Four title insurance companies will pay a combined $3.3 million in fines to settle allegations by the D.C. Attorney General (OAG) of illegal kickbacks to real estate agents in exchange for steering clients to their businesses.
Title insurance is one of the biggest costs home buyers pay at closing. It is required by most lenders to protect against costs from an unexpected property title challenge.
Allied Title & Escrow, KVS Title, Modern Settlements and Union Settlements will pay the District penalties ranging from $65,000 to $1.9 million to settle the allegations. The District will use $1.75 million from the settlements for restitution to affected consumers, which the Office of the Attorney General said it would detail in coming months.
Under terms of the settlement, the four companies agreed to end the practice of giving real estate agents consideration for referral business, and will either cease doing business in the District or divest real estate agents from their ownership interests.
Attorney General Brian Schwalb said investigations found the companies illegally provided real estate agents exclusive investment opportunities in their companies or shell entities. In return for referrals, agents received kickbacks in the form of a split of the profits. The OAG also said Allied compensated agents with yacht parties on the Chesapeake Bay to incentivize future referrals.
The D.C. Office of the Attorney General said those kickbacks reduced home buyers’ ability to shop for the best price on title insurance services and hurt competition in the District’s title insurance and escrow markets.
All four companies agreed to end the practices before the OAG’s investigation was completed. Allied, KVS and Modern issued statements denying improper conduct but settled to avoid protracted litigation, the Wall Street Journal reported. Union did not respond, according to the Wall Street Journal.
Settlement copies for Allied, KVS, Union, and Modern are online.
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