Can a real estate broker own a title company?

The rule: ownership is allowed, kickbacks are not

RESPA Section 8 bans paying or receiving anything of value for the referral of settlement-service business. But RESPA also expressly permits Affiliated Business Arrangements (ABAs) — where a broker has an ownership interest in a title company — as long as three conditions are met.

The three conditions

• Disclosure — the consumer gets a written Affiliated Business Arrangement Disclosure describing the relationship and an estimate of charges, at or before referral.
• No required use — the consumer is never required to use the affiliated title company (narrow exceptions aside).
• Return on ownership only — the only thing of value the broker receives is a bona fide return on the ownership interest, not a fee tied to referrals.

See the detail in the ABA safe harbor checklist and RESPA Section 8 explained .

The part people miss: it must be a real company

Disclosure alone isn’t enough. Regulators look at whether the title company is a bona fide business — properly capitalized and staffed, performing real title services, competing for business, and bearing real risk — or just a shell to funnel referral fees. A sham ABA is illegal no matter how the paperwork reads. That’s exactly what a well-built joint venture is designed to satisfy.