Judge Grants Stay to Delay Implementation of New Financial Interest Form in Illinois

July 17, 2018

Attorneys’ Title Guaranty Fund Inc. prevailed in its request for a stay of implementation against the Illinois Department of Financial and Professional Regulation (IDFPR). The judge granted ATG’s request for a stay of implementation of the revised disclosure of financial interest form (DS-1) until a hearing on the merits. The judge found compelling ATG’s argument that attorneys should not be required to disclose their fees to third parties and that the IDFPR does not have the authority to regulate attorneys’ fees.

The form, which is meant to disclose to consumers the fees related to title and settlement services, does not accomplish its intended objective, was set to go into effect July 1.

ATG believes the form contains terms that are confusing to consumers, exceeds the regulator’s statutory authority, and shows serious bias against lawyer agents both in the disclosure form itself and in the instructions for completing it.

“We fully support transparency and consumer protection and have been aggressively trying to convince the regulators to file enforcement actions against the unscrupulous few,” said Hank Shulruff, ATG senior vice president. “Instead of targeting those who are breaking the rules, they developed a form that contains provisions and requirements that are beyond the authority granted to the IDFPR by the Illinois Title Insurance Act. In addition, the form is misleading and confusing, and violates protections contained in the attorney-client relationship.”

“Bottom line: We want people to be protected from those who may prey upon unknowing consumers. The way the form is currently written looks like a warning that people should beware of their attorneys.   Consumers of real estate services should be encouraged to seek legal counsel when engaging in the largest transaction of a lifetime, the sale or purchase of a home,” Shulruff added. 

ATG and other industry leaders including the Illinois Land Title Association (ILTA) have been working with the Title Insurance Division of the IDFPR to improve the amended DS-1 Disclosure for Producers of Title Insurance Business and Instructions for Completing the Disclosure of Financial Interest Form first proposed by the IDFPR in early April 2018. Based on industry feedback, the IDFPR further amended the DS-1 content and delayed implementation from April to July. On June 26, ATG hosted representatives of ILTA and the Illinois Real Estate Lawyers Association for a meeting with the IDFPR to express the industry’s remaining concerns. ATG filed the suit for injunctive relief as the July 1 implementation date approached with no resolution to important outstanding issues.

ATG said its goal has been to help the department develop a disclosure form that conforms to the state’s statutory authority, ensures that consumers have access to legal counsel when engaging in a real estate transaction, and assists the state in accomplishing its objective of improving disclosure to consumers of fees related to title and settlement services when performed by a Producer of Title Business as defined by the Illinois Title Insurance Act.

“We will continue to work with the IDFPR, our counsel, and others in the industry to ensure that the disclosure is meaningful and practical to implement,” Shulruff said. “We applaud the IDFPR for taking steps to protect consumers, and we encourage them to continue to work with the industry and to use the powers it currently has to enforce existing laws when it encounters the unscrupulous few in the industry.”

Contact ALTA at 202-296-3671 or communications@alta.org.