From the August issue: A law aiming to prevent improper quid pro quos for title insurance agents just got a new set of sharp teeth — causing a furor in the already embattled industry.
In late May, the Office of the General Counsel of the state’s Insurance Department issued an opinion about whether it’s legal for a residential brokerage to place lawyers on “recommended” lists, which are distributed to homebuyers, in exchange for those lawyers referring clients to the brokerage’s title insurance affiliate.
The answer was a resounding no. The state agency ruled that this kind of quid pro quo is a violation of state law. As a result, brokerages are now prohibited from rewarding lawyers for using their firm’s affiliated title agency, or “punishing” those who don’t by removing them from recommended lists. (Until now, industry sources say that lawyers who failed to refer back business to the firms were often nixed from these lists.) Those who violate the law will now be slapped with a $1,000 fine or five times the amount of the financial inducement, whichever is larger. [more]