On January 15, 2019, the Appellate Division, First Department, reversed the Supreme Court in New York State Land Title Associations, Inc. v. The New York State Department of Financial Services (page 69).

To remind the reader, the New York County Supreme Court had previously annulled the Insurance Regulation which regulated title closer fees, ancillary charges, premiums and most importantly, soliciting business.

Now, the annulment is reversed (as if it never happened), except with respect to section 228.5(a)(1)-(3) [ancillary search fees] and (d)(1)-(2) [closer fees].

So, no more sports tickets, golf outings, holiday parties, open houses, and wining and dining to solicit title insurance business.

Now, to the entertaining part. What about all of the ancillary fees that were being charged by title insurance companies, above the regulatory caps, in between the annulment date and the reversal date? If a decision is reversed was it ever annulled? If it was never annulled were the caps on ancillary fees always applicable and were consumers overcharged. These are tough questions that Department of Financial Services should answer soon. Stay tuned and perhaps we will be hearing from the Court of Appeals to put finality to the legality of Insurance Regulation 208.

Insurance Regulation 208 has been annulled in the Article 78 case of New York State Land Title Association, Inc.; The Great American Title Agency, Inc.; and Venture Title Agency, Inc. v. The New York State Department of Financial Services; and Maria Vullo, in her official capacity as Superintendent of the New York State Department of Financial Services.

Regulation 208 (11 NYCRR 228) is now annulled pursuant to New York County Supreme Court Justice Rakower’s decision and order on New York State Land Title Association (NYSLTA) et. al. v. New York State Department of Financial Services (DFS).

The Court annulled Regulation 208 in its entirety and reasoned, among others, that Regulation 208 is “irrational” and “internally inconsistent.”

DFS has filed its Notice of Appeal. Stay tuned as it is yet to be determined whether Regulation 208 would be reinstituted with a stay or otherwise.

DFS Statement Regarding 11 NYCRR 228