In short: In Chicago Title Insurance Co. v. Butler, 770 So. 2d 1210 (Fla. 2000), a developer wanted title agents to share part of their premium with him, but Florida law banned those rebates. The Florida Supreme Court affirmed that the anti-rebate provisions for title agents violated substantive due process because they had no rational relationship to a legitimate public purpose.
The Facts
S. Clark Butler, a builder and developer, wanted to negotiate rebates of the title agent’s share of title insurance premiums.
At the time, the title insurer was guaranteed 30% of the risk premium and the agent kept 70%. Statutes and an administrative rule barred agents from rebating any part of their share.
Butler sued the Department of Insurance for a declaratory judgment and won in the trial court. The department did not appeal.
Title insurers, title agents and industry groups intervened and appealed, arguing rebating would lead to cut-throat competition that would weaken underwriting and insurer solvency.
The First DCA certified the case as one of great public importance.
The Decision
The Florida Supreme Court affirmed (Case No. SC95312, Oct. 19, 2000; per curiam, with Justice Shaw dissenting and Justice Lewis recused).
The title-agent anti-rebate provisions violated substantive due process under Article I, § 9 of the Florida Constitution because they bore no rational relationship to a legitimate public purpose.
The Court treated the case as controlled by Department of Insurance v. Dade County Consumer Advocate’s Office (Fla. 1986), which had struck down anti-rebate laws for insurance agents generally. It refused to overrule that case and found the claimed link to insurer solvency unclear.
The Law
The Legislature has since revised the statutes. Current § 627.782 still requires a title insurer to retain at least 30% of the premium, and the Insurance Code’s anti-rebating provisions (§§ 626.8437 and 626.9541(1)(h)) address when title agents may and may not rebate.
The exact enactment history of the post-Butler fix was not verified here; check the current statutes before advising on a rebate arrangement.
Lessons
- Title insurance premiums are regulated, but parts of the agent’s compensation have been open to negotiation since Butler.
- High-volume buyers, such as builders and investors, should ask how premiums and rebates are handled at closing.
- Industry-protection laws must still pass rational-basis review under the Florida Constitution.
- Get any rebate arrangement in writing and confirm it complies with current statutes.
Source: Opinion, Chicago Title Ins. Co. v. Butler, 770 So. 2d 1210 (Fla. 2000)
Watch the Oral Argument
This is the recording of the Florida Supreme Court oral argument. What lawyers and judges say at argument is not the ruling; the decision is summarized above.
Is Florida’s Title Insurance Law Unconstitutional? | Chicago Title Insurance Co. v. Butler, SC95-312
Go Deeper
- “Less and Except” Means Not Yours: Deed Carve-Outs and Tax Deeds (Garden State v. Shazbop)
- Hidden Buyer, $13M Sale: A Seller’s Fraud Claim Gets Revived (Puleo v. Cohen)
- Deed in Lieu Held in Escrow: Court Can Order Foreclosure Instead (Safe Harbor v. 9775 Dixie)
Frequently Asked Questions
Can a Florida title agent rebate part of the premium?
Butler struck down the old blanket ban on title agents rebating their share. Current statutes still regulate rebates, so check them before relying on one.
How much of a Florida title premium must the insurer keep?
Current § 627.782 requires the insurer to retain at least 30% of the premium.
Why did the Florida Supreme Court strike the anti-rebate law?
It found no rational relationship between the ban and a legitimate public purpose, violating substantive due process.
Who challenged the law in Butler?
A builder and developer who wanted to negotiate rebates with title agents.
Talk to a Florida real estate litigation lawyer
Weidner Law, P.A. handles Florida real estate, landlord-tenant, condominium and property disputes from St. Petersburg. If you need a real estate litigation lawyer, call (727) 954-8752 or email weidner@mattweidnerlaw.com.
Read the law yourself, free: the full Florida Statutes and court rules are on floridarules.net.
This article is general information about Florida law, not legal advice about your situation. Reading it, watching the videos, or contacting the firm does not create an attorney-client relationship. Every case turns on its own facts, and past results do not guarantee a similar outcome. The hiring of a lawyer is an important decision that should not be based solely upon advertisements.
