstract fees to pay.

To get started estimating potential title fees as well as down payment and closing costs up front, you can begin the mortgage approval process today.