Tennessee's New Settlement Agent Law: What Buyers, Sellers, and Real Estate Agents Need to Know

Starting July 1, 2025, Tennessee law gives homebuyers the exclusive right to choose their own settlement agent (the company or attorney that handles closing, escrow, and title insurance) in any real property transaction. This change comes from SB 394 / HB 569, and it reshapes a part of the closing process that has long been a source of friction.

What the Law Does

Under the new law, the buyer or borrower selects the settlement agent, subject only to approval by their mortgage lender. The chosen agent handles escrow and closing services, acts as the issuing title insurance agency, and directs the title clearance process. Sellers can no longer require buyers to use a specific settlement agent or condition any part of the deal on the buyer's choice of closing company. These protections cannot be waived even by agreement between the parties.

Sellers can still hire their own attorney to represent their interests at closing, but that role is limited to tasks like deed preparation, fee negotiation, and reviewing closing documents. Notably, the buyer's settlement agent cannot collect fees from a represented seller without written consent from the seller's attorney.

Why This Law Was Enacted

For years, it was common practice in Tennessee for sellers or listing agents to dictate which title company handled the closing. This created concerns about conflicts of interest, inflated fees, and a lack of competition in the title and settlement industry.

In some cases, sellers or their agents had financial relationships with preferred title companies, meaning the buyer had little say in a process they were largely paying for. This law is designed to promote transparency, competition, and consumer choice by putting the selection power with the party who is obtaining financing and purchasing the property.

What This Means Going Forward

For buyers, this is a straightforward win. You now have the right to shop for your own title company, compare fees, and choose an agent you trust.

For sellers and listing agents, the days of steering closings to a preferred title company are over.

Sellers should be aware that while they can still have their own attorney at the table, that attorney's role is defined and limited under the new statute.

For real estate agents on both sides, updating your standard practices and contract language to reflect this change before July 1 is important.

If you have questions about how this law affects your next transaction, feel free to reach out.

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This blog post is provided for general informational purposes only and does not constitute legal advice. Reading this post does not create an attorney-client relationship with The Law Office of Will McSeveney, PLLC. Every situation is different, and you should consult with a qualified attorney regarding your specific circumstances before taking any action based on the information provided here.