Jared Kaplan Comments on Governor Cuomo’s Proposals to Reform the Title Insurance Industry
SYOSSET, NEW YORK — Jared Kaplan, Partner, Kaplan, Kaplan & DiTrapani, LLP, says Governor Andrew Cuomo’s proposed regulations to keep the title industry in line may actually do more harm than good to the industry, with homeowners paying the price.
On May 1, Governor Cuomo introduced two regulations. The first would prevent title insurance companies from engaging in “unscrupulous practices” — that is, offering certain incentives to attorneys and real estate professionals who order title insurance for their clients in exchange for referring business to the title insurance company or agent. This proposal came about as a result of a four-year investigation by the New York State Department of Financial Services which found that title insurance companies engaged in a quid pro quo with those who provided them business by lavishing their referral sources with meals, entertainment, gifts and vacations valued at millions of dollars. The title insurance companies and agents allegedly charged those expenses back to the consumers as “marketing costs.”
The investigation was triggered when the title insurance industry allegedly sought a 22% increase in premiums. State regulators rejected the request, stating there was no financial data to permit the hike in the premiums. The last time an increase was granted was in 2001, when it was 8%.
“Surely, the Cuomo administration is not going to punish all 1,800 title insurance agents in this state for the actions of a few,” Mr. Kaplan said. “This industry has not seen an increase in premiums in over 15 years. How does the governor expect the smaller title companies to stay in business?”
The second proposed regulation calls for title insurance companies or agents that generate a part of their business from affiliates to function as a separate independent entity from any other affiliate and seek new business only from other sources. In addition, every agent must submit revenue and expense schedules; any agent who submits a report on behalf of one or more agents must include those agents’ names and license numbers to their superintendent.
For Patriot and bankruptcy searches, a title agent shall not charge more than 200% of out-of-pocket costs paid for the search. If no out-of-pocket cost is paid for the search, then the cost should be no greater than 200% of the fair-market value as charged by a third party. No flat fees would be charged for Patriot search for a specified number of names being searched. Recording fees and survey inspections would be capped at $25 and $75, respectively, plus out-of-pocket costs.
Mr. Kaplan says this is an unneeded layer of bureaucracy. “The proposed regulations are going to adversely affect the consumer and the industry as a whole, as the limitations being proposed will directly affect the service provided to and protection afforded to homebuyers,” Mr. Kaplan says. “The homebuyers will be soaked by out-of-pocket costs charged by the surveyors, counties, local municipalities and other third parties. A true savings for the consumer should start at the county level, where recording fees in Suffolk and Nassau Counties have increased almost threefold in the last two years.”
For more information, call (516) 801-6363 or visit www.closerattorney.com.
About Kaplan, Kaplan & DiTrapani, LLP
Servicing the greater New York area, Kaplan, Kaplan & DiTrapani, LLP expedites mortgage-related transactions of all types. Its skilled team of attorneys are experienced in handling refinances, loans and consolidations, as well as providing support and invaluable advice on a wide range of other topics. Among the firm’s practice areas are real estate transactions, residential real estate closings, real estate and commercial litigation, landlord-tenant matters and leasing. For more information, call (516) 801-6363 or visit www.closerattorney.com.