The Real Deal New York

NYS Senate votes to ease new rules for
title insurance

Rules that ban marketing expenses set to take effect Feb. 1
By E.B. Solomont | January 16, 2018 06:44PM

(Credit: Getty Images)

The New York State Senate unanimously passed a bill Tuesday that will allow title companies to resume buying clients coffee, taking them out for lunch or treating them to a round of golf.

Sponsored by Sen. James Seward of Oneonta, the bill — which now heads to the Assembly and Gov. Andrew Cuomo — takes aim at new regulations from the Department of Financial Services that prohibit title agents and insurers from offering clients meals, entertainment and gifts to win business. The bill notes that not all marketing expenses are inducements for business, and those items that are not offered as a quid pro quo for business are perfectly legal.

Following the vote Tuesday, Seward said the DFS regulations, which took effect Dec. 18, were “overly broad” since they deem any marketing practice that benefits a prospective client as a so-called inducement. “My feeling is that this goes beyond the tended scope of the law,” he said.

“The department has plenty of tools in their tool chest to go after bad actors,” he said. “I would encourage them to do so and go after those individuals, rather than tying up the entire industry.”

Although the new rules kicked in last month, DFS Superintendent Maria Vullo agreed to delay the implementation of the regulations until Feb. 1 following heavily lobbying from the industry. Six elected officials — including Seward — argued for a six-month delay. DFS declined to comment on Tuesday’s vote.

In a statement, the New York State Land Title Association — which represents the state’s title companies — commended the bill’s passage and said it would save jobs and boost the housing market.

“The bill is important because the Department of Financial Services created its own parameters for title insurance companies to work under,” said Bob Treuber, NYSLTA’s executive director.

He added that DFS’ regulations would have created conditions “so onerous that companies would be force to close, jobs would be lost, and New Yorkers trying to buy a home would have to pay higher closings costs.”

Last week, Vullo faced title companies at a hearing convened by Assemblyman Kevin Cahill of the Hudson Valley.

At the hearing, Vullo said “there is no place” for companies to win business on the basis of who “can lavish the most expensive gifts, throw the best parties, hand out the best seats to sporting events or socialize with referral sources at strip clubs.”

And, she added, DFS isn’t just going after a few “bad actors.”

“It is a widespread practice of the industry,” she said. “The fact that everyone does it doesn’t make it legal.”