North Carolina SB 577: Title Insurance Kickbacks Clarification.

Bill Text

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 1
SENATE BILL 577

Short Title: Title Insurance Kickbacks Clarification. (Public)
Sponsors: Senators B. Newton, Daniel, and Sawrey (Primary Sponsors).
Referred to: Rules and Operations of the Senate
March 26, 2025
*S577-v-1*
A BILL TO BE ENTITLED 1
AN ACT CLARIFYING THE PROHIBITION AGAINST KICKBACKS OR OTHER 2
UNEARNED FEES IN TITLE INSURANCE TRANSACTIONS. 3
The General Assembly of North Carolina enacts: 4
SECTION 1. G.S. 58-27-5 reads as rewritten: 5
"§ 58-27-5. Prohibition against payment or receipt of title insurance kickbacks, rebates, 6
commissions and other payments. 7
(a) Prohibition. – No person or entity selling real property, or performing services as a 8
real estate agent, attorney or lender, which services are incident to or a part of any real estate 9
settlement or sale, shall pay or receive, directly or indirectly, any kickback, rebate, commission 10
or other payment in connection with the issuance of title insurance for any real property which is 11
a part of such sale or settlement; nor shall any title insurance company, agency or agent make 12
any such payment. 13
(b) Penalty. – Any person or entity violating the provisions of this section shall be guilty 14
of a Class 2 misdemeanor which may include a fine of not more than five thousand dollars 15
($5,000). 16
(c) No persons or entity shall be in violation of this section Exception. – The prohibition 17
of subsection (a) of this section does not apply if all of the following conditions are met: 18
(1) The payment is made: (i) solely by reason of ownership of stock in a bona fide 19
title insurance company, agency, or agent. agent or (ii) from an employer to a 20
bona fide employee, including the payment of a commission for the sale of 21
title insurance. For purposes of this section, subdivision and in addition to any 22
other statutory or regulatory requirements, a bona fide title insurance 23
company, agency or agent is defined to be a company, agency or agent that 24
passes upon and makes title insurance underwriting decisions on title risks, 25
including the issuance of title insurance policies, binders and endorsements, 26
and that maintains a separate and distinct staff and office or offices for such 27
purposes. 28
(2) The person or entity purchasing title insurance is not required to use any 29
particular title insurance company, agency, or agent, except as permitted under 30
regulations adopted pursuant to the Real Estate Settlement Procedures Act, 12 31
U.S.C. § 2607(c)(5). 32
(3) One of the following applies: 33
a. The person or entity purchasing title insurance is provided, at the time 34
of referral, a written disclosure that satisfies the requirements of the 35
Real Estate Settlement Procedures Act, 12 U.S.C. § 2607(c)(4), of the 36

General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 577-First Edition
affiliation between the referring party and the title insurance company, 1
agency, or agent. 2
b. The person or entity purchasing title insurance is not provided a 3
written disclosure satisfying the requirements of sub-subdivision a. of 4
this subdivision, but the person or entity required to make that 5
disclosure demonstrates that the failure was unintentional and resulted 6
from a bona fide error notwithstanding maintenance of procedures that 7
were reasonably adapted to avoid that error. In any judicial or 8
administrative proceeding, the person or entity relying upon this 9
sub-subdivision shall have the burden of proof of establishing its 10
applicability by a preponderance of the evidence." 11
SECTION 2. This act becomes effective December 1, 2025, and applies to offenses 12
committed on or after that date. 13