Here's Why Title Insurance Reform Is So Elusive

If you want to understand why it’s so difficult to reform the world of New York real estate, all you have to do is look at the current fight over the fees charged by title insurers. 

Just about everyone who buys New York real estate, including co-op and condo apartments, spends several thousand dollars on title insurance, which guarantees that there are no liens on the property and the purchaser will have a clear title. Title insurers have traditionally landed business by entertaining homebuyers’ professionals – brokers, lawyers, and others – at posh bars and restaurants, Madison Square Garden suites, even strip clubs. They then pass along those entertainment expenses to homebuyers in the form of “fees” at closings. 

In an effort to cut closing costs, the state Department of Financial Services moved to ban this common practice. Lobbyists immediately sprang into action, and the state senate responded by proposing a 2018-19 budget that would roll back the reforms. Then the New York State Land Title Association (NYSLTA) and two title insurance companies filed suit to block the reforms. 

Now this: title closers – those independent contractors whose unglamorous job involves attending closings and ensuring all documents and checks are in order – have formed a trade association to represent their interests after they said the NYSLTA excluded them from the lawsuit, the Real Deal reports. 

Jim Hunter, president of the New York State Closer Association, said NYSLTA’s decision to exclude closers from the lawsuit caused an “uproar” among closers, many of whom had contributed to the group’s legal fund last fall. Closers are typically paid $50 per closing, and rely heavily on tips for the majority of their income. The new reforms bar gratuities for closers. 

Lobbyists, politicians, trade associations, lawsuits, gratuities – and now you know why it’s so difficult to bring reform to the world of New York real estate.