# CA Bulletin 1980-12: Unlawful Title Rebates

> California · Agency guidance · In force

URL: https://www.frixlaw.com/law-library/statutes/CA_INS_B_1980-12

## Section

- **Citation:** CA Bulletin 1980-12
- **Heading:** Unlawful Title Rebates
- **Jurisdiction:** California
- **Kind:** Agency guidance
- **Status:** In force
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** California Department of Insurance Bulletins / Unlawful Title Rebates

## Text

STATE OF CALIFORNIA
DEPARTMENT OF INSURANCE
BULLETIN NO. 80-12
December 24, 1980
TO:
ALL TITLE INSURERS, UNDERWRITTEN TITLE COMPANIES,
CONTROLLED ESCROW COMPANIES AND OTHER INTERESTED PERSONS
SUBJECT:
INSURANCE CODE SECTION L2404 -
UNLAWFUL REBATES
Since January 9, 1974, the title industry in this state
has been operating under the guidance of Department Bulletin 74-2,
as amended by Bulletins 74-2A (issued January 31, 1975) and 74-2B
(issued January 15, 1979), setting forth this Department's position
relating to the propriety of various business practices gauged
against the requirements of Section 12404 of the I nsurance Code.
Section 12404 applies to all persons or entities engaged in the
business of title insurance in this state and operates to prohibit
the payment, either directly or indirectly, to certain persons, their
agents or representatives, having specified interests in real property ,
of any commission, rebate or other consideration as an inducement
for or as compensation on any title insurance business or any escrow
or other title business in connection with which a title policy is
issued.
It is the purpose of this Bulletin to supersede the 74-2
series Bulletins by means of a consolidation, with amendments of the
enumerated prohibited business practices set forth in that series of
Bulletins.
This consolidation is made following a reappr aisal of
industry conduct during the past six years and amendments made where
deemed appropriate due to changed economic and business conditions.
It cannot be emphasized too strongly that this consolidation, in
practical effect, constitutes a restatement of the Department's
position regarding the propriety of specified business practices
and thereforeis intended as a guide to appropriate conduct by persons
or entities engaged in the business of title insurance
e where
deemed appropriate due to changed economic and business conditions.
It cannot be emphasized too strongly that this consolidation, in
practical effect, constitutes a restatement of the Department's
position regarding the propriety of specified business practices
and thereforeis intended as a guide to appropriate conduct by persons
or entities engaged in the business of title insurance.
Any violation
of the prohibitions set forth herein, brought to t he attention of
the Department , will result in immediate enforcement action against
the person or entity found to have engaged in such activity.

As a prelimina1y, it is helpful to review and understand
the rationale of the anti-rc'oo.te pi~ovisions o: the Insurance Code
as applied to the title rn,·u".",ncc imil,,,t.r·y.
Tt. i:; Wl'll (':,t.;1lili:;rwd
that this industry o:-icr:.it •.; in ..rn L'11v iro11rnt:!nL dc~:cr·l bed Liy t.'Co110mi~,t:;
as reverse competit:on.
We d~scribed this phenomenon and the role of
the anti-rebate laws i~ Bulletin 74-2 as follows:
"Purchasers or scl~ers of residential property
who must: pay for t.r..e almost universally required policy
of title insurance seldom make a conscious selection of
a title insure:c on the basis of comparisons of product
cost, qual~ty, or service.
Rather, the selection is
usuaily made by the agent or representative of the person
required to pay £or the title policy and, as a consequence,
the title induscry's competi.:ive effor'.: has been aimed
at the agent or representative.
While the representative
has a fiduciary relationship to the purchaser or seller,
cost or service features of the transaction of potential
benefit to the pu!'.'chaser o:c seller may be subo:::dinated to
other considerations found to be personally desiraole or
beneficial to the representative
sequence,
the title induscry's competi.:ive effor'.: has been aimed
at the agent or representative.
While the representative
has a fiduciary relationship to the purchaser or seller,
cost or service features of the transaction of potential
benefit to the pu!'.'chaser o:c seller may be subo:::dinated to
other considerations found to be personally desiraole or
beneficial to the representative.
As a result the oppor­
tunity for enr:.cnment of the representative may be placed
in a higher order of priority than the opportunity of
securing for the person required to pay for the policy
of title insurance the best product in cerms of cost or
service.
In a free and competitive consumer-oriented
market, prices are generally restrained by competition.
If the selection of the title service or product is
made by a person whose primary interest in the trans­
action is a collateral benefit flowing to him from the
title entity, the motivation for the selection by such
person may not be in ~he best interest of the consumer.
However, if consideration of any kind to the party making
the selection of the title service or product is eliminated,
it is reasonable to assume that the person making such
selection will chen be motivated by other considerations
in channelins or directing title business, where such
channeling or directing is unavoidable.
It is further
assumed that when there is no possibility of a material
personal benefit or rebate to the representative of the
seller or buyer, said representative would either make
no recommendation or would recommend a listing of title
companies known to be competitive in terms of price or
service in order to protect his own business reputation
or his own competitive position.
-2­
dable.
It is further
assumed that when there is no possibility of a material
personal benefit or rebate to the representative of the
seller or buyer, said representative would either make
no recommendation or would recommend a listing of title
companies known to be competitive in terms of price or
service in order to protect his own business reputation
or his own competitive position.
-2­

Recognition of the potential for treating
the interests of the cnnoumer ns nornndnry tn tho~n
lJf flip ~•>llUUHk•l. 1 ~
n.-,lJ,,lf nf Hth:h 111•r:.,i1 1:: ,11·,, rnund t·c1 J>,, in
violation of tho anti-rebate proviH~ons of the Insurance Code
whether the title entity, either directly or indirectly, pays for
or furnishes the food, rr.eal, or beverage or contributes money for
the purchase of same.
SiDilarly, the prohibition applies whether
the .:;xpenditure is made by a title entity acting along or by one
or more title entities acting through either formal or informal
association.
This rule also applies to group activities where such
persons comprise 50% or more of tiose in a~tendance o r those for
whom the oenefi~ is intended.
Activit~es such as (but not limited
to) meetincs, luncheons, dinners, conventions, installation
ceremonies, celebrations, outings, or related activities of local,
regional, or state ooards of real~y, cocktail parties, hospitality
room functions, open house celebrations, d&nces, fishing trips,
motor vehicle rallies, sporting events of all kinds, gambling
trips , hunting trips or outings, golf tournaments , artistic
performances, outings in recreation areas or entertainment areas,
and related activities are not the proper situs for fooc , meal , or
beverage expenditures made for or on heha:f of such persons
ospitality
room functions, open house celebrations, d&nces, fishing trips,
motor vehicle rallies, sporting events of all kinds, gambling
trips , hunting trips or outings, golf tournaments , artistic
performances, outings in recreation areas or entertainment areas,
and related activities are not the proper situs for fooc , meal , or
beverage expenditures made for or on heha:f of such persons .
Further, the furnishing of transportation to or from
such activities or areas or payment of the fee, charge, or admission
to such activities or areas, or the subsid~zation or reimbursement
of the cost to such persons of attendir.g or participating in such
activities or visiting such areas, constitutes a violation of the
anti-rebate provisions of the Insurance Code.
This prohibition
applies under every foreseeable circumstance, whether the benefit
is offered, paid, or furnished in whole or in part, directly or
indirectly, by a r.itle entity acting alone or by one or more title
entities acting th~ough either formal or informal association.
10)
Paying for, or offeri~g to pay for, any advertising
ostensibly for the benefit of the title entity t hrough any adver­
tising medium, the end result of which is the substantial subsidi­
zation of a product, service, or publication used by, or published
or printed by or £or the benefit of, any such person or any associa­
tion or group of •. uch persons.
Examples of such advertising are
ads placed in subdivision or tract brochures, multiple listing
services or books, exchange bulletins, newsletters, information
sheets, and progr ams, announcements, periodicals, or any printed
matter associated with meetings, seminars, or conventions of such
persons as well as registers, directories, or indices of such
persons
ion or group of •. uch persons.
Examples of such advertising are
ads placed in subdivision or tract brochures, multiple listing
services or books, exchange bulletins, newsletters, information
sheets, and progr ams, announcements, periodicals, or any printed
matter associated with meetings, seminars, or conventions of such
persons as well as registers, directories, or indices of such
persons.
A presumption of "substantial subsidization" will be
made whenever (1) 10% or more of the adver~ising revenue or
printing costs, whichever is less, of any pamphlet, program,
announcement, register, directory, index, book, brochure, periodical,
newsletter, bulletin, information sheet, or printed matter of any
kind intended for local (as opposed to statewide) distribution or
-7-

circulation is paid for by one LiLl0 enlity; or (2) 50% or more of the
advertising rcvcnur.: or print ill:~3~~ ~ ¾·:'::..10t?i1 .:r:...:.u~~E 3Y
TITLE cc~:p A~-~ :;:~ CC :-J?O:...V__'.\.~:c :: WI'::':. Tr:'2 :,.U:.;ss ESTA3::..,:s:~,:,D
BY ~HE CALIFORNI A I NSUR~jCE CO~XISS~C~~R , w~c U~GES YOU TO SHOP
FOR THE BEST SERVICE AVAILABLE A~~ CC~?ARE CHARGES AKD FEES
POR TITLE I NSURANCE, ESCROW, AND C'I'HER SERVICES ASSOCI ATED WI':'::
'PHE PURCHASE OR SALF. OF A HOME.
?RO?ERTY ?ROF:: ::..,E:
ADDRES S:
RECORD OWNER:
DEED RECORDING DA~E:
DCCCM~NTA~Y TRANS?ER TAX : $
CONCURRENT TRUST DEED, I? ANY :
( See At t ac he d)
LEGAL DESCRIPTION :
( Se e Atta ched Deed Copy and Plat)
TAX INFORMATION:
As sess ors Parce l No .
As s ess ed Value Land
$
As s es s ed Va lue Improveme nts
$
Exemption
$
Ne t Assessed Value
$
$______
Install ment s
$
/ 7
In lieu o f the above, s e e a t tache d copy o f Asse ssment Roll .
COMPARABLE SALES
DATE SOLD
ADDRESS
TR ANSFER TAX
1
2
'
? ANY :
( See At t ac he d)
LEGAL DESCRIPTION :
( Se e Atta ched Deed Copy and Plat)
TAX INFORMATION:
As sess ors Parce l No .
As s ess ed Value Land
$
As s es s ed Va lue Improveme nts
$
Exemption
$
Ne t Assessed Value
$
$______
Install ment s
$
/ 7
In lieu o f the above, s e e a t tache d copy o f Asse ssment Roll .
COMPARABLE SALES
DATE SOLD
ADDRESS
TR ANSFER TAX
1
2
'
. ;
3
Inst r uctions:
The statement a t the t op of t his f or m must be
in capital letters, not l es s tha n 11-point type , and of a
contr a s ting color f r om the rest of the form.
Exhi bit A

Errata
A phrase is missing from the second paragr a ph of item 9 on
page 6.
That para graph, which begins with the wo rds "Moderate
expenditures fol' food ... " should end with a comma nnd the
phrase "may be mad~ .
11 s hould be added .
The second sentence of the second paragraph of i tem 17 on page 9
{line 6 of tha t pal'agraph) contains the phrase "between a title
entlty 11 , which is a surplusage .
It s hould be deleted so
tha t the sentence reads as follows :
To the contrary _, any "special" relationship, as cefined
in Section 12404 , coming to the attention of the
Comrnl.s s loner •••

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Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/CA_INS_B_1980-12. Check the current official text before relying on it. Not legal advice.