State and Local Reporter - 02/09/2006 (Plain Text Version)

Barry Rutenberg, Chair
Gainesville, Florida

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In this issue:
Virginia Builders Rally in Richmond
Development Approval and Permitting Process Ranks as Top Industry Concern
Legislative Priorities from Around the Country
New Study Measures Housing's Impact on State Economies
EOC Scholarship Program Assists State & Local Education
11 Indicted in ‘Eco Terrorism’ Case
Illinois, Colorado Consider Affiliated Business Legislation
NOR Bills Debated Throughout the Country
Midterm Elections to Stir Powers in the States
UPDATE: U.S.-Mexican Agreement-In-Principle Will Help Alleviate Cement Shortages, Builders Say
Save the Date: NAHB 2006 Legislative Conference
NAHB State and Local Issues Fund: Fighting for the Housing Industry
Deadline for Legal Action Fund Applications Is Coming Up

Illinois, Colorado Consider Affiliated Business Legislation

Affiliated Business legislation has once again reared it's head in this year's state legislative sessions. Thus far, bills in both Illnois and Colorado have been introduced that address the issue of affiliated business partnerships.

llinois House Bill 4731, which was recently introduced, would make it illegal to condition or refuse the sale of residential or commercial property based on a purchaser’s choice of mortgage, title, appraisal, or insurance provider. It would also make it illegal to increase the cost of the property based on a purchaser’s choice of these providers. In addition, the bill would prohibit a person or entity selling or transferring real property from requiring a purchaser to use a specific provider as a condition to receiving an incentive, promotion, or special offer. This bill was referred to the House Rules Committee and has not moved.

Colorado House Bill 1141, which recently passed the House Business Affairs & Labor Committee, would establish a new state regulatory structure for affiliated businesses in the state. HB 1141 represents a compromise brought forth in lieu of legislation that would have mandated that title agencies maintain at least 40% of of their business from unaffiliated sources.

Proponents of Anti-Affiliated Business legislation argue that additional safeguards are needed to protect consumers against deceptive business practices.

The fact of the matter is that laws already in place allow for healthy competition while providing safeguards for consumers. “The practice of offering incentives is expressly allowed and regulated in the federal Real Estate Settlement Procedures Act (RESPA), which also provides that a builder cannot charge more for the home on the back end,” said Eric Menyuk, Assistant General Counsel for California based Ryland Group, Inc.

Additionally, federal and state consumer protection laws protect buyers from the alleged harms set forth by proponents of the Illinois and Colorado legislation.

Empirical data suggests that some home buyers prefer the “one-stop shopping” approach to home buying, and that one-stop shopping offers potential consumer benefits such as convenience and lower costs. The most recent survey on the subject, performed in March of 2002 by Harris Interactive, surveyed 2,052 recent and future home buyers finding that, “82% of home buyers would ‘strongly’ or ‘somewhat’ strongly consider using a one stop shopping service for their home purchase.” What’s more, “the study found that over 90% of home buyers who did not use one-stop shopping programs believed that if they had used one, they would have had a better overall home purchase experience.”

For more information on Affiliated Business legislation, e-mail Alex Strong in NAHB’s State & Local Government Affairs department, or call him at 800-368-5242 x8279.