Real Estate Commission Says Clients, Not Their Brokers, Should Choose Settlement Service Providers
The Colorado Real Estate Commission (CREC), whose mandate is to protect consumers, has made it clear in Position Statement #18 that we brokers should not dictate the settlement service providers utilized by buyers and sellers. Instead, the client should make that decision, influenced perhaps but not dictated by their real estate broker. Here’s the verbiage from that position statement: “When assisting a Consumer in finding a settlement service provider, a Broker must ensure the Consumer plays an active role in the process and is ultimately responsible for making the selection.”
A “settlement service provider” is defined as any provider of a service required in the execution of a real estate transaction: lenders, title companies, inspectors, surveyors, appraisers, home warranty providers, and lawyers. Another position statement (#3) echoes a federal law that prohibits us and any of those other service providers from receiving a kickback or “something of value” (such as dinners or even charitable gifts) in return for referring our client to them.
common practice for the buyer to assign that responsibility to the seller and to specify the title company named in the MLS listing — and for the buyer to use the same title company to purchase the “piggyback” title policy for the buyer’s lender. To choose another title company for the lender’s policy would always be more expensive and serve no purpose. Based on the CREC’s position statement, it would seem that we should tell each buyer that they may choose to hire a different title company for the lender’s policy than the one being used by the seller, but doing so would add hundreds of dollars to the cost of closing.
The exception to that is when the buyer is planning to flip the property (with or without making improvements) to another buyer and has an agreement with their preferred title company to “hold open” the policy for the resale, thereby saving the cost of a new title search and title policy.
There is a website to which we refer clients who want to do their own comparison shopping for title companies. I’ve promoted it in the past: www.CompareTitleCompanies.com
There’s another aspect of this matter which I have written about before which deserves repeating, and that’s the topic of “affiliated business arrangements” (ABAs). A service provider is considered an ABA when the brokerage has an ownership or profit-sharing interest in the provider. Virtually all the big brokerages and some smaller ones have their own mortgage companies, title companies and other service providers which bring additional revenue to the brokerage. Their ABAs must be disclosed to their clients, so they are aware that the use of one of the services (which the broker will invariably recommend) benefits the brokerage financially.
Golden Real Estate does not have any affiliated business arrangements, because I feel that having such relationships introduces an
ethical question of whether we are, as required by law and by the Realtor Code of Ethics always to put the client’s interests ahead of our own.
This ethical issue is amplified when the managing broker takes note (as he surely does) of which agents are “playing the company” game by “capturing” clients for their mortgage company and their title company.
Before I launched Golden Real Estate in July 2007, I was with two large brokerages which had those captive service providers, and it was clear to me that the managing broker was favoring associates with high “capture rates” for their affiliated businesses.
That is not only unethical, it constitutes “something of value” given to the associate in return for a service provider referral.
BTW, you’ll notice that we list Wendy Renee below as our “in-house loan officer.” She rents desk space in our storefront, but we earn nothing from the business she does.
In Memoriam: Our Free Moving Truck Has Bit the Dust
That law is the Real Estate Settlement Procedures Act of 1974 (RESPA). It was written to penalize persons or entities that are paid a fee (i.e., a kickback) for referring a client to a settlement service provider when the transaction includes a federally backed loan. As a practical matter, it has been assumed to apply to all real estate transactions.
RESPA’s primary focus is on lenders, to prohibit them from paying an “unearned” fee to a real estate broker, for example, in return for referring buyers to them. An “unearned” fee is one paid for doing nothing more than making the referral. If the person performs actual work, such as an attorney assisting on the transaction, that’s not a kickback, because it was earned
In this week’s column, I want to focus on the selection of title companies, since they, unlike those other service providers, are involved in virtually every real estate transaction.
Although the contract to buy and sell real estate allows the buyer to specify whether the seller or the buyer is to select the title company and pay for the owner’s title policy, it is a
I was reminded of this requirement that the seller actively participate in the selection of the title company when I was brought to task for my January 16th column in which I referred to First Integrity Title as our “preferred title company” because of a new service that they offer regarding HOA documents. Indeed, a complaint was filed against me by another service provider for violating the rule that the client, not the broker, must select the title company.
That complaint was dismissed by the Real Estate Commission’s investigator, but it inspired me to remind our readers — which includes real estate brokers and other service providers as well as prospective buyers and sellers — that this rule exists and that we should be diligent about obeying it. It’s not that hard to comply.
Henceforth, we will make it a practice to provide each client with a handout which, in addition to listing two or more lenders, inspectors, title companies and other settlement service providers, states in bold type (as suggested in Position Statement #18), that “the decision to hire a specific settlement service provider is completely at the Consumer’s discretion, and Consumers are not limited to service providers listed by the Broker.”
Back in 2004, I took delivery of our first box truck. After putting 150,000 miles on it, we bought a second truck and put another 100,000 miles on it. For a while, we actually had two trucks, and they got a lot of use, mostly by non-profits like BGoldN, the International Rescue Committee, Golden Chamber of Commerce, and Family Promise of Greater Denver. At right and below are pictures of volunteers from the Golden Relief Group who used the truck to transport donated furniture and furnishings for resettled refugees from Syria, Ukraine and elsewhere.
At right is our final truck, a 2012 Ford E350, which we purchased after it had logged 120,000 miles for Penske. The engine needs to be replaced at a cost of over $10,000, and it also needs a brake job.
We really enjoyed having a free moving truck to offer buyers and sellers, but you will notice in the box at left that now we only
provide free moving boxes and packing materials — still a nice benefit. We have decided not to replace the truck but to rent U-Haul trucks when the need arises. We are sorry that so many worthy nonprofits are losing access to a free box truck, but I’m hopeful they’ll find another company which can lend them one. Many self-storage companies have free box trucks for clients to use. Maybe one of them will do what we did.
Just Listed: 5-Bedroom Brick Ranch in SE Denver
$665,000
Don't miss out on this well maintained brick ranch with finished basement at 2677 S. Newport Street in southeast Denver, with easy access to I-25 and the Denver Tech Center. The 66-acre Bible Park, with its biking and walking trails, including the Highline Canal trail, is a half block away, along with numerous ballfields, tennis courts, exercise stations and a new playground. Inside on the main level there are hardwood floors throughout and a living room with brick fireplace, 3 bedrooms, and 2 bathrooms. A sliding patio door takes you outside to the covered patio and a large, dog friendly backyard with artificial turf area. The basement is finished and features 2 more bedrooms, a nicely updated 3/4 bathroom and a recreation room with a second wood-burning brick fireplace. The front yard and backyard are both professionally xeriscaped. The home has an updated kitchen, double-pane windows, a newer roof, and a high efficiency furnace. More information including photos and a narrated video tour are on the MLS and at www.GRElistings.com. Listing agent Chuck Brown will be holding it open this Saturday, Feb. 8th, from 11 am to 1 pm. Or call him at 303-885-7855
Worrying
Norma Jean (Dinges) Shahan March 9, 1938 - January 16, 2025
On January 16, 2025, Norma Jean Shahan, a loving wife and mother of four children, passed away at the age of eighty-six. Norma was born on March 9, 1938, in Hays, Kansas. On September 12, 1953, she married Marvin Allen Shahan in Brighton, CO. ey raised three sons, Michael, Dennis, and Roger, and one daughter, Kelly Westerkamp. Norma loved her family as they were everything to her.
She was preceded in death by her husband, Marvin; sons, Dennis and Roger; her father, Alois Dinges; her mother, Lorretta Dinges; and her
siblings, Alois Dinges, Shirley Windholz, and Robert Dinges, survived by her two children, Michael Shahan and Kelly Westerkamp; in-laws, Christine Shahan and Darrell Westerkamp; as well as several grandchildren, great-grandchildren, greatgreat-grandchildren, nieces, and nephews and a mention to Kitty, the stray cat that came into her life and turned her into a cat lover.
She is in heaven, resting with the angels and
SHAHAN
TrIVIa
Answers
1. Serenity.
2. El Yunque National Forest, Puerto Rico.
3. “ e Picture of Dorian Gray.”
4. Bu alo Bill.
5. Natural Sciences, Social Sciences and Formal Sciences.
6. White Castle.
7. 14 (Atlanta Falcons, Arizona Cardinals, Baltimore Ravens, Carolina Panthers, Chicago Bears, Cincinnati Bengals, Denver Broncos, Detroit Lions, Indianapolis Colts, Jacksonville Jaguars, Los Angeles Rams, Miami Dolphins, Philadelphia Eagles and Seattle Seahawks).
8. Maryland.
9. 88.
10. Ikebana.
(c) 2025 King Features Synd., Inc.
Miscellaneous
Merchandise
Health & Beauty
STRUGGLING TO HEAR?
Audien Hearing delivers crystalclear sound with affordable, invisible hearing aids. Starting at $189! Call Now: 888-760-1015
Dental insurance from Physicians Mutual Insurance Company. Coverage for 400+ procedures. Real dental insurance - not just a discount plan. Get your free Information Kit with details! 1-855-526-1060 www.dental50plus.com/ads #6258
Medical
Attention oxygen therapy Discover oxygen therapy that moves with you with Inogen Portable Oxygen Concentrators. Free information kit. 1-866-4779045
Miscellaneous
Jacuzzi Bath Remodel can install a new, custom bath or shower in as little as one day. For a limited time, waving ALL installation costs! (Additional terms apply. Subject to change and vary by dealer. Offer ends 3/30/25.) Call 1-844-501-3208
Miscellaneous
Replace your roof w/the best looking & longest lasting material steel from Erie Metal Roofs! 3 styles & multiple colors available. Guaranteed to last a lifetime! Limited Time Offer up to 50% off install + Additional 10% off install (military, health & 1st responders.) 1-833-370-1234
Water damage cleanup: A small amount of water can cause major damage to your home. Our trusted professionals dry out wet areas & repair to protect your family & your home value! Call 24/7: 1-888-872-2809. Have zip code!
Prepare for power outages today with a Generac Home Standby Generator. Act now to receive a FREE 5-Year warranty with qualifying purchase* Call 1-855948-6176 today to schedule a free quote. It’s not just a generator. It’s a power move.
Don’t let the stairs limit your mobility! Discover the ideal solution for anyone who struggles on the stairs, is concerned about a fall or wants to regain access to their entire home. Call AmeriGlide today! 1-833-3993595
Portable Oxygen Concentrator may be covered by Medicare! Reclaim independence and mobility with the compact design and long-lasting battery of Inogen One. Free information kit! Call 877-305-1535
Bath & shower updates in as little as 1 day! Affordable prices - No payments for 18 months! Lifetime warranty & professional installs. Senior & military discounts available. 1-877-5439189
MobileHelp America’s premier mobile medical alert system. Whether you’re home or away. For safety & peace of mind. No long term contracts! Free brochure! Call 1-888-489-3936
Aging Roof? New Homeowner? Got Storm Damage? You need a local expert provider that proudly stands behind their work. Fast, free estimate. Financing available. Call 1-888-878-9091
DIRECTV Stream - Carries the most local MLB Games! Choice Package $89.99/mo for 12 mos Stream on 20 devices at once. HBO Max included for 3 mos (w/ Choice Package or higher.) No contract or hidden fees! Some restrictions apply. Call IVS 1-866859-0405
We buy houses for cash as is! No repairs. No fuss. Any condition. Easy three step process: Call, get cash offer & get paid. Get your fair cash offer today by calling Liz Buys Houses: 1-844-8775833
Consumer Cellular - same reliable, nationwide coverage as the largest carriers. No longterm contract, no hidden fees free activation. All plans feature unlimited talk & text, starting at just $20/mo. Call 1-877-751-0866
Miscellaneous
Eliminate gutter cleaning forever! LeafFilter, the most advanced debris -blocking gutter protection. Schedule free LeafFilter estimate today. 20% off Entire Purchase. 10% Senior & Military Discounts. Call 1-833610-1936
Become a published author We want to read your book! Dorrance Publishing trusted since 1920. Consultation, production, promotion & distribution. Call for free author`s guide 1-877-7294998 or visit dorranceinfo.com/ ads
Home break-ins take less than 60 seconds. Don’t wait! Protect your family, your
