As many of you have no doubt heard, the New York State Department of Financial Services has promulgated two new Insurance Regulations. Insurance Regulation 206 became effective on October 18, 2017 and Insurance Regulation 208 becomes effective on December 18, 2017.
Insurance Regulation 206 primarily deals with title company fiduciary responsibility and industry consumer disclosure notices that we must provide. This newsletter focuses on Insurance Regulation 208 which has a much greater and immediate impact on the industry.
Following is a synopsis of the key points covered by Insurance Regulation 208:
1)
NO title insurance corporation or agent or any person acting on behalf of such corporation or agent....shall provide any payment, expense, compensation or benefit associated with a) meals and beverages (except as noted in section (2) below; b) entertainment (ie - sporting events, concerts, etc); c) gifts (ie - gift certificates or cash); d) outings (ie - sport outings, vacations, golf, trips); e) parties; f) assistance with business expenses; g) use of premises (unless fair rental fee is charged equal to market rates); h) payment of professional fees for any professional representing the insured (ie - attorneys, engineers, appraisers, surveyors); h) non-title services without charge.
2)
The following expenses are permitted provided they are provided without regard to insured status or directly or indirectly conditioned on the referral of title business and offered with no expectation of obligation of referring business and the amounts spent must be reasonable and customary and not lavish or excessive a) advertising or marketing in any publication or media at market rates; b) advertising or marketing of a de minimis value that includes a permanently affixed logo of the title insurance corporation or agent; c) promotional or marketing events that includes complimentary food and beverage that is open and attended by the public; d) continuing legal education classes that is open to all members of the legal profession; e) hosing promotional or marketing events with complimentary food or beverage so long as title insurance business is discussed for a substantial time including the presentation of title insurance products and at least 25 diverse individuals unrelated to the host were in good faith invited to attend; f) charitable contributions payable by negotiable instrument to the charitable organization in the name of the title insurance corporation or agent
3)
A title insurance corporation or agent shall not charge an applicant in connection with a residential real property closing (residential real property is defined as 1-4 family dwellings including property used in part as a professional office and individual coop or condo properties) more than the following amounts: a) 200% of the out of pocket cost to the corporation or agent for bankruptcy, patriot and municipal or departmental searches plus 100% of any charge billed by the municipality for providing any municipal or departmental information; b) $25 per document plus actual recording fees paid to the county to record any document; c) Survey Inspection fees of $75 plus the actual out of pocket charge paid the survey inspector; d) surveys at actual cost charged by the surveyor; e) actual out of pocket costs for overnight mail services; f) $50 for each escrow collected at closing; g) any other charges not specified must be fair, reasonable and non-discriminatory
4)
The title insurance corporations and agents shall be responsible for the payment of the title closer and
shall PROHIBIT the title closer from receiving any compensation at the closing from the applicant either directly or indirectly. The applicants must be advised that the title closer may not accept any compensation other that the compensation paid to them by the title insurance corporation or agent. However, if the title closer is remitting a payoff of a mortgage on behalf of a seller the seller must be notified of the title closer's charge to payoff said mortgage within 3 days of the date of the closing. Such charge must be disclosed on the title corporations or agents invoice.
To read the new Insurance Regulations in full please click on the following links:
These new Insurance Regulations are going to put a tremendous strain on our industry. The title insurance industry is trying to get more clarification or perhaps changes to these new Regulations, but as of now they are effective as published.
If you have any questions or comments concerning these new Insurance Regulations please call us at any time.
Thank you.
