Real Estate Overcharges: Consumers Investigate Lawsuits

Tacoma, WAConsumers are investigating a possible lawsuit alleging they were overcharged on their recording fees for real estate transactions. They claim that this occurred because of incorrect figures being used on their HUD-1 settlement statement. Some lawsuits have already been filed while more are likely on the way.

Potentially hundreds of thousands of people have paid too much in recording fees without realizing it. Although the amounts of some of the overcharges may seem low, $5 for some, when that is added up over the number of people who may have been affected by the overcharges, the profits add up. Even at just $5 a transaction, over 100,000 people that equals a profit of $500,000. That is $500,000 that the agent has not actually worked for. And not all overcharges were for $5: some were allegedly higher than $100.

"Consumers are now investigating and filing lawsuits against title insurance companies for such price gouging. One lawsuit has been filed in Seattle, claiming that title insurance companies have agreed not to compete on the rates that consumers are charged, leaving homeowners and home buyers paying a much higher rate than they should be for title insurance.

According to the lawsuit, "The [title insurance] companies agree to fix the price of title insurance far in excess of the risk and loss experience associated with such insurance...As a result of their joint rate setting and agreement, no company competes on price to the consumer." Such price collusion, if it has occurred, is illegal.

The lawsuit, which seeks class action status, claims that "hundreds of thousands, if not millions of consumers" have been affected by real estate overcharges. It further argues that title insurance companies are engaged in paying inducements and kick-backs to real estate agents in return for their business. Defendants named in the lawsuit include Fidelity National Title Insurance Company, Chicago Title Insurance Company, and First American title Insurance Company.

There have also been similar lawsuits filed in several states, including New York.

In 2006, a judge approved a $27.5 million settlement for people who bought new homes in Michigan and were overcharged for title insurance. Investigations have been carried out in numerous states after consumers complained that they paid too much for title insurance.

More lawsuits are likely to be filed as people check their records to see if they were subjected to real estate overcharges. If you believe you were unfairly overcharged in a real estate transaction, contact a lawyer who can determine your eligibility to join a class action lawsuit.