Terrence A. Oved, Esq., Quoted in Real Deal Article
A state court judge just threw out regulations limiting how title insurance companies wine and dine their clients — but the industry isn’t popping open the champagne just yet.
State Supreme Court Judge Eileen Rakower on Thursday ruled that anti-marketing regulations enacted earlier this year by the Department of Financial Services (DFS) went too far in prohibiting what amounted to “ordinary marketing and entertainment expenses.” She said DFS improperly used a state insurance law intended to prevent kickbacks and commission rebates.
But DFS Superintendent Maria Vullo indicated that the agency plans to appeal decision, leaving the title insurance industry cautious about how to immediately respond to the ruling.
“The concern is, are you going to subject yourself to any unnecessary scrutiny from DFS?” said Esen Edip, former president of Titles of New York, which provides title insurance on residential deals. “They are going to look for examples to support their case. And nobody wants to be that example. There are a few bad seeds, just as in any community, but I think the overall regulation was too far-reaching.”
The agency rolled out the new regulations in January, banning title companies from treating clients to meals and entertainment. The rules also prohibited tips for closers, who rely on such funds for most of their income. In February, the New York State Land Title Association, along with Great American Title Agency Inc. and Venture Title Agency, filed a petition challenging the rules. Jim Hunter, president of the New York State Closer Association, which filed a friend of the court brief in the case, noted that it’s unclear if DFS will seek a stay on the decision, which would keep the regulations in place until the agency’s appeal is heard.
Representatives for DFS didn’t immediately return a request seeking comment.
Still, overall, title insurance companies seem reassured by the decision.
“I think for the industry this is a vindication that what they’ve been doing all along is both necessary and proper,” said Terrence Oved, chair of Oved & Oved’s real estate and transaction department. “It’ll be business as usual.”
The brief life of the regulations, however, has drawn more attention to how much title closers are paid, Hunter said. Linda Hall, a long-time title closer, said she’s hopeful that tips will make a comeback.
“I did a lot of charity work. The lawyers kind of forgot that we weren’t being paid properly,” she said.
“As far as I’m concerned, the regulation is dust until [Vullo] files an appeal. But no one knows what’s going to happen.”