Thrown to the wolves, title insurance closers band together

Newly-formed trade association files court documents challenging state regulations

After a state crackdown on how title insurance companies wine and dine their clients, the industry’s once-united front is crumbling.

Title closers — independent contractors whose unglamorous job involves attending closings and ensuring all documents and checks are in order — have formed a trade association to represent their interests after they said the New York State Land Title Association excluded them from a lawsuit filed last month.

Jim Hunter, president of the New York State Closer Association, said NYSLTA’s decision to exclude closers from the lawsuit was “politically tone deaf” and caused an “uproar” among closers, many of whom had contributed to the group’s legal fund last fall.

Last month, 100 closers formed the NYSCA to advocate for themselves, he said.

The industry at large has been aggressively fighting new regulations enacted Feb. 1 by the Department of Financial Services. The new regulations ban title companies from treating clients to meals and entertainment. They also outlaw tips for closers, who rely on those gratuities for most of their income.

The NYSLTA, along with Great American Title Agency Inc. and Venture Title Agency, filed an Article 78 on February 20, arguing that DFS’ regulations would “wreak havoc” on the industry.

Sign Up for the undefined Newsletter

But the lawsuit did not address gratuities, and several closers said they felt as if they’d been punched in the gut after ponying up $250 each to join NYSLTA last fall. That prompted 100 closers to form the new nonprofit.

“People felt deceived,” said one closer, who requested anonymity for fear or losing work.

On March 20, the judge in the case allowed the newly-formed NYSCA to attach its amicus brief to NYSLTA’s lawsuit, according to the title group’s attorney, Eric Horowitz of the law firm Zane and Rudofsky.

In its court filing, the NYSCA said state regulators failed to conduct a rigorous analysis of how the rules would impact closers before plunging “full steam ahead” with the regulations. Closers are typically paid $50 per closing, and rely heavily on gratuities for the majority of their income.

Along with the brief, the group submitted affidavits from 29 closers, including one who was fired after the new rules took effect. In his affidavit, Hunter said he may have to switch careers in order to support his family.

On Friday, Hunter said the group wants to make it clear that closers are an important part of transactions. “There’s a lot of ignorance for what happens in this industry,” he said. “We’re paying a severe price for that. That was a driving force for us to form this association.”

In a memo last year, the NYSLTA said it excluding closers from the suit was a strategic decision. “Our litigation strategy must be based upon the strongest arguments with the highest likelihood of success,” the memo said. “Unfortunately that does not include closer gratuities.”