Editor’s Note: This is part of our continuing series on affiliated companies. Our goal is to feature companies which have had history and experience with affiliated business to learn about their success and share the RESPA compliance lessons they have gained in these affiliations over time.

Title Alliance, Ltd. has been in the business of creating and administering successful RESPA-compliant, joint-ventured (JV) title agencies for more than 37 years.

The Media, Pa.-based company was the first in the industry to develop title and settlement JVs with real estate and lending professionals in Pennsylvania.

Today, Title Alliance has about 40 companies representing about 60 branches in 11 different states.

But first, the company had to completely change its original focus.  Title Alliance started out as the Title Abstract Co. of Pennsylvania, which was founded in 1948.

“We’ve been in the affiliated/JV space since 1983,” Title Alliance CEO Jim Campbell told RESPA News.  “Prior to that, we were the exact opposite of what we are now. We used to be a retail title company and an insurance underwriter. And, in 1983, we established our first partnership in Pennsylvania. And since then, we’ve migrated out of the retail space if you will, and we specialize exclusively in setting up partnerships. We are in the title insurance business, but our niche is the ability to establish and manage partnerships in primarily the residential purchase community.

“Our first affiliate was a conglomerate. It was actually a little bit of an accident. It was a number of different types of members. It had some lenders in there, it had a couple different small real estate operations. It was more by accident than on purpose. People in our area, in Pennsylvania, wanted to get into the affiliated space. We said we would give it a try, and we did, and what we found pretty quickly was the climate in our area was gravitating heavily toward that. So, one relationship rolled into the next, and so forth and so forth.

“In time, what we found was we really couldn’t be great in two spaces. We didn’t want to have an internal conflict where we were competing against really ourselves or our partners. We found that running an affiliated business was different than running retail title companies. So, we changed our mindset and gravitated toward that. We didn’t know what the future was going to bring in this space, but we sort of went all in and said, ‘This is the lane we’re going to go in.’ “

Overcoming obstacles

But it hasn’t always been easy.

“In the `80s, when we were a title insurance underwriter, one of the states we were licensed in was Florida, and we had a major defalcation to the tune of roughly $2 million,” Campbell said. “And it really, really set us in a bad way. But what it really reinforced to us was we always considered ourselves very compliant and we followed the rules. And we said we never want to put ourselves in the position whereby other people could take advantage of us because we weren’t in control.

“It was sort of two forces that came in at the same time: One was the market was driving and we were either going to be in it or we weren’t, and the other was that we were an underwriter, and we didn’t’ want to be vulnerable to some agent mishandling funds. Then, as time evolved, we focused on setting up partnerships. We basically transferred all of our retail title companies and we made them all joint ventures. Since 1983, that’s all we’ve done. We establish and we set up title partnerships. More than 90 percent of our business is in the Realtor space.”

Go West

About five years ago, Title Alliance received a referral for a company in Mesa, Ariz.

“It was a good cultural fit for us, and we established our first partnership west of the Mississippi,” Campbell said. “It was a very welcoming conversation. They wanted to go into the space for the same reason that basically all brokers do – you need to have the additional support from a financial perspective, but they also use it as a recruitment and a retention tool for their agents. And that’s part of our model. In our partnerships, we set up individual companies and we involve the main real estate broker and also the top producing agents are invited to participate as well.

“Since then, we’ve focused a significant portion of our business in the West. We got beat up a little bit, not knowing the local climate, etc. People didn’t know who we were in the West even though we were a company that was founded in 1948. As far as they were concerned, we were a brand-new start up.

“But what we found was the market was very much open to our type of business. In the East, most sizeable real estate companies already had partnerships. In the West, specifically in Arizona where we started, that really wasn’t the case.”

Since that first partnership in Arizona in 2015, Title Alliance has continued to work its way out West, establishing more companies in Arizona, as well as others in Boise, Idaho; Washington and New Mexico.

“We’re pretty excited about our trajectory,” he said. “There is a major trend with the receptiveness if you will to people being in these types of partnerships and despite COVID last year, we actually made some pretty significant inroads so far in terms of growing. We weren’t able to travel past March like most of the rest of the country except for one or two trips late in the year, but we found a way to work through and establish new relationships. We came rolling into 2021 with a handful of commitments to expand our partnerships on the West and East as well.

“We’re busy, and we don’t even have a sales force. It’s just us going in and telling our story and trying to establish a relationship with good quality real estate brokers. It’s all organic growth. We don’t actively solicit. The vast majority of our business is referrals.”

Compliance is key

Campbell said when you look at developing a partnership, the first thing to look at is whether it’s a good cultural fit.

“No. 2, they have to have enough critical mass to support a company,” he added. “For every one of our companies, we make sure we dot every ‘’ and cross every ‘t’ to make sure they’re fully RESPA compliant. All the obvious things. We have to have our own dedicated space, we have to have our own dedicated employees, we have to be performing all the core services – using disclosure of course – and the companies are properly capitalized.

“For us to go in and perform a partnership, they have to be the right person, and they have to have enough business to comfortably support the operation both in a robust market like the one we’re in right now but also in times when it’s more challenging.”

Campbell said RESPA compliance has been a way of life from the start at both Title Alliance and the former underwriting company.

“It’s our natural fiber as underwriters, so we were very used to compliance,” he said. “Sometimes it comes at a competitive disadvantage. Some people care about the rules and some people not so much. It’s always been our position as far as RESPA is concerned that we have to have to proper amount of business to support it and we have to do everything in our power to make sure it’s compliant. We are fortunate in that the lane that we picked was most conducive to grow companies rapidly in a compliant fashion. So, our biggest obstacle are competitors who don’t regard the rules as heavily. That’s always been a challenge, and recently there has been less enforcement than there has been in the past. Our mindset has not changed though. Whether it’s from a federal standpoint as far as RESPA is concerned, or more importantly, the states. Some people forget you can get in just as much trouble not following the rules on a local level. For instance, Ohio has really clamped down for folks who aren’t following the rules.

“From our perspective, whether there is a climate of heavy enforcement or there’s not, we operate our business the same way. In some ways, we’re actually in better shape when there’s heavy enforcement because we follow the rules and we’re not really worried about us, and it makes the folks who don’t care as much at a disadvantage.”

Specifically, Campbell said Title Alliance has stayed compliant by being members of RESPRO for more than 20 years.

The company also hires outside counsel on an as-needed basis. In addition, in-house General Counsel and Compliance Officer Maria Deligiorgis is tasked with staying on top of the various legal challenges posed by affiliated business ventures.

“The more robust the market is, the more challenging it is,” Campbell said. “Maria certainly has her hands full because we’re in new states, and you need to make sure you’re in line with all the local regulators as well as with federal. Maria is excellent at that. Every state is created differently. Some states are very easy to get into. Some are very challenging.”

The company is also updating its training videos for company employees later this year to be more interactive.

However, Campbell said the basic compliance model has stayed consistent throughout the years.

“The rules have been the rules for quite some time, so we go back to the basics: Make sure you disclose, make sure you do all the core functions, make sure you are properly capitalized, make sure you have dedicated employees and make sure you have your dedicated space,” he said. “From a business standpoint, it’s not the most logical way to do things. But that’s not the world we live in.”