Compliance Information: Title Insurance Agents
As a licensee it’s important you have access to information that helps you keep your insurance business in compliance. This section is an important tool to help you meet that goal.
However, these tools are not and cannot replace statutes, department rules, orders or case law. The items below are intended as reminders only and are not necessarily the exact text of the Florida Statutes or Florida Administrative Code. The legal cites have been provided for your further reference. In addition to state compliance issues, it is important to maintain compliance with federal laws, rules, and regulations, including but not limited to RESPA, TILA, TRID, and GLBA.
Every title insurer must file with the department a list containing the name and address of each appointed agent who is exempt from licensure under s. 626.8417(4) and (5) and who issues or countersigns binders, commitments, title insurance policies, or guarantees of title. Furthermore, each month thereafter, the title insurer must report to the department the name and address of any unlicensed agent whose appointment is granted or terminated.
The list may be submitted to the department via email to AgentLicensing@MyFloridaCFO.com. Please be sure to also include your appointing entity number assigned by the department on your submission so it is properly reported. [See s. 627.797, F.S.]
Our Department receives a high volume of questions from the title insurance industry. Unfortunately, these questions do not always use consistent terminology making it difficult to determine the true situation and resulting question. It is very important when we communicate with each other that we know what the other is talking about so we can assist the other. Sometimes taking time to describe the term or situation you have a question about will assist the Department with answering your question. This is particularly true when it comes to compliance questions. An example of the areas in which we often get ambiguous questions are real estate open houses and listings. With this situation in mind, here is some guidance that we will try to keep as simple but still provide helpful guidance.
A title agent/agency may market its services to anyone, including real estate agents/brokers and lenders who will be a significant source of new business. The key is that the title agent/agency must market itself (this includes its services) and not the broker, lender, or anyone else (this includes their services).
There are multiple types of open houses:
- Brokers Open/Brokers Open House: When a real estate broker shows homes they have listed to their realtors or other realtors. Realtor caravans would be an example. (non-public)
- Open House: When a Realtor holds an open house for a home which they have listed to promote the home for sale to consumers. (public)
- Builders Model Homes: Open House/Parade of Homes Event: When a builder hosts an event in a model home to promote the home to Realtors and/or consumers.
A Brokers Open, Brokers Open House, and certain Builders events are times when a title agency should be extra cautious of violating the Florida Insurance Code and RESPA. No members of the general public, no sellers, and no buyers are in attendance. A byproduct of this meeting will be the discussions the brokers have with each other where they let each other know about the inventory each one has available for sale. The thinking is that one of the other brokers may have a buyer that will be more receptive to paying the full asking price.
An Open House to the public is different than those detailed above because this is an opportunity for the title agent/agency to take full advantage of their audience to explain what they do and why they are better at doing it than any other title agent/agency.
Regardless of the event type, the title agency may only advertise its own services and not perform any of the duties or functions of the broker selling the home (this includes circulating listings). The title agency may have food and beverages, but that must be accompanied by materials showing what the title agency does and can do for the consumer. A title agency may NOT just drop off food or solely provide food/beverages for these events. A title agency MUST attend the event and promote its agency during the event. The title agency cannot describe the home, give tours to people visiting the home, distribute flyers about the home, "man the event" without a Realtor or builder sales associate present, promote any broker listings, etc., as these are duties and functions of the real estate broker, Realtor or builder sales associate.
Marketing these open houses and others' events (including listings) by the title agent/agency are prohibited. Licensees and persons subject to the Florida Insurance Code should refamiliarize themselves with it for compliance. Specifically, Rule 69B-186.010, F.A.C., regarding guidance in this area should be reviewed prior to any title agent/agency considering promoting open houses (or listings) on their website, Facebook or other social media or other types of solicitation at the title agency's own time, resources and expenses, no matter how quick and inexpensive.
Any licensee of the Department of Financial Services found to have conducted these acts is subject to discipline for violation of the Florida Insurance Code and be referred for unlicensed real estate activity. Any other person will be referred to the appropriate state or federal agency/board, etc.
Violations by the title insurance industry can be reported to Title@MyFloridaCFO.com. Please email or forward as much information as you can. Please note that this guidance is not all-inclusive and any person subject to the Florida Insurance Code and/or RESPA should seek legal advice or contact their association prior to proceeding with any regulated activity.
Title agents and agencies are permitted to rebate all or part of their share of the title insurance premium as the result of a Florida Supreme Court decision in the case of Chicago Title Insurance Company v. Butler, No. 95312 (Fla. Oct. 19, 2000). This decision allows a title insurance agent or agency to rebate any portion of the agent’s share of the premium to the person responsible for paying that premium. However, a rebate may not be provided to any third party as an inducement for the referral of business to the title insurance agent or agency.
The Department believes that it is a violation of subparagraph 626.9541(1)(h)3., Florida Statutes, and subsection 69B-186.010(4)(a), Florida Administrative Code, for a title insurance agent and/or agency to pay for an estoppel certificate without being reimbursed for the expenditure. However, if a title insurance agent and/or agency pay for an estoppel certificate, and the title insurance agent or agency is reimbursed at closing for the estoppel certificate, such advance payment for the estoppel certificate does not constitute an "unlawful rebate." If the closing falls through then the title agent/agency should make efforts to request and obtain reimbursement.
Rule 69B-186.010, F.A.C., became effective on February 9, 2016 and was last amended on May 13, 2018. It covers Unlawful Rebates and Inducements Related to Title Insurance Transactions. The purpose of this rule interprets subparagraph 626.9541(1)(h), F.S., which provides that it is an unfair method of competition and unfair or deceptive act or practice prohibited by Section 626.9521, F.S., to engage in certain activities related to title insurance. All lists contained within this rule are intended as examples and are not exhaustive. This rule does not prohibit inducements or rebates provided by filed or approved rates or rating manuals, advertising gifts allowed by paragraph 626.9541(1)(m), F.S., or inducements and rebates otherwise expressly allowed by law.
- Does the rule apply to attorneys and law firms?
- Is anyone training or regulating the realtors to keep them from asking for unlawful inducements?
We’ve communicated information related to law, including the rule, to the Florida Department of Business and Professional Regulation (DBPR) and the Florida Realtor’s Association. We’ll continue to communicate and educate the industry.
- Is it acceptable for a vendor that a title agency does business with (i.e. an appraiser, termite company, home inspection company, etc.) to provide coupons for a discount to the title agency's customers?
It is acceptable for the vendor to do so.
- What is the Department of Financial Services' position on whether a title agent can advance the cost of an estoppel letter from a homeowners association if the agent expects to receive reimbursement at closing?
The Department believes that it is a violation of subparagraph 626.9541(1)(h)3., Florida Statutes, and subsection 69B-186.010(4)(a), Florida Administrative Code, for a title insurance agent and/or agency to pay for an estoppel certificate without being reimbursed for the expenditure. However, if a title insurance agent and/or agency pay for an estoppel certificate, and the title insurance agent or agency is reimbursed at closing for the estoppel certificate, such advance payment for the estoppel certificate does not constitute an "unlawful rebate". If the closing falls through, the title agent/agency should make good faith efforts to request and obtain reimbursement.
For example, §720.30851(8) F.S., states, in part, that "if the certificate is requested in conjunction with the sale or mortgage of a parcel but the closing does not occur and no later than 30 days after the closing date for which the certificate was sought the preparer receives a written request, accompanied by reasonable documentation, that the sale did not occur from a payor that is not the parcel owner, the fee shall be refunded to that payor within 30 days after receipt of the request."
- Can a title agency print bulletins for a real estate agent if it charges actual cost?
Yes, and you can make a profit you wish.
- Can a title agency email its contacts realtor flyers for listings and open houses which do not contain the title agency’s name?
No, because you’re providing the realtor free leads and doing the work for the realtor for free.
- Can a title agency have a raffle at an event to promote its own business?
- Can a title agency donate a gift card to be raffled off at an event given by a realtor?
Yes, if it is to promote the business of the title agent/agency and not the realtor.
- Can a title agency attend an open house and provide refreshments, and if so, is there a dollar limit on the refreshments?
- Yes, if it is to promote the business of the title agent/agency.
- No, if it is to promote the business of the realtor or their open house.
There is no dollar limit on food. However, if you wish to share in the costs of the food and drink for an open house with a realtor, you must pay a proportional share of those costs. You cannot provide food and drinks for the realtor’s open house at no cost to them.
- Can a title agency contribute towards the cost of publicizing an open house?
Yes, if it is to promote the business of the title agent/agency, not the realtor, and is proportionately split among the parties hosting or putting on the open house.
The charge to each provider should be equal to that provider’s share of the advertising cost in direct proportion to its prominence in the advertisement. For example, if realtor content takes up 80% of the total ad space, while title agent content takes up only 20%, the most the title agent/agency should pay is 20%.
- Would it be a violation for a title agency to sponsor and cater realtor open houses?
Yes. This answer also applies to attorney-owned title agencies, affiliated-business title agencies, and title insurers.
- Is there a limit on how many $25 promotional items that a title agency can give to any particular referrer of settlement business?
No, however, promotional items may not be given in exchange for business referred.
- Can my title agency invite real estate professionals to our office to hear an educational presentation by an expert in some field related to real estate closings, such as a CPA with expertise in FIRPTA (Foreign Investment in Real Property Tax Act) or a surveyor?
Yes, however, the invitation should not be based solely on business referrals.
- During the presentation, can we serve lunch or other refreshments?
Yes because this is part of the event you are putting on to educate and promote your business.
- Is paying the speaker allowable?
Yes, because you are paying the expert for their time. However, you cannot overpay a speaker to reward them for business referrals.
- Our title agency would like to have a monthly networking, relationship-building event with local real estate agents, such as a wine tasting, a cooking class etc. Some invitees already give us business, while others would be real estate agents from whom we would like to get business. Is this permissible provided the per-person cost does not exceed the $25 limit?
Yes, however, the $25 limit does not apply to the event, as described. The limit only applies to articles of merchandise given for purposes of advertising. So, for example, if you were to host a wine tasting event and wanted to provide attendees with a wine glass engraved with your company name and logo for purposes of advertising, the $25 limit would apply to the wine glass, not the wine tasting event itself.
- What if the per-person cost to host a monthly networking, relationship-building event with local real estate agents is $35 and the real estate agents who attend each pay $10, reducing our cost to $25 per-person. Is this okay?
As stated above, the $25 limit applies to articles of merchandise given for purposes of advertising. It does not apply to the event, as described. Therefore, if you want to have attendees pay a portion of the cost of the event, that is okay, however it is not mandatory that you do so.
- Can our title agency participate in a program like "Homes for Heroes"?
You can offer a rebate to the “heroes” that meet the classification. Consider including a statement on your marketing material that this is a rebate of your agency portion of the title premium, in case a competitor feels you are offering an unlawful inducement. The rebate must be properly documented in your file and on the Closing Disclosure.
The Florida Insurance Code does not regulate the amount a title agency can charge for closing services; however, the fee charged must at minimum include the actual costs, fees or charges the agency must pay related to the closing.
Title agents must maintain records for 7 years pursuant to section 627.7845(2), F.S., which states:
"The title insurer shall cause the evidence of the determination of insurability and the reasonable title search or search of the records of a Uniform Commercial Code filing office to be preserved and retained in its files or in the files of its title insurance agent or agency for a period of not less than 7 years after the title insurance commitment, title insurance policy, or guarantee of title was issued. The title insurer must produce the evidence required to be maintained by this subsection at its offices upon the demand of the office. Instead of retaining the original evidence, the title insurer may, in the regular course of business, establish a system under which all or part of the evidence is recorded, copied, or reproduced by any photographic, photo static, microfilm, micro card, miniature photographic, or other process which accurately reproduces or forms a durable medium for reproducing the original."
Contractual agreements between the title agent and the insurer that require the agent to maintain such records are NOT regulated by the bureau.
Escrow Account records must be maintained in accordance with rule 69O-186.009, F.A.C., states "Every licensed title insurance agent shall maintain a monthly reconciliation of every escrow account required to be maintained pursuant to section 626.8473, F.S., and shall, on a monthly basis, report such reconciliation together with appropriate supporting documentation to each title insurer which licensed the agent during the reconciliation period. The reconciliation shall be supported by appropriate documentation, including a monthly bank statement, a list of all outstanding checks as of the date of the reconciliation which is not shown on the monthly bank statement, and a trial balance of the escrow ledger records required to be maintained by subsection (2). Licensed title insurance agents and title insurers shall provide a copy of the monthly escrow account reconciliation to the Office upon Its request. Such records shall be maintained by the title insurer for a period of five years." Also part (2) states, "Every licensed title insurance agent shall maintain a separate ledger card for each real estate closing transaction for which funds are received in escrow. The ledger card shall contain chronological entries of dates and amounts of moneys received and disbursed including the name of the remitter and payee and each check number issued on such escrow account. Such records shall be maintained by the title insurance agent for a period of three years. The ledger card required by this rule may be maintained in computer storage with a print-out available upon request of a title insurer or the Office of Insurance Regulation (OIR).
The Florida Statutes prohibit title insurance agents and agencies from paying, allowing, giving, or offering to pay, allow or give a direct or indirect inducement for the purchase of title insurance. Paying someone for each piece of business they send to you could be considered an inducement, which would be a violation of the statutes. See subsection 626.9541(1)(h)3.a., F.S.
This includes prohibiting paying employees of the title agency who are not licensed and appointed as title insurance agents for the same act(s). An example would be a title insurance agency that pays a marketing representative who is not licensed as a title insurance agent for each title insurance policy sold that they brought that business to the title insurance agency. See other sections 626.0428(3), 626.112(8), and 626.8411(1)(d), F.S.
The Department of Financial Services (Department) is often asked to advise if certain fees are allowable and where these fees are to be recorded on the closing disclosure and/or HUD settlement forms. The Department can answer these concerns very simply:
- The Florida Department of Financial Services does not regulate the amount of each fee charged as part of a closing.
- These forms were developed by the Consumer Financial Protection Bureau (CFPB). Questions about how to complete these forms should be directed to the CFPB at www.consumerfinance.gov.
The Department is charged with making sure Florida consumers are not deceived by our licensees when they purchase title insurance and close on a property.
As part of any inspection or investigation done, the Department will verify at a minimum that the title insurance agent, or agency:
- Charged the correct premium for the title insurance policy and each of the policy's endorsements.
- Allocated the premium payment to the proper party as stated in the sales contract.
- Deposited the funds for the transaction in a separate bank account, as required by §626.8473, F.S.
- Disbursed the escrow funds as specified in the sales contract, settlement statements, and any other escrow agreement(s).
- Charged the consumer the same fees the agency advertised or told the consumer would be required to close on the property.
- Satisfied the problems discovered during the title searches as required by the title insurer.
- Met all the requirements to assure title is transferred to the new owner, properly, as outlined in the closing documents and sales contracts.
The Florida Statutes defines "closing services" as the service provided by a licensed title insurer, title insurance agent or agency, or attorney agent in the agent's or agency's capacity as such, including, but not limited to, preparing documents necessary to close the transaction, conducting the closing, or handling the disbursing of funds related to the closing in a real estate closing transaction in which a title insurance commitment or policy is to be issued. These are activities that reduce the future liability of the title insurer by making sure the closing was conducted suitably, the correct people signed the appropriate forms, all existing liens were identified and discharged or excluded from coverage, the property was properly identified, existing loans were satisfied, and the new documents were recorded timely in the proper venue.
The Florida Insurance Code does not require the title agent, or agency, to meet these requirements on its own. Title agencies are permitted to hire outside parties to assist in the completion of these duties. When a title insurance agency does this, it must also include these fees in with its closing services fee that it advertises to the public and that it reports to the Office of Insurance regulation (OIR) in its data filing for that year.
Title agencies are permitted to charge the third-party fees as separate line items as long as the consumer has been notified these fees represent responsibilities of the agency, which were contracted to a third party. The consumer must also understand these fees will be charged to them either as part of the closing services fee total, or in addition to the agency's closing services fee. However, in no case should a third-party fee be charged to a consumer in a deceptive or misleading manner. Irrespective of how these fees are charged, the Florida Insurance Code will hold the title agency and its agent in charge responsible for the work product of the vendors selected and/or hired by the agency to perform any services that fall under closing services, primary title services, or the title search, regardless of which party to the transaction pays for these services.