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A class-action suit has been filed against a California RE/MAX branch and United Title Co. alleging illegal kickbacks, fraud and unfair competition.

The lawsuit, filed in May in the U.S. District Court in the Southern District of California, alleges that United Title and the RE/MAX branch violated the anti-kickback protections of the Real Estate Settlement Procedures Act, known as RESPA.

Alleged kickbacks in the real estate title insurance arena have taken center stage this year, sparked by a Colorado inquiry into title insurance practices. John Garamendi, California’s insurance regulator, announced in July that three major title insurers would pay more than $37 million to settle charges of kickbacks to lenders, builders and real estate agents.

The lawsuit is a class action suit on behalf of everyone who sold or purchased a home in California using RE/MAX as their agent or broker “and were induced by RE/MAX to use the services of United Title,” according to the complaint.

The plaintiffs are asking for damages of up to three times the fees they paid and also seek an injunction barring all defendants from giving or getting kickbacks and failing to disclose they are in affiliated business arrangements.

The six plaintiffs named in the legal papers are San Diego residents Felix and Linda Rodriguez, Laura Willis, Rosario and Susan Villareal and Ruth Warren. The six say when they bought San Diego homes using RE/MAX sales agents, their agents recommended United Title for either title or escrow services or both. 

The lawsuit alleges that United Title paid a “bonus” to RE/MAX for referrals in violation of RESPA.

RESPA states, “No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding…that business incident to or a part of a real estate settlement service…shall be referred to another person.”

Also, the complaint alleges that United Title and RE/MAX violated RESPA’s disclosure provisions.

“They (the six) either were not told there was a business relationship between RE/MAX and United, or the disclosure was not sufficient,” said Kevin Young, one of the attorneys for the plaintiffs.

Messages left for Reginald Vitek ofSeltzer Caplan Mc Mahon Vitek, the firm representing RE/MAX, were not returned by press time, nor was a message left at the RE/MAX brokerage.

This suit, Rodriguez v. United Title, is unusual because past anti-kickback lawsuits, as well as enforcement actions have centered on title agencies. This is because it is illegal under RESPA for title insurers to offer kickbacks, sources say.

“The broker (RE/MAX) is included for unfair business practices under California’s business and professions code,” said Kevin Young, attorney for the six plaintiffs.

In May, in a more typical example, an Illinois man filed a class-action lawsuit against First American Title Insurance Co. alleging the company misrepresented closing charges, according to media reports.

In July, three major title insurers settled with John Garamendi, California’s insurance regulator, in a probe of their practices.

The companies were accused of paying $25.4 million in illegal kickbacks to various lenders, builders and real estate agents in exchange for the referral of title insurance business. The title insurers settled without admitting wrongdoing.

Garamendi, who is also co-chair of the Title Insurance Working Group within the National Association of Insurance Commissioners, has worked with Colorado and Washington state insurance regulators to probe a series of alleged phony reinsurance contracts between title companies and subsidiaries of real estate agents, developers and lenders.


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