Strip Clubs Still Part of Title Insurers' Fees

So much for reform in the world of New York real estate. Responding to an aggressive lobbying push, the State Senate has passed a bill that will allow title insurance companies to continue to entertain clients at sporting events, strip clubs and high-dollar restaurants – and then pass those expenses on to homebuyers as “marketing costs,” the Real Deal reports.

Most homebuyers purchase title insurance – sometimes for thousands of dollars – to make sure there are no liens on the property and they’ll have clear claim to the title once they plunk down their cash. Title insurers customarily entertain buyers’ mortgage brokers, lawyers and real-estate agents in order to win their clients’ business. 

Sponsored by Sen. James Seward of Oneonta, the bill – which now heads to the Assembly and Gov. Andrew Cuomo – takes aim at new regulations from the Department of Financial Services (DFS) that seek to prohibit the long-standing practice of title insurers entertaining at the expense of unwitting homebuyers. 

Although the new regulations kicked in last month, DFS Superintendent Maria Vullo agreed to delay the implementation of the regulations until Feb. 1, following heavy lobbying from the industry. In a statement, the New York State Land Title Association, which represents the state’s title companies, commended the bill’s passage. Bob Treuber, the association’s executive director, claims the DFS regulations would have created conditions “so onerous that companies would be forced to close, jobs would be lost, and New Yorkers trying to buy a home would have to pay higher closings costs.” The purpose of the regulations is to lower closing costs. 

At a hearing last week, Vullo said “there is no place” for companies to win business on the basis of who “can lavish the most expensive gifts, throw the best parties, hand out the best seats to sporting events or socialize with referral sources at strip clubs.” And, she added, DFS isn’t just going after a few bad actors. “It is a widespread practice of the industry,” she said. “The fact that everyone does it doesn’t make it legal.”