Real Estate Law Section

The section monitors, studies and proposes statutory developments in property law and keeps its membership updated by sending periodic e-newsletters. It also produces annual CLE programming for real estate lawyers and others.

Chair
CloseTrak
5860 Ridgeway Center Parkway Suite 101
Memphis, TN 38120
Twitter: jkirk01
Facebook: jkirk01
(901)333-1360
Immediate Past Chair
Webb Sanders PLLC
125 W Hester Rd
Cottontown, TN 37048
(615)581-0804
Vice-Chair
Stites & Harbison, PLLC
401 Commerce Street, Suite 800
Nashville, TN 37219
(615)782-2294

Hot Topics in Real Estate Coming Next Week

If you do real estate law, you don't want to miss the annual Hot Topics in Real Estate program jointly produced by the Tennessee Bar Association and the Tennessee Land Title Association. This year's program will be Nov. 10 at the AT&T Building in downtown Nashville, starting at 8:30 a.m. and offering 6.25 CLE hours credit. Here's what the agenda looks like.

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The Consumer Financial Protection Bureau Targeting Affiliated Businesses

The Consumer Financial Protection Bureau (CFPB) recently took action against Meridian Title Corporation (Meridian) for violation of a long-standing provision of the Real Estate Settlement Procedure Act (RESPA). CFPB has been delegated with the enforcement of RESPA.  
 
According to the release, Meridian is a real estate settlement agent and a title insurance agency located in South Bend, Indiana, which was found to have steered “consumers to a title insurer owned in part by several of [Meridian’s] executives without making disclosures about the business affiliation.” 
 
When directed to its affiliated provider, the settlement agent/title agent “was able to keep extra money beyond the commission it would normally have been entitled to collect based on an understanding with the affiliated provider, to add to its bottom line,” according to Director Richard Cordray.
 
Receiving “anything of value” pursuant to a referral agreement has long been a violation of RESPA, but if the referring entity meets the definition of an “affiliated business,” then the referring entity must “generally disclose its relationship to the consumer.” Theoretically, this permits the consumer to exercise independent judgment regarding whether to use that provider. The penalty for Meridian’s failure to disclosure resulted in an order that required the regional company to pay $1.25 million to 7,000 “harmed consumers” and an order to desist from such conduct in the future.
 
Unfortunately, many affiliated providers of services for title agencies and lenders have become lax and brush off this continuing obligatory disclosure to the consumer.
 
This action is noteworthy because the CFPB has identified and taken action against a relatively minor player in the title industry. This should reinforce the importance of compliance by every title agency and lender. Lenders who enjoy affiliated business arrangements with title insurance providers are apt to trivialize this RESPA requirement when dealing with the consumer, especially when the lender views the provider as a business partner through its relationship as a member in the provider’s limited liability company.
 
As with many consumer protection regulations, the consumer often fails to appreciate the value of choosing services through a provider that does not share in the financial interest of the lender. This is especially true when an owners title policy is issued simultaneously with a loan policy. The interest of the consumer and lender are not necessarily the same.
 
Paul "Kelley" Hinsley is an eastern delegate and past chair of the executive council for the Tennessee Bar Association's Real Estate Section. Hinsley holds degrees from the University of Tennessee at Knoxville and the University of Tennessee College of Law.

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