Joint Ventures

Understanding a Joint Venture in the Title Company Space

Lets dive into the concept of a title company joint venture and the reasons behind the formation of such strategic business alliances.

A title company joint venture is the result of two parties joining forces to establish a company, often a Limited Liability Company (LLC), which is incorporated in one or more states. This newly formed entity then obtains licensing and underwriting to operate as a title insurance agency. The parties involved in title joint ventures are typically existing title professionals, such as a local title agent with an existing title company, and a real estate brokerage or mortgage lender.

Entering into a title insurance joint venture, particularly in the highly regulated title insurance sector, requires careful thought. One key aspect to consider before starting a title company is ensuring the arrangement complies with the Affiliated Business Arrangement (ABA) safe harbor under RESPA 8(c)(4). This provision stipulates that an entity qualifies as an ABA if it fulfills three conditions:

1. The arrangement must be disclosed to the referred individual by the referring party.
2. The referred individual is not obligated to use any specific settlement service provider.
3. The referring party cannot receive any benefits from the ABA other than returns on ownership interest (or franchise relationship).

Top-tier real estate firms should collaborate with their board and executive leadership to establish the selection criteria for a title company joint venture partner. Properly defined criteria will pave the way for a successful realtor-owned title company partnership that yields the expected results now and in the future.

Key criteria for selecting a title joint venture partner should include:

• A proven history of successful joint ventures.
• Expertise across multiple states, if you plan to expand your business regionally or nationally.
• An established technology platform, ready for digital real estate transactions.

You might be wondering why industry-leading real estate professionals are keen on initiating a title company partnership or joint venture. While strategic objectives vary among companies as they expand their real estate business, common motivations for opening a title insurance company include:

• Diversifying revenue streams.
• Profiting from title operations.
• Integrating technology.

Many professionals are interested in learning how to start a title company, form a title company alliance, or own a RESPA-regulated title company with the aim of profiting from their existing title referrals. For high-volume real estate professionals, a title company joint venture can be a significant source of additional revenue.

World Wide Land Transfer is at the forefront of the industry, offering title company joint ventures in partnership with leading real estate brokerages, lenders, and current title professionals. Discover how we are revolutionizing title company ownership and start your own title company by scheduling a meeting with our team. Please email jointventures@wwlandtransfer.com for more information.