On January 14, Maryland’s attorney general announced that the state’s Consumer Protection Division (CPD) entered into a settlement resolving allegations that several joint venture title agency companies formed between a title agency and real estate agents or brokers unlawfully paid fees to those agents and brokers in exchange for referring consumers for title insurance.
The CPD alleged these joint ventures were created specifically to facilitate referral payments, in violation of the federal RESPA and the Maryland Real Estate Settlements Act (MRESPA), which prohibit giving anything of value for referrals related to title insurance. The agency further alleged that those violations of RESPA and MRESPA constitute unfair and deceptive trade practices proscribed by the Maryland Consumer Protection Act (CPA). As part of the settlement, all joint venture companies involved must be dissolved, and the formation of new joint ventures for the purpose of making unlawful referral payments is prohibited. The joint venture companies denied any wrongdoing and maintained that they were fully compliant with the CPA, MRESPA, and RESPA, including satisfaction of the RESPA statutory safe harbor for affiliated business arrangements set forth in 12 U.S.C. § 2607(c)(4).
Under the terms of the agreement, the companies must pay $850,000 in restitution to Maryland consumers and make an additional $200,000 payment to the CPD for consumer protection purposes. The settlement included a requirement that the CPD terminate its investigation into the companies and their real estate members upon full compliance with the settlement and stated that any future violations of the Maryland CPA based on similar conduct would be treated as a second violation under state law.
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