Ban on entertainment; 'Is it changing the way we do business? Absolutely'
NORTH BAY – Title companies have had to make changes in how they operate since the passage of California Senate Bill 133.
SB 133, which went into effect the first of the year, requires any person employed by a title insurer or controlled escrow company that sells title insurance or whose primary duty is marketing be certified by the Insurance Commissioner. It also prohibits a title insurer from paying any person as an inducement for a referral of title business.
“What has been mandated is for all sales people in California to get fingerprinted, take an online test and go to a class. Then we were considered legally able to work,” said David Lucido, sales manager at Fidelity National Title for Sonoma, Napa, Mendocino and Lake counties.
According to the California Association of Realtors Web site, the bill prohibits “paying for someone else’s food, beverage and entertainment. What’s significant about Senate Bill 133 is that effective Jan. 1, 2009, title marketing representatives can provide absolutely no expenditures for food, beverages or entertainment. The only promotional items that are permitted are items that have a permanently affixed title company logo and a value of $10 or less.”
“Are there inconveniences? Yes. Is it changing the way we do business? Absolutely,” said Kimberly Waite, vice president of Stewart Title. “We used to be able to do some client entertainment. When we moved to a new location, we would have a grand opening and serve refreshments. Now we can’t. We can’t host educational events and serve refreshments,” she said.
Fidelity’s Mr. Lucido said the bill correctly addressed the issue of kickbacks but probably went overboard.
“I understand it to a point,” he said. “But I think they have gone to a level they didn’t need to go.”
The bill is designed to protect the consumer. But people in the title insurance business, real estate sales business and mortgage lending business say there will be losses to the public, particularly in the area of education.
Mike Kelly, a Realtor with Keller Williams Realty, said title company representatives used to serve on committees and take notes at Realtor breakfasts, compile information for consumers and provide a conference room at times for meetings. None of these things will be allowed anymore.
A brochure published by the California Land Title Association answers questions about the new legislation.
It explains, in addition to other things, that anyone receiving or giving a rebate of any kind can be charged with commercial bribery. In the bill itself, it is stated that violation of certain aspects of the bill can result in a misdemeanor.
“There are a lot of unanswered questions,” said Mr. Lucido. “Can we still give them a property profile? Should we be giving things away to them like that? What if your father was in the real estate business? Do you have to watch your back when you go to dinner?”
While some Realtors and title company insurers may be concerned about the impact of the law, others feel it is appropriate and are not wholly concerned with negative implications.