It seems like title insurance companies have forever been “buying the business” in one form or another from realtors. It’s just the way business “was” done. You know what I mean … FREE farm packages, marketing materials, use of meeting rooms, educational seminars, lunches, dinners, trips, concert/sports tickets, and the list goes on. The “quid pro quo” was always in play and, let’s face it… many partook. The State’s Departments of Insurance have been shaking their heads at title insurance companies for these types of offenses for decades. In reality, they did little to nothing to enforce regulations which were designed to protect consumers. This mentality opened the doors for title insurance interlopers to set up local shops that systematically bought title/escrow business from their realtor clients. However, when the market conditions got tough and the party ended last year, most of those title companies left town or went bankrupt, leaving many realtors and their clients holding the bag. It wasn’t pretty and was costly for many.
Those days are gone in California now that the State Legislature passed Senate Bill 133 http://www.clta.org/e-news/sep2008/sacramentoReport_sb133.html and title insurers are taking this bill very seriously. We have heard that the California Department of Insurance (CA-DOI) in collaboration with the California Department of Real Estate and the IRS are ready, willing and able to make examples and levy BIG FINES against those companies and individuals who violate the rules. Due to California’s fiscal budget crisis, we need to take their threats seriously. In addition, starting this year all Title Marketing Reps are required to be licensed by the CA-DOI and they have been told by the State and their title employers under no uncertain terms that their licenses, jobs, and careers are at risk if they get caught violating the guidelines in this Bill. Compliments of Fidelity National Title, this summary of BS 133 will give you a simple and clear outline of what title insurance companies and their Marketing Reps can and cannot do to secure your business.
Going forward, if you get an offer for freebies from minor or new title insurance companies in your area or from some Title Marketing Rep you don’t know or is new to the business, BEWARE because that “freebie” may cost you and your client more grief than it was worth! In the long run, this industry wide change will be good for the consumer and, ultimately, for the real estate and title insurance industries as well.
Scott Gill
Senior Vice President
Scott.Gill@rwnc.net
