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Let’s Talk About Unlawful Inducements Related to Title Insurance Transactions

home title companyHome Title Company Explains Unlawful Inducement

At Florida Home Title Company, we stay up to date with local and national legislative changes that affect the title insurance industry. One recent addition to Florida’s title insurance law is Regulation 69-B-186.010. But what is this law, and how does it affect your title insurance?

Guarding Against “Unlawful Inducements”
Regulation 69-B-186.010 is part of a larger set of rules governing the insurance industry – Florida’s “Unfair Insurance Trade Practices Act.” These laws prohibit insurers from taking part in unfair, deceptive, or questionable practices when providing insurance for clients.

Regulation 69-B-186.010 was introduced in February 2016, and deals specifically with limitations for “referrers of settlement services.” This may sound vague, but the language here is purposefully broad, and can thus encompass title agents and agencies, realtors and real estate brokers, mortgage brokers and bankers, attorneys, sales associates, developers, surveyors, escrow agents, and closing agents. In other words, almost anyone who is involved with a real estate transaction can be held liable for dishonest practices, or “unlawful inducements.”

What are Unlawful Inducements?
Again, the regulation is very broad and non-exhaustive when defining “unlawful inducements.” In general legal terms, an inducement refers to “a pledge or promise that causes an individual to enter into a particular agreement.” Put simply, inducements are any kind of incentive or motivation that would persuade a customer to purchase or do something, including bribes or gifts.

In terms of title insurance, Regulation 69-B-186.010 prohibits any of the following activities:

  • Any discount, credit, or reduction in fees (that are not part of the real estate contract)
  • Providing membership to any club, guild, union, or society (either for free or at a reduced fee)
  • Offering to make a charitable or tax-reducible contribution on behalf of the prospective buyer
  • Providing or offering stocks, bonds, securities, property, profit or dividends (except for cases lawfully permitted under the Real Estate Settlement Procedure Act)
  • Providing or offering employment

However, the regulation also covers inducements in the form of office furniture, gift cards, room rentals, food and beverages, and more. These restrictions prevent title insurance companies (and others) from bribing, coercing, or manipulating their clients with promises that are unethical and not contractual.

Not only do these laws protect our customers and clients, but they also protect the industry as a whole. If one company is practicing in a deceitful or unfair manner, it can promote unscrupulous competition and business practices amongst other service providers too.

How it Affects Title Insurance and Real Estate Transactions
If you’re a property developer, or potential buyer or seller, it’s good to know your rights in this regard. Be aware that any company or agent offering inducements not covered by the real estate contract is probably doing so illegally.

If you’re a realtor, be careful of what kinds of perks you offer your clients. However, be aware that certain expenditures are considered perfectly legal – for example, promotional items, educational materials, and legitimate compensation for services rendered. Your best option is to consult a professional real estate lawyer to ensure that you comply fully with the new regulation.

Contact Florida Home Title Company today for further information regarding unlawful inducements and title insurance. Our attorney owned and operated company has the legal expertise to walk you through Regulation 69-B-186.010.