What's happening
This bill clarifies and updates penalties and definitions regarding prohibited rebates and commissions in title insurance transactions.
Why it matters
Clarifies what constitutes an illegal inducement or compensation. in title insurance transactions, specifying that any benefit given as a reward for referring or placing title insurance is prohibited—this helps reduce potential kickbacks and conflicts of interest in real estate transactions.
Sets out clear and tiered penalties. for violators, including individuals and companies, with fines based on fixed amounts or multiples of the illegal rebates/compensation involved—this provides stronger deterrence and more proportional consequences for misconduct.
Defines exceptions for standard marketing activities,. allowing title insurers and agents to continue normal advertising and relationship-building efforts as long as they are not used to reward specific business placements—this protects legitimate business practices from unintended legal risk.
Explicitly extends liability to a broader group. (including attorneys, agents, and employees of property owners or buyers) who knowingly accept illegal rebates, making it harder for participants in real estate deals to evade accountability.
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Who cares
Headline styles
Define Title Insurance Inducements
Plain English, a few words. Used as the page title.
Sponsors
2 Co-sponsors
History
- Referred to insurance
- Referred to insurance
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Clarify Title Insurance Rules
In Assembly Committee · Insurance · Sponsor Kevin Cahill
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2928
2019-2020 Regular Sessions
IN SENATE
January 30, 2019
Introduced by Sens. BRESLIN, ADDABBO, SERINO -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law, in relation to the prohibition of commissions and rebates
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subsection (d) of section 6409 of the insurance law, as amended by section 17 of part V of chapter 57 of the laws of 2014, is amended to read as follows:
(d) (1) No title insurance corporation, title insurance agent, or any other person acting for or on behalf of the title insurance corporation or title insurance agent, shall offer or make, directly or indirectly, any rebate of any portion of the fee, premium or charge made, or pay or give to any applicant, 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, nor shall any applicant, or any person, firm, or corporation acting as agent, representative, attorney, or employee of the owner, lessee, mortgagee or of the prospective owner, lessee, or mortgagee of the real property or anyone having any interest in real property knowingly receive, directly or indirectly, any such rebate or other consideration or valuable thing. Any person or entity who violates this section shall be subject to a penalty of [(1)] (i) five thousand dollars; or [(2)] (ii) up to ten times the amount of any compensation or rebate received or paid in the case of a title insurance corporation or title insurance agent; or [(3)] (iii) up to five times the amount of any compensation or rebate received or paid; or [(4)] (iv) in the case of an
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03106-01-9
S. 2928 2
applicant for title insurance that covers real property used predominantly for residential purposes, and which consists of not more than four dwelling units, other than hotels and motels, an amount not to exceed the compensation or rebate received or paid, when such applicant knew that it was a violation to receive such rebate, or other consideration or valuable thing; provided, however, if such applicant did not know that it was a violation to receive such rebate, or other consideration or valuable thing, he or she shall not be assessed a penalty under this [subdivision] subsection.
(2) For the purposes of this subsection, "an inducement for, or as compensation for, any title insurance business" shall mean a benefit given with the intention to compensate or offer compensation, directly or indirectly, for any past or present placement for a particular piece of title insurance business to any applicant, or 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. Nothing contained in paragraph one of this subsection to the contrary shall prohibit any title insurance corporation or title insurance agent, or any other person acting for or on behalf of the title insurance corporation or title insurance agent, from undertaking any usual and customary marketing activity aimed at acquainting present and prospective customers with the advantages of using a particular title insurer or title insurance agent that are not intended for the purpose of a reward for the future placement of, or the past placement, of a particular piece of title insurance business.
§ 2. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the insurance law, in relation to the prohibition of commissions and rebates
Purpose
This bill clarifies that providing a benefit with the intention to compensate or offer compensation, directly or indirectly, for any past or present placement for a particular piece of title insurance business by a title insurance corporation or agent or a representative thereof is a prohibited illegal inducement under the
Section 6409(d) of the insurance Law.
Summary of provisions
Section 1: This section amends subdivision 2 of section 6409(d) of the Insurance Law, clarifying that a marketing activity or conveyed benefit or consideration shall be considered an illegal "inducement" under this section if it is given with the intention to directly or indirectly compensate a present or perspective client for any past or present placement of title insurance business.
Section 2: Provides the effective date.
Justification
In 2017, as part of proposed rulemaking to clarify and enforce Insurance Law Section 6409(d), the Department of Financial Services drafted regu- lations that deemed any marketing practices that conveyed a benefit onto a perspective client an illegal inducement "regardless of whether provided as a quid pro quo for perspective business." This interpreta- tion goes beyond the intended scope of the law and seems to be an about face from previous guidance by the Office of General Counsel (OGC), which were requested by and relied upon by the title insurance industry, and which expressly required the presence of a "quid pro quo" in order to constitute an illegal inducement. See i.e. OGC Opinion No. 11-06-05 (June 21, 2011).
Because the title insurance industry does not engage in direct to consumer advertising, insurers and agents need to be able to market themselves and their services to their clients, including attorneys and other real estate professionals, and they should be able to do this in a way similar to others in the insurance industry and general economy, as long as there is no direct or indirect "quid pro quo" for the placement of a particular piece title insurance business. This bill clarifies that the mere presence of common marketing activities absent a quid pro quo does not constitute an illegal inducement under 6409(d).
Legislative history
2017-2018: A.8467 / S6704
Fiscal implications
None to the state.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.