8131 – No Entitlement


If you bought or refinanced a house lately, you’re probably a little ticked at title insurance.  Title insurance covers the property for defects in the title, and in addition to your bank requiring the insurance, it’s probably a good idea to get an owner’s policy that protects you as well as the bank.  The problem is the cost, which is usually in the thousands of dollars, most of which goes to the bank’s lawyer who also happens to be the title insurance agent. Tom decided he was mad as hell and wasn’t going to buy it anymore and sued, claiming he was overcharged.  The rates on his coverage included an original issue rate, a reissue rate and an extended coverage rate. When Tom refinanced, the company charged him the extended coverage rate which was 20% more than the original issue rate.  He brought a class action suit under the Real Estate Settlement Procedures Act or RESPA, which prohibits split percentages or kickbacks in real estate transactions. Bu the Court dismissed the case, holding there’s another section of the law that specifically protects title insurance fees. So homeowners are not entitled to a break on title insurance.


Thomas A. Arthur vs. Trico Title Insurance Company of Florida, U.S. Court of Appeals for the Fourth Circuit, No 08-1727, Wilkinson, J., USLW Vol. 78, No. 1, Pg. 1008, 7-7-09