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Title Insurance Fee Splitting

June 1, 2018

South Carolina has strict laws governing how a licensed title insurance underwriter may divide the premiums when preparing title insurance in South Carolina. The short of it: if you aren’t licensed pursuant to South Carolina law, you may not take any of the South Carolina fee with you.

 

South Carolina law specifically states that a title insurance producer may not pay you a commission or any other valuable consideration for selling, soliciting, or negotiating insurance in the state if you are not properly licensed in South Carolina.[1] A licensed title underwriter who does not follow these regulations is likely going to lose his or her license very quickly, and will face further consequences.

 

Unfortunately for unlicensed individuals, South Carolina law goes one step further, just to make sure unlicensed individuals and companies aren’t taking a piece of the pie. It is also illegal in South Carolina for an unlicensed person to accept a commissions, service fee, brokerage, or “other valuable consideration” from an insurance premium.[2] This means that if you are selling, soliciting, or negotiating insurance for a South Carolina transaction and you aren’t licensed, you may not accept any portion of a fee even if a properly licensed individual attempts to split the fee with you.

 

But it isn’t just South Carolina law that strictly governs splitting insurance fees. Federal law, through the Real Estate Settlement Procedures Act (RESPA), makes it a federal violation to pay a referral fee to anyone in connection to a federally related mortgage transaction.[3] Under federal law, a person who violates RESPA may be fined up to $10,000.00 and thrown in jail for up to one year.[4] Additionally, a person may be liable under a civil suit for an amount equal to three times the amount charged for the service.[5]

 

In spite of all of that, it is actually in consumer’s best interest that these fees only be split with properly licensed individuals. Requiring those who sell, solicit, and negotiate insurance to go through the licensure process ensures that each party involved is expertly represented in the transaction. Partnering with licensed South Carolina agents gives you a local presence, expert knowledge of the rules and local customs, and can save you and your clients a lot of serious headaches.

 

Our team works with you to be sure your transaction is appropriately handled under South Carolina law in an expert and efficient manner, so that you can serve your clients with excellence. Contact us today to discuss how we can assist you with your next South Carolina commercial deal.

 

 

 

[1] S.C. Code Ann. § 38-43-200(A).

 

[2] S.C. Code Ann. § 38-43-200(B).

 

[3] 12 U.S.C. § 2607(a), (b) (2005).

 

[4] 12 U.S.C. § 2607(d)(1).

 

[5] 12 U.S.C. § 2607(d)(2).

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