Title Insurance Washington State: What Buyers Pay and Why It Matters

Title insurance is one of the few closing costs that buyers and sellers in Washington both pay for — just for different policies. Understanding the split, what each policy covers, and how Washington's title market works prevents confusion late in your transaction.

Two Policies, Two Parties

Every real estate purchase involving a mortgage involves two separate title insurance policies:

The lender's title policy (also called a loan policy or mortgagee policy) protects your mortgage lender's interest in the property. If a title defect surfaces after closing — an unresolved lien, a forged deed in the chain of title, an undisclosed heir — the lender's policy compensates the lender for its loss. You, as the buyer, pay for this policy. It's required by every institutional mortgage lender in Washington.

The owner's title policy protects your ownership interest. If the same title defect surfaces, the owner's policy compensates you — not just your lender. In Washington, it's traditional for the seller to pay for the buyer's owner's title policy, making it part of seller-paid closing costs rather than buyer costs.

Both policies are typically issued simultaneously by the same title company. When this happens, most Washington title underwriters apply a "simultaneous issue discount," which reduces the combined premium compared to what you'd pay for each policy separately.

What Title Insurance Covers

Before issuing policies, the title company conducts a title search: reviewing county recorder records, tax assessments, court judgments, and UCC filings to identify any encumbrances on the property. The result is a preliminary title commitment (also called a prelim) that lists the conditions the title company will insure around.

You'll receive the prelim during your inspection contingency window (via the Title Contingency, NWMLS Form 22T). Review it carefully. It will list exceptions — things the policy won't cover — including known easements, HOA covenants, and other recorded documents affecting the property.

What title insurance actually covers (for defects not visible in the public record):

• Forged signatures on prior deeds or documents in the chain of title
• Errors or omissions in court records
• Undisclosed heirs or prior interests in the property
• Liens filed after the search window but before recording your deed (known as "gap" coverage)
• Fraud by a prior seller or their agent
• Unpaid contractor liens or mechanic's liens that weren't discovered in the search

What title insurance typically doesn't cover:

• Matters visible on a survey (encroachments, boundary issues) — unless you have survey coverage added
• Zoning violations or permit issues — these require a separate endorsement
• Environmental contamination
• Items listed as exceptions in the preliminary title commitment

Washington Title Insurance Costs

Title insurance premiums in Washington are regulated by the State Insurance Commissioner based on filed rate schedules. Rates vary by county and underwriter, but the overall cost for both policies combined runs roughly 0.5% to 1.0% of the purchase price.

On a $700,000 purchase:

• Total title and settlement services: approximately $3,500 to $7,000
• The seller traditionally pays the owner's policy portion; the buyer pays the lender's policy portion
• The lender's policy on a $665,000 loan (5% down on $700,000) typically runs $600 to $1,500 depending on the county and underwriter

Washington has four major title underwriters operating statewide — First American, Fidelity, Stewart, and Old Republic — along with regional companies. Your purchase and sale agreement may specify which company handles title, or it may be negotiable between you and the seller.

Title Issues Specific to Washington

A few Washington-specific title concerns that buyers should understand:

REET liens. If the seller underpays Real Estate Excise Tax (REET) or claims a fraudulent exemption, the Department of Revenue can place a statutory lien on the property. Your owner's title policy protects you against inheriting this liability after closing. Your escrow company's job is to calculate and remit REET correctly before the deed records.

Homeowners association liens. Washington HOAs have lien rights for unpaid dues and special assessments. The preliminary title commitment will show any recorded HOA liens. Unrecorded HOA delinquencies are a known gap — ask the escrow company to collect an HOA estoppel certificate confirming no outstanding amounts owed.

Easements and covenants. Western Washington has a high prevalence of recorded utility easements, pipeline corridors, and flood easements. Review the Schedule B exceptions in the prelim carefully. Easements that cross through the middle of a buildable area, or restrictive covenants that limit modifications to the property, can materially affect its value and usability.

Covenant Homeownership Program restrictions. If the seller received assistance through WSHFC's Covenant Homeownership Program, there may be deed restrictions or repayment obligations in the title record. These should appear in the prelim and need to be resolved before closing.

The Title Contingency Window

NWMLS Form 22T gives you a set number of days after receiving the preliminary title commitment to review it and raise objections. If you identify an easement, covenant, or lien that materially affects your use or ownership of the property, the seller must either clear the issue or you have the right to terminate the transaction and receive your earnest money back.

Use this window seriously. Have your buyer's agent walk through the Schedule B exceptions with you. For properties with complex title histories — older rural properties, former commercial conversions, properties near waterways or power corridors — consider having a real estate attorney review the prelim for a flat fee ($300 to $600), even though Washington doesn't require attorney closings.

The Washington First-Time Home Buyer Guide covers the title review process alongside all other Washington-specific due diligence steps, with checklists for what to look for in a prelim and how to flag concerns before you release your inspection contingency.

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