Four title insurers in Washington state face nearly $300,000 in fines after being accused by the state’s Insurance Commission of violating a rule that limits annual spending on gifts and other inducements to $25 per person.

While many of the offenses involved small expenditures, Washington state regulators appear determined to enforce the letter of the law in their third action against title insurers since an investigation conducted in 2005 and 2006 found “widespread, pervasive and routine use of illegal spending to steer business to their companies.”

Last month, Washington state Insurance Commissioner Mike Kreidler announced he would seek $1.95 million in fines from Stewart Title Guaranty Co. for 195 alleged violations of the $25-per-person, per-year rule. Stewart Title has requested a hearing on the allegations.

The alleged violations in the latest probe include one title insurer’s purchase of $37.45 worth of candy, and $40 spent on raffle tickets for a John L. Scott Christmas party.

Fines are also being sought in cases where title insurers provided property information reports to real estate agents and brokers for free or below their actual costs, or not recovering all of their costs for classes provided to real estate agents. In other instances, regulators said title companies improperly allocated the costs of business meals on a per-person basis, without any way to track whether the $25-per-person, per-year regulation was being followed.

Although the insurance commissioner has proposed $290,000 in fines, $110,450 would be suspended if the companies agreed to sign consent orders rather than disputing the allegations at hearings.

In July, Ticor Title Insurance Co. and First American Title signed consent orders resolving similar allegations, and the commission suspended all but $7,500 of $35,000 in proposed fines.

The four title agencies investigated this time around — Clark County Title, Cascade Title of Clark County, Rainier Title LLC and Land Title Co. — were licensed agents for Pacific Northwest Title Insurance Co., Commonwealth Land Title Insurance Co., Lawyers Title Insurance Corp. and Chicago Title Insurance Co., which were cited and face fines.

Most of the agencies “do not have an effective system for tracking the money they spend on incentives and inducements,” the Insurance Commission said in a report detailing the investigation, and were unable to “completely document compliance” with the $25-per-person, per-year regulation.

Receipts were missing, not itemized by diner, or lacked the identity and number of attendees and the purpose of the meal or event, investigators said.

“Most of these companies continue to provide information and other helpful items to real estate agents, brokers and agencies either for free or well below market value or actual costs,” the report said. “There are significant problems connected to the ‘clock hour’ classes and the fees the companies charged real estate agents and brokers who attended.”

While some agencies reported the cost of materials and refreshments provided to attendees, they failed to factor in the cost of the instructor’s time and the cost of the venue, the report said. Some didn’t realize that classes on the subject of escrow aren’t covered under an exemption for title insurance classes.

Some of the companies provide “a wide array of valuable goods and services to real estate agents and brokers, lenders and builders that may constitute illegal inducements or rewards,” for business referrals.

Ken Schreiner, president of Cascade Title Co., said he supports the rule limiting expenditures to $25 per person, per year, “but I don’t feel that these fines were equitable.”

Cascade Title Co. was cited for prorating the costs of business meals by the number of guests, providing Metroscan property information printouts at no cost to real estate agents and brokers, and spending $60.40 on refreshments at an event.

Schreiner said the refreshments were pastries, which were provided at an event attended by at least 15 real estate agents.

“I thought it was perfectly legal to divide it up among the agents who were there,” Schreiner said. “They are saying it’s some kind of event.”

As for the property reports, “Every title company in the state, I’m fairly comfortable saying, except one, was issuing Metroscan printouts with property profiles, so why are we being singled out?”

Schreiner said his family has been in the title insurance business since 1909, and also owns two other agencies that were part of the latest investigation — Clark County Title and Thurston County Title.

“I think we’re pretty darn clean,” Schreiner said.

Washington state authorities are seeking a total of $30,000 in fines connected with alleged violations by Clark County Title and Cascade Title, with half of that amount suspended. But investigators lauded Schreiner’s other company, Thurston County Title, for following the letter of the law.

“This agent … provides evidence that title insurers can abide by the letter of state law as it applies to inducements and incentives,” investigators reported. The company “manually tracks the few expenses it incurs and does not provide ‘clock hour’ classes. Other than the documents and information that title companies are permitted to provide at no cost, Thurston County Title charges fees for all other documents, and the fee schedule is posted on the agency’s Web site.”

Calls to the agencies whose actions are the basis of the largest proposed fines — Rainier Title LLC and Land Title Co. — were not returned.

Washington regulators are seeking $115,000 in fines related to expenditures by Rainier Title, the licensed agent for Commonwealth Title, and $145,000 connected to the actions of Land Title Co., the agent for Chicago Title Insurance Co.

Rainier, an affiliated business owned in part by John L. Scott and Coldwell Banker Bain real estate companies, is accused of providing alleged incentives including a $1,500 sponsorship for the Pierce County Association of Realtors’ 100th Anniversary Celebration in December.

Other alleged incentives included providing agents with New Home Trends reports for 15 cents to 50 cents per report, which Rainier Title allegedly pays $3,100 a month for.

Regulators are also seeking fines for a $37.45 expenditure on candy for Windemere Canyon and $40 spent on raffle tickets for a John L. Scott Christmas party. The expenditures violated the $25-per-person, per-year rule because the recipient was an individual, rather than an entity, investigators said.

Alleged violations by Land Title Co. included a $2,251 golf tournament sponsorship that benefited a mortgage lender, and $400 for playoff tickets to a Seattle Seahawks playoff game for a mortgage broker and real estate agent.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription