Alabama-based RealtySouth must pay half a million dollars to the Consumer Financial Protection Bureau for inadequate disclosures that could leave consumers unaware of their rights to choose service providers when they buy a home.
According to the CFPB, the practices identified illegally benefited TitleSouth, an affiliated company owned by the same holding company that owns RealtySouth.
RealtySouth violated the Real Estate Settlement and Practices Act, which protects consumers during the home-buying process by prohibiting kickbacks for referrals of real estate settlement services.
RealtySouth was found that preprinted form purchase contracts, which its agents provided to homebuyers preparing to make an offer on a home, either explicitly directed or suggested that title and closing services be conducted by its affiliate, TitleSouth.
“The disclosure RealtySouth gave consumers did not comply with the law; it did not properly highlight consumers’ rights, and the required language was buried in a section of text that also made marketing claims about the company’s prices,” the report said.
Since the charge, RealtySouth has changed its disclosure forms and will pay a civil penalty of $500,000.
Back in October, the CFPB filed a lawsuit against Kentucky law firm Borders & Borders, alleging the firm and its principals illegally paid kickbacks for real estate settlement referrals.