BRIAN SANDOVAL
Governor
Bulletin 14-009
Replaces Bulletin 95-003
STATE
OF
NEVADA
DEPARTMENT
OF
BUSINESS
AND
INDUSTRY
DIVISION
OF
INSURANCE
1818 East College Pkwy., Suite 103
Carson City, Nevada 89706
(775) 687-0700 •
Fax
(775) 687-0787
Website: doi.nv.gov
E-mail: insinfo@doi.nv.gov
Unlawful Inducements in the Title Industry
BRUCE H. BRESLOW
Director
SCOTI
).
KIPPER
Comm
issioner
November 10, 2014
The Nevada Division
of
Insurance often receives questions regarding marketing practices in the title industry
that may violate Nevada's rebate and inducement laws. Real estate and mortgage professionals may
unknowingly be asking title professionals for items
or
favors that they are not allowed to provide under Nevada
law.
NRS 686A.130(2) prevents a title insurer
or
underwritten title company from paying directly
or
indirectly any
commission, rebate, part
of
its fees
or
charges
or
any other consideration as inducement
or
compensation for the
placement
of
any title, escrow,
or
other service to any
of
the following:
• The insured;
• The owner, existing
or
prospective,
of
the real property;
• The lessee, existing
or
prospective,
of
the real property;
• The mortgagee, existing
or
prospective,
of
the real property;
or
• Any person acting as agent, representative, attorney,
or
employee
of
any
of
the above.
This bulletin serves to provide notice to all title insurers and title agents, as well as to all real estate
brokers/agents, mortgage brokers/lenders, and builders/developers, as to how the Division
of
Insurance
interprets and enforces
NRS 686A.130. While it is not possible to discuss all potential unlawful title inducement
activities, this bulletin provides guidance on some activities that may be considered a violation
ofNRS
686A.130.
Definitions
For the purposes
of
this bulletin:
"Title company" means a title insurer
or
title agent authorized/licensed to do business in the State
of
Nevada.
"Real Estate Facilitator (REF)" means a person in a position to influence the selection
of
a title insurer
or
agent
as a result
of
their occupation as:
• A real estate agent or broker;
• A mortgage lender or broker;
• A real estate builder
or
developer; or
• Other person who provides services in connection with a real estate transaction.
Guidelines
Title and Escrow Fees
A title company must follow its filed schedule
of
fees and charges.
It
may not reduce
or
waive fees when the
insured does not qualify for a filed discount.
Promotional Materials
A title company may provide promotional gifts and promotional items subject to the following restrictions:
• The item must be branded with a permanently affixed company-specific marking
or
logo
of
either the
title insurer or title agent;
• The cost
of
the item to the title company must not exceed $20; and
• The item must not contain a reference to a REF.
Other Gifts
A title company may not provide gifts, rewards,
or
payments to a buyer, seller, or REF including, but not
limited to:
• Tickets to concerts, theater shows, and sporting events;
•
Golf
memberships and green fees;
• Gift cards; or
• Cash payments.
Advertising Real Property
A title company may provide title, escrow, and related services in accordance with the schedule
of
fees filed
with the Division
of
Insurance. A title company may not provide items or services or subsidize the costs
of
items or services that assist in promoting or marketing the sale
of
real property including, but not limited to:
• Food, beverages, transportation, prizes or other items for a real estate open house;
• Postcards, flyers, signs, or sign riders advertising the property; or
• Simulated panoramic property tours, drone services,
or
other photos
of
the property.
Other Advertising
• A title company
may
not produce, pay for,
or
subsidize advertising for a REF. A title company
may
place an advertisement in the media, including publications
ofREFs
or trade associations
if
the
following criteria are met:
• The publication is non-exclusive so any title company has an equal opportunity to advertise;
• The title company pays an amount equivalent to what other advertisers in the media pay; and
• The advertisement is solely self-promotional.
Business Costs
A title company may not provide, pay for, or subsidize ordinary business costs
of
a REF including, but not
limited to:
• Furniture;
• Office equipment;
• Cell phones or cell phone plans;
• Computer software
or
subscriptions to internet-based services, except software used
by
the title
company that assists a REF in communicating with or handling transactions with the title company;
• Business cards, either printed or virtual;
• Postage; or
• Advertising leads or mailing lists.
Educational Activities
A title company may not provide gratuitous seminars, conventions, or training classes. A title company may
provide educational programs
if
it meets the following criteria:
• The content
of
the program consists solely
of
education relevant to the title insurance industry;
• The program is non-exclusive and open to all REFs;
• The title company spends no more than $15 per attendee; and
•
If
there are continuing education credits offered, each attendee must pay an amount equal to what the
attendee would pay to attend a similar class offered by someone other than a title company on the open
market.
Business Entertainment
• A title company may not provide food, beverages, prizes, transportation or other items for an event
promoting a REF.
• A title company may pay for meals or other expenses to entertain a REF
ifthe
expenditure meets the
following criteria:
o A title company representative is present during the function;
o There is a substantial and substantive business discussion regarding title
or
escrow during the
function;
o Expenditures must not be based on or given
as
compensation for referral
of
business;
o Expenditures may be made for no more than four persons (including spouses and guests)
representing a single REF during a single event;
o The title company may not expend more than
$40 per person per function. When calculating this
limit, all costs paid by the title company for travel, hotel, equipment and facility rental, food,
beverages, and registration or entry fees, except those fees incurred solely by the title company
that
do
not benefit the REF, must be included; and
o Expenditures may not be made for the same person for more than 4 functions in a calendar year.
o These criteria do not apply to topics covered separately in the bulletin, such as promotional items
or
educational activities.
• A title company may host a self-promotional function
if
it meets the following criteria:
o The function must be held at the title company's offices;
o The function must be non-exclusive and open to all REFs; and
o The title company must spend no more than
$20 per guest reasonably expected to attend the
function.
Office Space
A title company may not lease or share office space inside the office
of
a REF. An employee
of
a title company
conducting business inside the office
of
the REF may be construed as a favored-agent relationship in violation
ofNRS
686A.200 and may compromise the ability
of
the title company to act as a neutral third party in the
escrow transaction. In addition, a title company paying for non-staffed office space in a REF's office merely for
the purposes
of
advertising is considered an unlawful inducement.
REF Events
A title company may not pay a marketing fee
or
preferred provider fee to a REF to obtain access to
employees/contractors/associates
of
the REF. A title company employee may attend activities and business
meetings
of
a REF
if
the following conditions are met:
• There is no cost to the title company other than entry
or
registration fees, meals for the employee,
transportation, and similar per diem type costs;
• The fees paid are no greater than those paid
by
settlement-provider attendees; and
• The title company employee must actually attend the event for which any fee is paid.
Third-Party Vendors
The statute prohibits title companies from paying inducements directly or indirectly. A title company may not
utilize a marketing company
or
other third-party vendor, whether affiliated or not with the title company, to
provide to a REF any
of
the prohibited items
or
services in this bulletin.
Trade Associations
A title company may have a membership in and/or participate in the events
of
bona fide trade associations
provided the association/event does not benefit a particular REF over other REFs and the opportunity to
participate is non-exclusive and open to any title company.
SC
~
Commissioner
of
Insurance
