THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, September 4, 1996 TAG: 9609040011
SECTION: FRONT PAGE: A10 EDITION: FINAL
TYPE: Opinion
SOURCE: By BARBARA M. WOLCOTT
LENGTH: 78 lines
In ``Virginia law targets real-estate-settlement kickbacks'' (Another View, May 28), Howard Birmiel, a director of the Virginia Real Estate Attorney's League (VaREAL) 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, Birmiel 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 am troubled by Birmiel's comments, which 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 Bermiel 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 Virginia who believe the highest standards of conduct must be maintained by those offering real-estate services. We are 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 Delegate Butch Davies to draft the adoption of Federal Real Estate Settlement Procedures Act (RESPA) language into Virginia's Code.
The ironic thing about Birmiel's comments is that his organization, VaREAL, does not 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, VaREAL introduced a package of 10 pieces of legislation that would ``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 require the increased use of attorneys in real-estate transactions!
For example, House Bill 1343, introduced by Del. Billy Moore of Portsmouth on behalf of VaREAL, would have required an attorney to conduct every real-estate settlement in Virginia. This proposal would change current Virginia law, which 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.
VaREAL did not stop there in its attempts to regulate the competition. Delegate Moore also introduced House Bill 1344 on behalf of VaREAL, which would have required 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. This proposal would increase the costs of title insurance by, again, mandating the use of an attorney. So much for Birmiel's advice that consumers should 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. VAR 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 VaREAL, 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 real-estate-settlement work is healthy and 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 column is a thinly veiled attempt to argue, without evidence, that the real-estate-settlement-services market is perverted by anti-competitive behavior which hurts consumers and devalues the services of attorneys. Ask yourself: 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? MEMO: Barbara Wolcott is president of the Virginia Association of
REALTORS. by CNB