The Manhattan Appeal Court’s just issued a decision that Title Insurers will not be happy about. What is understandably being reported by most of the media is that “A New York state appeals court has reinstated regulations on the title insurance industry enacted to prohibit insurers from wining and dining attorneys and real estate agents in exchange for business referrals and passing those costs along to consumers.” (See e.g.)
There are some positive aspects for title insurance companies that are being overlooked. Indeed, the Court also held that:
1. There is “no rational basis for DFS to impose an absolute ban on the collection of certain fees by in-house closers while permitting independent closers to collect the same fees as long as the fees are reasonable and the requisite notice is provided to consumers (11 NYCRR 228.5[d])”; and
2. “Nor is there a rational basis for capping fees for certain ancillary searches at 200% of the out-of-pocket costs of those searches or 200% of certain other measures in the absence of any out-of-pocket costs (11 NYCRR 228.5[a][1]-[3]).”
Because it was unanimous, further appeal to the New York Court of Appeals would have to be granted on a request for leave to appeal by the Appellate Division First Department which issued the decision or by the New York Court of Appeals.
Although the overall result was not a positive one for title insurance companies, there is some positive value that should not be overlooked.
Click here for the decision.
