Affiliated Business in Title Insurance

Regulation of Affiliated Business in Title Insurance

In 2019, the Utah legislature passed a new law regarding affiliated business in title insurance. The new law generally does three things: (1) eliminates the prior Utah law restrictions against a real estate business owning an interest in a title insurance business; (2) references the Real Estate Settlement Procedures Act, 12 U.S.C. Sec. 2601 et seq. (RESPA), authorizes the Division to impose sanctions for violation of Section 8 of RESPA, and adds some Utah specific restrictions; and (3) makes the Division responsible for enforcing the new law.

The new law, codified at Utah Code §§ 31A-23a-1001 to -1007, and § 61-2f-401(25), references section 8 of the federal Real Estate Settlement Procedures Act (RESPA) (12 U.S.C. § 2607) and the regulations thereunder (including 12 C.F.R. §§ 1024.14 and 1024.15). The new law also requires that a “new or newly affiliated title entity” (as defined in Utah’s statute) must maintain certain capital requirements, must do a minimum amount of non-affiliated business, and must file annual reports of its business activities with the Division by March 1 each year.

Some of the specific activities relating to affiliated title insurance business that the Division may now regulate include:

  • The requirement that at least 30% of the Utah revenues of an affiliated title business must come from non-affiliated business sources (beginning June 1, 2021, after a phase-in period) Utah Code Ann. 31A-23a-1003(1)(b);
  • The RESPA requirement that no “fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise” be given or accepted in exchange for business referred to an affiliated title company; and
  • The requirement that the person referring business to an affiliated title company make a specific written disclosure (required by 12 C.F.R. § 1024.15(b)(1)) to the customer at the time the referral is made giving details of the affiliated business arrangement.

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