With the renewed popularity in marketing services agreements and other strategic alliances between real estate service providers, October Research, LLC put together a two-part webinar series with two industry experts to shed light on whether a certain business opportunity is legal.
Mayer Brown LLC partners Phil Schulman and Holly Spencer Bunting offered insight on affiliated business arrangements in Part I of the webinar, “Strategic Alliances for Today’s Title Industry.”
The webinar offered insights on how businesses can be set up to comply with RESPA.
“Why should title guys care about strategic alliances? Without offending any of you on the phone, it’s because you’re the caboose on the train to homeownership,” Schulman told attendees. “You need to capture a customer’s attention, but you really don’t see them before the closing table. So how do you get access to a consumer prior to that?
“Well, builders, Realtors and lenders – they’re the ones who see the consumers first, and they’re the ones who very often recommend title companies, closing attorneys and escrow agents. Those companies are finding their margins being squeezed, so they’re prime candidates for strategic alliances.”
Bunting detailed exactly what the requirements are in RESPA’s three-part safe harbor test.
“If you establish an affiliated business arrangement joint venture and one party is making referrals to that joint venture and profits are flowing back to them as an owner in the business, if that business does not meet the statutory safe harbor and is not operating as a bona fide business, then the profits the owners have received are considered to be impermissible referral fees,” Bunting said.
The speakers also offered real-life scenarios that title companies and their partners face in creating these business entities.
To order a recording of Part I or to sign up to attend Part II, “Strategic Alliances for Today’s Title Industry: Marketing Activities” live Nov. 20, visit https://www.octoberstore.com/Strategic_Alliances_Webinar_Series_p/alliances.htm.
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