Wining-and-dining ban on title insurance industry reinstated by Appellate court

Decision overturns earlier ruling from New York State Supreme Court

TRD New York /
Jan.January 15, 2019 12:40 PM

Maria Vull and Mylan Denerstein with 27 Madison Avenue (Credit: The New Abolitionists and Mapio)

After a brief reprieve, the title insurance industry is again facing a ban on wining and dining clients.

The Appellate Division of the New York State Supreme Court handed down a ruling on Tuesday that reinstated the vast majority of the controversial regulations that the Department of Financial Services placed on the industry last year. The rules ban title insurance companies from treating their clients to entertainment and meals.

The appeals court wrote in its ruling that DFS had conducted a five-year investigation of the title insurance industry and “found that lavish gifts were routinely being offered in anticipation of receiving business,” which led to rising costs for consumers.

“DFS reasonably sought to put an end to this ethically dubious scheme by clarifying that such practices are impermissible,” the decision reads.

The ruling reverses an earlier decision from New York State Supreme Court Judge Eileen Rakower, who had annulled the state’s regulations in their entirety in July, describing them as “absurd.” DFS appealed the decision in August, and both sides argued before the appeals court in October.

The decision concluded that Rakower “erred in annulling the remainder” of the DFS regulations, but it voided two of the rules: the 200 percent cap on out-of-pocket costs for “certain ancillary searches” that insurance companies conduct and the restrictions on payments to closers. Closers rely on gratuities for most of their income.

Gibson Dunn’s Mylan Denerstein, who argued on behalf of the title insurance companies, said in a statement that the New York State Land Title Association “is reviewing the decision.”

Eric Horowitz, an attorney with Zane and Rudofsky who filed amicus briefs in March and September on behalf of title closers, said he was pleased that the ruling upheld overturning the state’s restrictions on closer payments.

“From the limited standpoint of the title closers and their ability to make a living,” he said, “this is a good decision.”

DFS Superintendent Maria Vullo released a statement praising the decision as a move that would help protect New Yorkers from paying costly title insurance premiums.

“As I have maintained throughout this years-long process, the practice of using high-priced tickets, meals, lavish gifts and strip clubs as inducements for title insurance business is prohibited by New York Insurance Law,” she said, “and those improper expenditures may not be passed on to consumers.”


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)

Real estate stocks push up this week as U.S.-China trade tensions ease

416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case

Renderings of 130-02 South Conduit Avenue and Triangle Equities’ Joshua Weingarten (Credit: Terminal Logistics)

Triangle Equities lands $87M loan for massive JFK warehouse project

From left: 172 Madison Avenue, 100 East 53rd Street, Woolworth Tower, 53 West 53rd Street, 615 10th Avenue

Loan wolves: Bankers are stalking developers as debts come due

State Sen. Julia Salazar and Assembly member Harvey Epstein proposed the tax this month in an effort to disincentivize real estate speculation (Credit: iStock, Getty Images)

Experts take issue with proposed tax on mezzanine loans

Brookfield's largest-ever $15B property fund has invested in properties from New York (666 Fifth Avenue) to Bangalore (the Leela Palace hotel) (Credit: Brookfield, Getty Images, Leela)

Real estate fundraising hits lowest level since 2013

Some investors continue to find U.S. commercial real estate as attractive places to park their capital (Credit: iStock)

Brexits and Bubbles: How investors view Europe’s shaky real estate market

Pope Francis (Credit: WIkipedia, iStock)

Unholy real estate strategy: Catholic churches shuffle properties to shield billions from sex abuse victims, report says

arrow_forward_ios
Loading...