Conflict of Interest Violation Costs Title Company Tens of Thousands
The California Insurance Code has an anti-inducement provision stating a title insurance representative cannot own, be employed by, or otherwise be affiliated with a business or entity that provides real estate services to anyone considered a property owner or real estate agent.
It is unlawful for a lender or real estate agent to received free or discounted services, property, or money in exchange for steering business to a title company. This results in an inflation of insurance premium rates for consumers.
Steven Patrick Thomas, a representative employed by First American Title Company in Santa Ana, is alleged to have violated this provision. Thomas owned a business with a direct connection to the real estate industry and provided to real estate agents housing market information not related to title insurance using the name “Reports on Housing.”
First American Title Company has agreed to pay the California Department of Insurance $50,000 to resolve the allegations that Thomas violated state law which protects consumers from conflicts of interests in real estate transactions. $25,000 of the $50k are in penalties and the other $25,000 are costs the California Department of Insurance spent while investigation this case.
Additionally, Thomas is no longer allowed to market title insurance in California.