BROKER OWNED AND “IN-HOUSE” TITLE COMPANIES

I recently spoke at a new Realtor welcome gathering. An overwhelming and alarming statement I got from many new realtor was, “I would like to have an attorney handle my real estate closings but my broker wants me to use the “in-house” title company that he/she has a “business arrangement” with or ownership interest in? ” This statement was followed up with, “What should I do?”

The short answer is…”GET A NEW BROKER, this is not the broker’s decision to make, it is the client’s decision to decide who is best to handle the closing of their real estate transaction.” Furthermore, it is the Realtor’s responsibility to help guide the client in the right direction to help them make an educated decision about whom is best situated to handle their real estate transaction. This fiduciary responsibility the Realtor has does not go away because their broker has a financial interest in an “in-house” title company.

This has been a problem for the real estate industry for several years now and continues to grow. Yes, I said “problem”, because that is what it is. As the managing attorney of a law firm that handles real estate related matters I have seen too many incompetent title examinations and closings conducted at the hands of these “in-house” title companies. Who really benefits from inaccurate title examinations, inaccurately prepared deeds, incorrect or incomplete legal descriptions and improperly prepared title policies? I do not see any upside to the consumer with these types of business arraignments. What is even more disturbing is often the services provided by the “in-house” title company are higher than the same services provided by a lawyer.

As a Realtor you have an obligation to your client to provide them with sound advice and guidance. As a home buyer or seller you also have an obligation and responsibility to do your homework, ask questions, and get several quotes for the services that must be provided during the real estate transaction.

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