5 RESPA title myths that get brokers in trouble

Myth 1: “If I own 10%, it’s automatically legal.”

Ownership percentage isn’t a magic number. What matters is whether the company is a bona fide business and whether you meet the safe-harbor conditions . A 10% stake in a sham entity is still illegal.

Myth 2: “A disclosure cures everything.”

Disclosure is necessary but not sufficient. You also need no required use and a bona-fide-return structure — and a real operating company behind it.

Myth 3: “I can require my buyers to use my title company.”

No. Required use breaks the safe harbor. Consumers must always be free to shop and choose. You compete on service, not coercion (see title capture rate ).

Myth 4: “Distributions can reward me for sending deals.”

Distributions must be a return on ownership, proportional to your stake — never tied to referral volume. Payments that track referrals are kickbacks.

Myth 5: “A marketing agreement is an easy workaround.”

MSAs are heavily scrutinized and routinely lead to enforcement when payments don’t reflect real services. See MSA vs. ABA vs. JV .