Albany Says “Drinks for All!” as Title Insurance Reform Fades

The $300,000 bribery conviction of Joseph Percoco, a former top aide to Governor Andrew Cuomo, was greeted with “shrugs” in Albany, as the Los Angeles Times put it. In a much less spectacular bit of news, Albany’s pay-to-play culture was on display this week when the state Senate proposed a budget for 2018-19 that would roll back strict regulations designed to rein in excessive fees charged by the title insurance industry – after a big lobbying push by the industry, the Real Deal reports. 

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. The new regulations by the state’s Department of Financial Services put a stop to the practice – until the title insurance industry pushed back.

After some aggressive lobbying, the state Senate’s proposed budget states that title companies cannot be prevented “from undertaking any usual and customary marketing activity aimed at acquainting present and prospective customers with the advantages of using a particular title insurer or title insurance agent.” 

Over the next few weeks, Gov. Cuomo and members of both Houses will finalize the fiscal 2018-19 budget. In January, the state Senate voted to ease the regulations by challenging DFS’ authority. Last month, the New York State Land Title Association and two title companies filed a lawsuit to challenge the new rules. In court documents, they said the regulation would “wreak havoc” on title companies by forcing company closures, layoffs and reduced services. 

Welcome to Albany, where you gotta pay to play. Always have and, apparently, always will.