The title insurance industry can pop the bubbly once again.
Roughly seven months after a New York Appellate Court reinstated most of the controversial new regulations the Department of Financial Services had imposed on the title insurance industry, New York Supreme Court Judge Eileen Rakower has once again overturned them in their entirety.
DFS rolled out its new regulations at the beginning of 2018, banning title insurance companies from wining and dining their clients in what the agency said was an attempt to prevent consumers from being overcharged for the companies’ services. The New York State Land Title Association filed a lawsuit challenging the rules soon after, and Rakower ruled last summer that the rules were “absurd” and annulled them.
DFS appealed her decision, and the Appellate Division of the New York State Supreme Court reinstated the majority of the regulations at the beginning of the year.
However, the Appellate Division remanded certain aspects of the case back to the Supreme Court, and Rakower once again annulled the entire law. She ruled on Monday that the regulations are “impermissibly vague” and in violation of the First and Fifth Amendments of the Constitution.
“It is a little odd the way it worked, where the Appellate Division overruled her, but then she came back and did the same thing,” said one source familiar with the lawsuit. “She just did it on different legal grounds.”
NYSTLA executive director Bob Treuber said in a statement that Rakower’s ruling “affirms that title insurance companies have the simple right to market their services like all other professionals in the state” and that the industry “will continue to fight for New York homeowners.”
DFS did not respond to questions about whether it planned to appeal Rakower’s decision once again. But superintendent Linda Lacewell released a statement arguing that Rakower’s ruling violates the decision from the Appellate Division that upheld the majority of the agency’s title insurance regulations.
“DFS will continue to fight for consumers to preserve this valid and important regulation,” Lacewell said. “We continue to maintain that the cost of using high-priced tickets, meals, lavish gifts and strip clubs as inducements for title insurance business should not be passed on to consumers.”