On January 4th, 2017, the State of Virginia ruled that Title Company Home Warranties are no longer able to be provided to buyers at closing in return for business. If you don’t know this practice it goes like this: In many areas of the country, including the Northern Virginia, Washington DC, and Maryland areas, Title Companies have offered “FREE Home Warranties” for buyers who close business with them. Essentially, it was a marketing tactic by the Title Company to “induce” business. I have said for a very long time this is not a valid practice and should not be allowed. I wrote this blog back in April 2016 saying this exact thing and explaining how the Title Company Home Warranty isn’t really free. Someone does pay for it. Here is the ruling for you to check out for yourself.
What this ruling says in essence is the Title Company can’t rebate (cover cost) for the home warranty as an “inducement” for business. It also says that the practice of a “free” item that is paid for outside of closing in exchange for business (Title Insurance Policy) is not allowed, since in almost all cases, Title Insurance was purchased anyway.
Title Company Home Warranties–Now What?
The difference from Stewart Title and our competitors in this arena is vast. We have never participated in the Title Company Home Warranties in return for business. What we do is give top of the line real estate marketing services to our clients that help them expand and grow their business. Advanced marketing and sales abilities create more opportunities for business—not home warranties.
Since Stewart Title is the 3rd largest Title Insurance Underwriter in the country, we do have a Home Warranty division that is separate from our Title and Escrow services. This allows homeowners to buy a home warranty (if they wish) but it is not mandatory, and paid for by the buyer.
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