Bulletin: FL2007010

Dear Associates:

On October 1, 2007, the new law affecting permissible charges by title agents took effect.  As Stewart Title previously stated (see Stewart Title bulletin FL2007004), it is no longer permissible to charge separately for title examination.  The title examination is now considered a primary title service, the charge for which is to be included in the title insurance premium collected.  Agents and closing officers may continue to charge separately for the title search and closing fee and, under the new state law, the charges for the services are now unregulated.  However, according to this jurisdiction’s court interpretations of the Real Estate Settlement Procedures Act (RESPA), an agent or closing office who purchases those products or services from a third party may not charge the consumer an amount in addition to the amount they paid themselves unless they add value to the product.

Attached to this bulletin is the official notice on these issues published October 1, 2007 by the Florida Department of Financial Services (D.F.S.) which we urge you to read over carefully.  It appears to be the intent of the D.F.S. to limit numerous charges to the consumer so that it will be easier for them to compare prices when selecting a title office or attorney to handle a real estate transaction.

The new law also puts into statutory law the decision in the Butler case which makes permissible a rebate of the agents’ share of the premium to the entity paying for title insurance.  Rebates, referral fees or any payment of money or items to third parties as an inducement to refer a real estate transaction remain strictly illegal.  The attached bulletin also explains that the applicable promulgated rate (full, reissue, new home purchase discount or substitution) must be shown on the closing statement.  Since the new law and the Butler case provide for a rebate and not a discount, the underwriter must be remitted premium based upon the applicable promulgated rate regardless of how much of the agents’ share of the premium is related.  For example, if the promulgated rate is $1,000.00 and the agent rebated $250.00 to the insured, the agent is required to remit $300.00 (30% of $1,000.00) to the underwriter.

We once again remind everyone to give notice to their customers of the reissue, new home purchase discount and substitution rates and to charge consumers the reissue, new home purchase discount and substitution rates whenever they are applicable. 

Finally, the promulgated simultaneous issue rate remains a minimum of $25.00.  Therefore, any charge for simultaneous issue above $25.00 is in fact the promulgated rate for that particular transaction and thus, thirty percent of whatever is charged must be remitted to the underwriter.

Please feel free to contact the underwriting department of Stewart Title in Florida should you have questions regarding these matters.

Department of Financial Services: Informational Memorandum (Issued October 1, 2007)

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