DFS Updates Compliance Information for Title Insurance Agents

07/16/2019 5:13 PM | Scott Merritt (Administrator)

For more information view DFS Compliance Information: Title Insurance Agents Page.

Real Estate and Builder Open Houses

Our Department receives a high volume of questions from the title insurance industry. Unfortunately, these questions do not always use consistent terminology making it difficult to determine the true situation and resulting question. It is very important when we communicate with each other that we know what the other is talking about so we can assist the other. Sometimes taking time to describe the term or situation you have a question about will assist the Department with answering your question. This is particularly true when it comes to compliance questions. An example of the areas in which we often get ambiguous questions are real estate open houses. With this situation in mind, here is some guidance that we will try to keep as simple but still provide helpful guidance.

A title agent/agency may market its services to anyone, including real estate agents/brokers and lenders who will be a significant source of new business. The key is that the title agent/agency must market itself and not the broker, lender, or anyone else.

There are multiple types of open houses:

REALTOR:

  • Brokers Open/Brokers Open House: When a real estate broker shows homes they have listed to their realtors or other realtors. Realtor caravans would be an example. (non-public)
  • Open House: When a Realtor holds an open house for a home which they have listed to promote the home for sale to consumers. (public)

BUILDER:

  • Builders Model Homes: Open House/Parade of Homes Event: When a builder hosts an event in a model home to promote the home to Realtors and/or consumers.

A Brokers Open, Brokers Open House, and certain Builders events are times when a title agency should be extra cautious of violating the Florida Insurance Code and RESPA. No members of the general public, no sellers, and no buyers are in attendance. A byproduct of this meeting will be the discussions the brokers have with each other where they let each other know about the inventory each one has available for sale. The thinking is that one of the other brokers may have a buyer that will be more receptive to paying the full asking price.

An Open House to the public is different than those detailed above because this is an opportunity for the title agent/agency to take full advantage of their audience to explain what they do and why they are better at doing it than any other title agent/agency.

Regardless of the event type, the title agency may only advertise its own services and not perform any of the duties or functions of the broker selling the home. The title agency may have food and beverages, but that must be accompanied by materials showing what the title agency does and can do for the consumer. A title agency may NOT just drop off food or solely provide food/beverages for these events. A title agency MUST attend the event and promote its agency during the event. The title agency cannot describe the home, give tours to people visiting the home, distribute flyers about the home, "man the event" without a Realtor or builder sales associate present, promote any broker listings, etc., as these are duties and functions of the real estate broker, Realtor or builder sales associate.

Marketing these open houses and others' events by the title agent/agency are prohibited. Licensees and persons subject to the Florida Insurance Code should refamiliarize themselves with it for compliance. Specifically, Rule 69B-186.010, F.A.C., regarding guidance in this area should be reviewed prior to any title agent/agency considering promoting open houses on their Facebook or other social media or other types of solicitation at the title agency's own time, resources and expenses, no matter how quick and inexpensive.

Any licensee of the Department of Financial Services found to have conducted these acts is subject to discipline for violation of the Florida Insurance Code. Any other person will be referred to the appropriate state or federal agency/board, etc.

Violations by the title insurance industry can be reported toTitle@MyFloridaCFO.com. Please email or forward as much information as you can. Please note that this guidance is not all-inclusive and any person subject to the Florida Insurance Code and/or RESPA should seek legal advice or contact their association prior to proceeding with any regulated activity.

[See Section 626.9541, F.S. and Rule 69B-186.010, F.A.C.]

 For more information view DFS Compliance Information: Title Insurance Agents Page 

 

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