Desk fees and co-advertising costs Stewart Title Guaranty Co. paid to real estate brokers amounted to illegal incentives for business referrals, Washington state officials allege in ordering the company to stop such practices.

Washington state limits the use of inducements, payments or rewards for title insurance business referrals to $25 per person per year.

An Aug. 6 cease-and-desist order issued by Washington State Insurance Commissioner Mike Kreidler alleges Stewart Title of Snohomish County violated the rule more than 100 times between Dec. 1 and March 30, spending thousands of dollars a month on alleged incentives, including gifts, refreshments, event sponsorships, advertising and desk fees.

Desk fees — payments to brokers to rent space in their offices that can exceed $1,000 a month — amounted to illegal incentives because the desks are rarely used by Stewart Title staff, the commissioner said in a press release. In some cases, Stewart Title paid more than its fair share of shared advertising costs, and real estate agents were charged $49 for transaction coordinator services that usually cost $150 to $175 in the region, the commissioner alleged.

A spokeswoman for Stewart Title did not immediately respond to a request for comment from Inman News.

Last year, Kreidler alleged that examinations of 11 title insurance companies found all had violated state law governing incentives and inducements. After letting the companies off with warnings that further such practices would lead to enforcement actions, last month the commissioner fined Ticor Title Insurance Co. and First American Title $35,000 for allegedly providing similar incentives. All but $7,500 of the fines were suspended.

The investigation of Stewart Title and five other title insurance agencies is still underway, Kreidler said, but the cease-and-desist order was issued because of Stewart Title’s “blatant disregard” for the law.

Stewart Title could face fines of up to $10,000 per violation and have its license to do business in the state suspended or revoked when the investigation is complete, the commissioner said.

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Send tips or a Letter to the Editor to matt@inman.com, or call (510) 658-9252, ext. 150.

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