Groundhog Day: Judge annuls DFS’ title insurance regs for second summer in a row

It is unclear if DFS will once again appeal the ruling

TRD New York /
Aug.August 06, 2019 05:00 PM
Last summer, Judge Eileen Rakower annulled the state’s new title insurance regulations. This summer, she did it again. (Credit: Getty Images)

Last summer, Judge Eileen Rakower annulled the state’s new title insurance regulations. This summer, she did it again. (Credit: Getty Images)

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.”

Related Articles

The lawsuit argues the increased amounts will deter foreign investors from the program (Credit: Getty Images, Wikipedia)

Lawsuit seeks to halt new EB-5 regulations

(Credit: iStock)

“Indentured landlord” in rent-reg lawsuit vents at politicians

Sam Chang and 40 West 45th Street (Credit: Google Maps)

Sam Chang hit with $2M suit over Club Quarters hotels

Arden Group CEO Craig Spencer, Hello Living CEO Eli Karp and 4650 Broadway (Credit: Google Maps, iStock)

Hello, lawsuit: Spurned Inwood dev site buyer Hello Living sues ex-partner

Brookfield's Rick Clark and RFR Realty's Aby Rosen with the Lever House at 390 Park Avenue (Credit: Getty Images and Google Maps)

Aby Rosen makes it two Lever House lawsuits in two weeks

475 Park Avenue South (Credit: Google Maps)

Cohen Brothers Realty sues storied landlord to stay in Park Ave South building

101 West 23rd Street and E&M Management principal Daniel Goldstein (Credit: Google Maps and E&M)

“Something is rotten” at Chelsea co-op, owners say

Donald Trump and Dean & Deluca's Soho location (Credit: Getty Images, iStock)

Trump Organization sues Dean & DeLuca over rent defaults