Utah consumers want the freedom to choose. That is what Senate Bill 121 is all about. It repeals the law that grants a monopoly to one class of title and settlement agents. Senate Bill 121, which recently passed the House and Senate by comfortable margins, allows consumers the choice of one-stop shopping in real estate services. Unfortunately, narrow interests working to protect their monopoly fear the competition that will be created by greater consumer choice. However, Utahn’s deserve a choice when it comes to buying and selling their homes.
Both the Utah Association of Realtors and the Utah Land Title Association, which represent over 80% of the title companies in Utah, worked together in creating a consensus bill that would both create competition and protect consumers. Consumers in Colorado, New Mexico, Nevada, Idaho, and more than forty other states have this choice, and upon the Governor signing the legislation of SB 121, Utahn’s will have this choice as well.
In the most recent Harris Survey on one-stop shopping and affiliated business arrangements in real estate transactions, with virtually all prospective buyers surveyed, 97% believe one-stop shopping makes buying a home easier. The independent survey work on one-stop shopping began more than a decade ago. It has consistently shown greater public awareness and desire to have the choice of one-stop shopping for real estate services.
Opponents of this bill fear competition and what the effect of that competition will have on their bottom line. They have been spreading falsehoods about SB 121.
Here is the truth.
SB 121 adopts the federal Real Estate Settlement Procedures Act (RESPA) rules for affiliated businesses, which permits one-stop shopping. It requires that those who own an affiliate can only receive a proportionate return on any profit the affiliate earns. They CANNOT pay for referrals or pay kickbacks. They CANNOT require the use of the affiliate. That is illegal. They also must promptly disclose the affiliate relationship, putting the power back in the hands of the customer by allowing them to decide for themselves.
In addition, the Utah law requires any new title company to fund and maintain a capital reserve cushion to ensure the strength of the company. This provides stronger protections for Utah consumers than existed previously. The new law also codifies a multipart test to determine the health and legality of the affiliate arrangements and provides penalties for violations. All of these rules make the affiliate relationship stronger and better regulated than most or all of its competitors.
SB 121 does not leave the consumer unprotected. The change in law is instead all about choice, as there cannot be a required use of any title company. If the Governor approves the bill, consumers WILL have a choice and there will be real competition for the first time in a long time. This leads to a stronger industry, better consumer options, and increased savings that will be passed on to the customer. SB 121 is all about offering greater choice and increasing efficiency in the home purchase transaction.