ROY — A legislator who helped pass a controversial real estate transactions bill has fired back at criticism of lawmakers’ motives.
Rep. Mike Schultz, R-Roy, rebutted allegations that he and other lawmakers whose careers are in the real estate or homebuilding industries promoted Senate Bill 121 to further their professional interests.
In an interview at his business, Castle Creek Homes, Schultz on Monday questioned in turn the motives of Brad Griffiths and Tyler Turner, co-owners of GT Title Services Inc., who led the failed battle against SB 121.
Schultz said he’s proud to be a member of a citizen Legislature and spends most of his time getting homes built. On Tuesday, he wore a sweatshirt, jeans and a baseball cap and propped his cowboy boots by the door.
“There’s a reason why the title company owners don’t want this bill to pass,” Schultz said. “Griffiths and Turner, they’re title company owners and they know this will bring in more title companies and it will create more competition.”
The argument became academic, at least for now, when Gov. Gary Herbert signed SB 121 into law Tuesday.
In 1985, the Legislature passed a law prohibiting real estate companies and homebuilders from owning title companies. The intent was to eliminate pressure on title companies to pay kickbacks for the business referrals they receive from builders and brokers.
SB 121 took form when Salt Lake City real estate broker Thomas Wright, a Republican National Committeeman who’s also active in community causes, approached Sen. Daniel Hemmert with the bill.
Schultz agreed to be the House floor sponsor.
The original version of SB 121 would have repealed the 1985 law, but after lobbying by title companies, provisions were added to increase oversight and compliance with federal consumer laws.
During legislative hearings in February and March, Griffiths said the amended bill still would enrich the new combined companies at the expense of independent title companies and consumers.
But if new combined companies flout the law, “they’re going to get shut down in a hurry and depending on the severity of it they’re going to get fined a whole bunch of money and-or spend some time in prison,” Schultz said.
“All the fees have to be spelled out and can’t be hidden,” he said. “The homebuyer has to have knowledge and agree to pay that prior to deciding to go ahead with the title company.”
Schultz said Tuesday that Griffiths singled him out because he owns a homebuilding company.
“He used me as an example because he thinks I’m going to go start a title company,” Schultz said, adding that he has no such plan. ”He thinks I have self interest in this.”
Schultz said SB 121 actually improves protections because the state real estate and insurance departments will be in charge of enforcement, which is based on extensive federal regulation of the real estate industry.
Corruption in real estate transactions, Schutz said, “Is the last thing we want. We do not want kickbacks, nothing like that, to happen, so the more eyes on that the better.”
Companies must file annual transaction reports and state regulators can initiate investigations or follow up on consumer complaints.
Asked Tuesday for details on the enforcement process, the Utah Division of Real Estate issued this statement:
“As Governor Gary Herbert just signed Senate Bill 121 into law today, the Utah Division of Real Estate will add this statute to our enforcement umbrella. The Department of Commerce and its investigative divisions are a complaint driven state agency. As the Division of Real Estate receives complaints that cross S.B. 121, our investigative team will respond accordingly.”
Schultz also defended the Legislature’s handling of the bill. It was introduced early in the 45-day session and received two committee hearings. It was in play for 40 days, he said, plenty of time for negotiation to take place.
In the end, the Utah Land and Title Association agreed to the bill with the added protections, Schultz said.
“Not every title company is going to be OK with what gets worked out, but ultimately the ULTA decided they wanted to negotiate and work something out.”
Concerns about campaign contributions and professional ties influencing lawmakers’ decisions are overblown, Schultz said.
Schultz said only he and two other House members, Speaker Brad Wilson, R-Kaysville, and Rep. Calvin Musselman, R-West Haven, work full-time in the real estate industry. Lawyers and people with higher education jobs are much more common, he said.
Regarding his own campaigns, Schultz said his personal contributions cover his campaign costs and he donates the rest to city celebrations like Hooper Tomato Days or the campaigns of other candidates.
“I just want to be able to look my constituents in the face and say it makes no difference to me who contributes to my campaign,” he said. “I am fortunate enough to be in a position to pay for my own campaigns.”
He’s received contributions from people in the title industry, which proves he can vote against a contributor “in a heartbeat,” Schultz said.
“Contributions have zero effect on how I vote,” he said.