Welles-Bowen Realty Inc. has been sued by a Perrysburg couple who allege that the company's title-company arm is a sham operation that collects kickbacks from a Chicago firm.

Joint ventures between real estate agencies and title insurance underwriters to sell the insurance to home buyers have been created nationwide and have prompted several state investigations.

John Murray, an attorney with the well-known Sandusky law firm of Murray & Murray, said the lawsuit filed by his firm shows the issue has hit the Toledo market.

"The question is: Are they really doing substantive work or are they just getting a secret rebate that should be going to the consumers or real estate [agents]?"

Kevin Smith and David Browning, the brokers and owners of Welles-Bowen Realty, and their attorney, Richard Carr, dispute the lawsuit's claims. They say the title company has two employees who handle title business, which they say is established according to federal rules.

In the lawsuit, which seeks class action status, Erick Carter and Whitney Hayes-Carter allege that Welles-Bowen Title Agency does not have a separate staff and was created for one reason by the Toledo real estate company, Fidelity National Financial Inc., and Chicago Title Insurance Co.

The purpose, the suit contends, "was to enable Fidelity and/or Chicago Title to provide Welles-Bowen Realty with kickbacks and other improper or illegal payment in exchange for Welles-Bowen Realty referring real estate settlement work to Chicago Title."

When the Carters agreed in September to buy a house at 431 Blue Jacket Rd. in Perrysburg, they allege, they were referred by their Welles-Bowen agent to Welles-Bowen Title for home-purchase closing services.

A closing document indicates the title company received $946.28 for title insurance from the Carters, $644 from the seller for title insurance, and $25 from the seller for a title examination.

"Although Welles Bowen Title did not conduct the title search, provide any closing services, or provide office space for the closing, it received approximately 70 percent of the funds applied to title charges on the Carters' HUD settlement statement," the lawsuit alleges.

Mr. Smith told The Blade: "We have an affiliated business arrangement that the Carters read and signed which spells everything out and states they had an option about what title company they wanted to use."

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