Learn more about what a title company joint venture is and why parties come together to form a new business partnership.
A title company joint venture is created when two parties come together to form a company, typically a limited liability company (LLC) that incorporates in one or more states to then become licensed and underwritten as a title insurance agency. Typically in the industry, the groups that come together to form a title company joint venture are existing title professionals, usually a local title agent with an existing title company, and a real estate brokerage or mortgage lender.
There are many considerations when entering into a joint venture, especially in the heavily regulated title insurance industry. One of the most critical considerations is ensuring that the arrangement falls within the Affiliated Business Arrangement, or ABA, safe harbor under RESPA 8(c)(4). This exception states that an entity qualifies as an Affiliated Business Arrangement if if meets the following three conditions:
1) The party making the referral must disclose the arrangement to the person being referred
2) The person is not required to use any particular provider of settlement services
3) The person making the referral cannot receive any “thing of value” from the ABA other than a return on the ownership interest (or franchise relationship)
Leading real estate companies should work with their board and executive leadership to determine the selection criteria for a title company joint venture partner. Setting up the criteria properly will ensure a successful title company partnership that delivers the desired outcomes both today and for years to come.
When considering whether to enter into a title joint venture, it is critical that partner selection criteria include:
- A demonstrated track record of joint venture success
- Multi-state expertise if you plan to scale your business regionally or nationally
- A proven technology platform, ready for digital real estate closings
So you may be thinking, why are top real estate industry professionals interested in starting a title company partnership or joint venture?
While many companies have varying strategic objectives as they grow their real estate business, here are a few common reasons that real estate lenders and real estate brokers seek to form a title company joint venture:
- Revenue stream diversification
- Title profit
- Technology integration
Many search the web on how to start a title company, how to form a title company alliance or a title company partnership with the goal of realizing profit from their existing title referrals. For high volume real estate professionals, entering into a title company joint venture can assist them in realizing a significant source of additional revenue.
CLOSED Title, The Joint Venture Title Company™ , is leading the industry in offering title company joint ventures as partners with leading real estate brokerages, lenders and current title professionals. Visit our Joint Ventures page to learn more about how we are reinventing title company ownership.
CLOSED Title was founded to deliver on a fundamental promise of technology: to transform experiences. We are making strategic investments in CLOSED Title technology to create new closing experiences.
Founded by Devan Spinelli, Esq., a real estate attorney and technology consultant to Fortune 500 C-level executives, CLOSED is innovating and empowering clients to close online from anywhere in the world, receive real-time title updates and experience unparalleled responsiveness.