New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

Andrew M. Cuomo
Governor

James J. Wrynn
Superintendent

OGC Op. No. 11-06-05

The Office of General Counsel issued the following opinion on June 21, 2011 representing the position of the New York State Insurance Department.

Re: Real Estate Broker Marketing Agreements with Title Insurance Agents

Question Presented:

May a real estate broker provide to a title insurance agent marketing services and be paid, at a market rate, a fee for actual services rendered?

Conclusion:

Yes. As long as the real estate broker and the title insurance agent are not affiliated entities, and there is no quid pro quo or any other arrangement that would violate N.Y. Ins. Law § 6409(d) (McKinney 2009) or any other provisions of the Insurance Law, the real estate broker may provide to a title insurance agent the marketing services that are set forth in the facts herein, and be paid, at a market rate, a fee for the actual services rendered.

Facts:

The inquirer states that he represents a real estate broker. The real estate broker proposes to enter into a marketing agreement with an unaffiliated title insurance agent, whereby the title insurance agent would pay the real estate broker fees for actual marketing services rendered that are not based on sales. The inquirer states that the marketing services his client would provide for the title insurance agent include: 1) advertising the title insurance agent on his client’s website; 2) advertising the title insurance agent to other real estate brokers, management, and support staff on the real estate broker’s intranet site; 3) providing periodic e-mails to his client’s customers advertising the title insurance agent; 4) providing periodic e-mails to his client’s sales agents advertising the title insurance agent; 5) placing the title insurance agent’s promotional literature in his client’s “Buyer/Seller Packs,” which contain information distributed to his client’s customers; 6) granting access to the title insurance agent to attend his client’s district meetings and other functions; 7) granting access to the title insurance agent to attend individual sales team meetings to promote the agent’s services and provide training; 8) displaying the title insurance agent’s flyers and brochures in his client’s offices; 9) sending periodic e-mails from his client’s management team to its sales agent and support staff highlighting the title insurance agent’s service and performance advantages; 10) advertising the title insurance agent on “For Sale” signs; and 11) placing the title insurance agent’s brochures in his client’s open houses.

Analysis:

Title insurance agents are not licensed under the Insurance Law. Therefore, the provisions of the Insurance Law that address the marketing arrangements of insurance agents and brokers generally do not apply to title insurance agents.

However, Insurance Law § 6409(d) prohibits a title insurance corporation, or any person acting for it, from paying or giving any insurance applicant or a buyer’s or seller’s representative or attorney, any commission or any part of its fees or charges, or any other consideration or valuable thing as an inducement for, or as compensation for, title insurance business. Furthermore, any person or entity that accepts or receives such a commission or rebate is subject to a penalty equal to the greater of $1,000 or five times the amount of the commission or rebate. Insurance Law § 6409(d) states as follows:

No title insurance corporation or any other person acting for or on behalf of it, shall make any rebate of any portion of the fee, premium or charge made, or pay or give to any applicant for insurance, or to any person, firm, or corporation acting as agent, representative, attorney, or employee of the owner, lessee, mortgagee or the prospective owner, lessee, or mortgagee of the real property or any interest therein, either directly or indirectly, any commission, any part of its fees or charges, or any other consideration or valuable thing, as an inducement for, or as compensation for, any title insurance business. Any person or entity who accepts or receives such a commission or rebate shall be subject to a penalty equal to the greater of one thousand dollars or five times the amount thereof.

Therefore, as long as there is no affiliate relationship between the real estate broker and the title insurance agent, and no quid pro quo or any other arrangement that would violate Insurance Law § 6409(d) or any other provisions of the Insurance Law, a real estate broker may provide to a title insurance agent the marketing services that the inquirer sets forth in the facts and be paid, at a market rate, a fee for the actual services rendered. Please be advised that, any advertisement should not be deceptive, false, or otherwise misleading.

For further information, you may contact Senior Attorney Sapna Maloor at the New York City office.