New York State Title Insurance Industry: Is It All About Luxury Box Suites, Steakhouse Dinners And Champagne-fueled Parties?

Update December 26, 2019: The decision from the New York State Appellate Court has reversed Judge Rakower’s second ruling. Regulation 208 has been reinstated. However Judge Rakower’s decision regarding Closers and ancillary fees still stands.

Headline July 5, 2018: The New York State Title Insurance Industry Takes On The New York State Department Of Financial Services In An Article 78 Proceeding….And Wins!

More than six months after NYSDFS Regulation 208 went into effect, it has been summarily annulled by the courts (an appeal of the decision by the NYSDFS is expected)!

The perception in some quarters was, and remains, that the title insurance industry in New York State is all about the ‘stuff’ that companies give to decision-makers to induce business through what’s known as quid pro quo?

At least that’s the perception if you’ve been reading some in the media as well as direct quotes from New York State Department of Financial Services Superintendent Maria Vullo. And, truth-be-told, given the rhetoric you would be well within your rights to think that this is the case.

And, after all, if a statement appears in a news source or comes out of the mouth of a political leader it must be true in its entirety, right?

‘Proposed state regulations take aim at the lavish gifts given by title-insurance firms to real estate professionals who refer them business.’ (Crain’s)

“…consumers should not have to pay for the cost of strip-club outings and high-priced restaurants in their premiums for title insurance…” (NYSDFS Superintendent Maria Vullo)

‘…The luxury box suites, steakhouse dinners and champagne-fueled parties can return to an obscure corner of the real estate world…’ (The New York Times)

‘…the title insurance industry, an obscure corner of the real estate world that has spent tens of millions of dollars to win the favor and business of its clients at ballparks, Madison Square Garden luxury suites, exclusive country clubs, expensive steakhouses, even strip clubs…‘ (The New York Times)

Of course, as we know, reality will typically fall somewhere in-between the extremes being presented by the various constituencies that have a proverbial ‘dog in the fight’!

Needless to say, in the world of New York State title insurance companies there are no doubt some bad actors who may do business in exactly the way the industry has been portrayed.

In other words, utilizing the lure of ‘stuff’ to curry favor with those who most often make the decision concerning which title insurance provider to use.

(Hint: It’s not the consumer but more often attorney’s, mortgage professionals and others although the consumer does have the right to choose the title insurance company to use.)

But for every bad actor in an industry, and all industries have them, the vast majority of firms develop business the old fashioned way, by ‘earning it’! And title insurance in New York State is no different.

In title insurance, ‘earning it’ is providing what the ‘decision maker’ and their client, the residential or commercial real estate buying or refinancing consumer, actually wants, needs and deserves to receive…

1. The ultimate protection of their residential or commercial real estate purchase or refinance, and the knowledge that they have received good, clean and clear title to the subject property. This is JOB #1 for any provider of a title insurance policy! In this regard it is therefore important to ask what the claims experience of a title insurance provider historically has been.
2. A seamless transaction from the standpoint of the title insurance, with all issues being cleared well before all parties sit down at the closing table.
3. That the underwriter being used to issue a title insurance policy be highly rated with an extremely sound financial condition so that, in the event a claim actually had to be paid, they have the wherewithal to do so.
4.  Ancillary and ‘junk fees’ appearing on a title bill should be fair and reasonable saving the actual consumer as much money as possible. Buyers therefore should check any title bill with at least one additional title company to make sure they are being charged a fair amount. Title companies are well compensated by the premium and should not be gouging the consumer!

The bottom-line for the title insurance-buying consumer in New York State, as well as for those who may be helping them decide the company to use is this: Put as much time, thought and effort into the title insurance company that you use for your transaction as in selecting the property to buy in the first place.

Michael Haltman, President
Hallmark Abstract Service
Phone: (646) 741-6101
Email: mhaltman@hallmarkabstractllc.com

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