ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, June 29, 1996 TAG: 9607010001
SECTION: EDITORIAL PAGE: A9 EDITION: METRO
SOURCE: BARBARA M. WOLCOTT
IN HIS May 20 commentary, Howard A. Birmiel, a director of the Virginia Real Estate Attorneys League (Va REAL), implies that Virginia real-estate agents, title-insurance companies, bankers and settlement agents are too often engaged in giving "kickbacks" for the referral of settlement services. While offering no evidence of these illegal practices, he urges consumers to be careful in their choice of settlement services, and to base their decision on "price and quality of service." He even admonishes that "the wrong choice can be expensive."
As president of the Virginia Association of Realtors, I'm troubled by Birmiel's comments. They imply the common existence of multiple violations of federal law, and unnecessarily spread the perception that professionals providing real-estate services are lining their pockets via illegal behavior. If he has evidence of purported kickbacks, he should provide that documentation publicly instead of making broad, negative generalizations.
The Virginia Association of Realtors represents nearly 25,000 real-estate professionals in the state who believe the highest standards of conduct must be maintained by those offering real-estate services. We're very concerned about anti-competitive behavior like kickbacks. We understand all too well that fair free-market competition depends on our customers having the right to choose the services they want to use. In fact, our association was supportive of the enhanced kickback law, and assigned our legislative counsel to work closely with Del. Butch Davies of Culpeper to draft the adoption of Federal Real Estate Settlement Procedures Act language into Virginia's law.
The ironic thing about Birmiel's comments is that his organization is opposed to choice. Va REAL doesn't believe in giving consumers a choice between attorneys and other settlement agents for real-estate services. In fact, during the 1996 session of the Virginia General Assembly, that organization introduced a package of legislation to "level the playing field" between lay settlement services and real-estate attorneys. The net effect of this legislation is to remove the choice consumers currently have regarding settlement services, and to require the increased use of attorneys in real-estate transactions!
For example, a bill introduced by Del. Billy Moore of Portsmouth on behalf of Va REAL would have required an attorney to conduct every real-estate settlement in Virginia. This proposal would change current Virginia law that allows title companies and lay settlement agents to compete with attorneys in providing real-estate settlement services. The effect of this legislation would be to require the use of one type of provider of real-estate settlement services - attorneys.
Va REAL didn't stop there in its attempts to regulate its competition. Del. Moore also introduced a bill on behalf of Va REAL to require that all real-estate title opinions be issued by an attorney. This bill would require the use of an attorney before the issuance of any title-insurance policy. It would increase the costs of title insurance by mandating the use of an attorney. So much for Birmiel's advice that consumers make the choice of settlement services based on "price and quality of service." Wouldn't it be nice if only real-estate agents could sell houses? But, of course, that, too, is ridiculous. Our organization believes consumers should have the right to choose.
In 1981, the attorney general of Virginia issued an opinion ending real-estate attorneys' monopoly on the practice of real- estate settlements. By opening up the practice of real-estate closings to title companies and lay settlement companies, it was the attorney general who "moved to restore freedom to the real-estate closing market," not Va REAL, as Birmiel argues. Before this ruling, there was little competition for real-estate closing work. Today, after 15 years of experience, we know that the competition for this work is healthy, and that many lay settlement and title companies, staffed by paralegals previously employed to do closings for attorneys, provide high quality real-estate closings at low prices.
Birmiel's commentary is a thinly veiled attempt to argue, without evidence, that the settlement-services market is perverted by anti-competitive behavior that hurts consumers and devalues the services of attorneys. Ask yourself this: Is it really plausible that real-estate settlement costs will go down and service will improve if attorneys are given a monopoly on the practice of real-estate closings?
Barbara M. Wolcott is president of the Virginia Association of Realtors.
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