State Report Alleges Illegal Spending by Title Insurance Firms

By William Murphy

Published on October 17, 2006

State law puts a $25-per-year cap on the amount a title insurance company may spend on items used to sway someone to steer business to the company. According to Kreidler's report, companies are violating the law by spending thousands to wine and dine representatives of the building and real estate industries in hopes of garnering customers.

Title insurance protects lenders and homeowners performing a title transfer from financial loss due to legal defects such as hidden liens or forged signatures on the transfer document. Anyone taking out a mortgage is required by the lender to purchase a title policy. Buyers typically go with the company recommended by the lender or real estate agent.

Kreidler's 10-month investigation revealed that one company, First American Title Insurance Co., provided $23,000 for one real estate agent's advertising. He said that such expenses are illegally passed on to consumers.

Kreidler said he will not fine companies because the problem is so widespread, but in the future he will aggressively enforce the law.

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