This doesn’t happen every day in New York: the courts have decided in favor of homebuyers over pole-dancers and deep-pocketed Albany lobbyists. And Governor Andrew Cuomo is thrilled.
A panel of Appellate Court judges has unanimously upheld a set of title-insurance reforms, reversing a decision by a lower court, Crain’s reports. The appeals court ruling reinstates reforms that were designed to prevent title insurers from lavishing gifts on homebuyers’ brokers, lawyers and other professionals – and then passing the costs on to homebuyers at closings as “marketing fees.” The gifts included meals in fancy restaurants, VIP boxes at Madison Square Garden events, and, of course, outings to strip clubs.
Most homebuyers purchase title insurance – sometimes for thousands of dollars – to make sure there are no liens on the property and they’ll have clear claim to the title once they plunk down their cash. The reforms were drawn up by the state Department of Financial Services (DFS) in an effort to lower costs for consumers. They were supported by the Cuomo administration but vigorously opposed by the New York State Land and Title Association, a trade group that filed the suit as the regulations went into effect last summer.
"As I have maintained throughout this years-long process, the practice of using high-priced tickets, meals, lavish gifts and strip clubs as inducements for title insurance business is prohibited by New York Insurance Law, and those improper expenditures may not be passed on to consumers," Maria Vullo, superintendent of the DFS, said in a statement.
Kathryn Wylde, president of the Partnership for New York City, a business group that had pushed for a crackdown, added: "Today's ruling from the [appellate court] that effectively bans title insurance companies from passing along lavish expenses to consumers is a victory for New York residents and businesses.”
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