Shopping around for title insurance will soon be a thing of the past. Legislation that regulates the price of title insurance goes into effect January 1, 2011, putting Washington DC in the same position as most other states, with regulated published rates for the purchase of title insurance irrespective of title company.
The Budget Support Act of 2011, passed September 24th, contained a provision that gave the DC Department of Insurance, Securities and Banking (which can't seem to get its website working) the ability to regulate rates to insure property title against challenges. Maryland and Virginia both have similar regulatory regimes, and title attorneys say they have not seen much difference in the "published" rates versus the market rate, but the bill also requires licensing of title attorneys, and while that will add a bureaucratic veneer to the title industry, it will also give DC's title attorneys reciprocity in other jurisdictions where now there is none.
"Its a revenue source for the District" says title attorney Marty Stanton of KVS Law Group, a law firm that performs settlement and legal work in each of the three jurisdictions. "But I haven't seen an impact in Virginia and Maryland on the residential consumer." Though Stanton concedes there might be scarlet-colored tape, he comments that the upside is "more legitimacy to the process, and [is] ultimately better for the consumer. Rates in the 3 local jurisdictions are now competitive." The law applies to both commercial and residential property but does not affect other fees that could be charged by a title company that therefore differentiate settlement pricing within the District.
But there is concern that a proposed bill that would exempt commercial property from regulation, sought by the DC Building Industry Association, would give commercial purchasers the ability to negotiate better rates, forcing higher rates on residential purchasers. Roy Kaufman of Jackson Campbell is the lobbyist for the District of Columbia Land Title Association, and thinks the exemption is unwarranted. "Land is land is land," says Kaufman, "any exemption would be inequitable...Every other state regulates title insurance, if we are not the last we are one of the last."
Gail Edwards, Executive Vice President of DCBIA, says the market forces ensure the best rates. "It raises the cost of development by thousands and thousands of dollars, that's bad for development. The rates have always been competitive in the city, title companies have to market themselves, but with filed rates everybody pays the same." Edwards says regulated rates will raise the cost "dramatically."
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