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DocuSlgn Envelope ID: 544C62C2-D384-4F1 E-8FF0-863C47ECC544

_STATE OF WASHINGTON
OFFICE OF THE INSURANCE COMMISSIONER

In the Matter of Order No. 21-0127

MODUS TECHNOLOGIES, INC.


ORDER TO CEASE AND DESIST
Respondent.

In accordance with RCW 48.02.080, the Insurance Commissioner of the state of


Washington ("Insurance Commissioner") orders the above-named Respondent, and its officers,
directors, trustees, employees, agents, and affiliates to immediately cease and desist from:

A. Engaging in an agreement, arrangement, scheme, or understanding with Modus Title


LLC designed to avoid state insurance regulations under Chapter 48 RCW and Chapter
284-29WAC;

B. Offering illegal inducements via its technology platform in violation of RCW


48.29.210;

C. Offering complimentary nontitle goods or services to producers of title insurance


business in connection with Modus Title LLC; and

D. Offering complimentary or co-branded advertisements to producers of title insurance


business in connection with Modus Title LLC.

BASIS:
1. Modus Technologies, Inc. is a foreign corporation registered in Washington State
on February 1, 2018 as "an online real estate closing platform". Modus Technologies, Inc. has
registered "Modus Technologies" and "Modus" as trade names with the Washington State
Department of Revenue.
2. Modus Title LLC ("Modus Title") is a resident business entity title insurance
producer first licensed in Washington on August 30, 2019. Modus Title has the following "doing
business as" (dba) names registered with the Insurance Commissioner: "Modus", "Modus
Closing", "Modus Escrow", and "Modus Title & Escrow".
3. Modus Title has also registered the trade names "Modus" and "Modus Closing"

ORDER TO CEASE AND DESIST State of Washington


ORDER NO. 21-0127 Office oflnsurance Commissioner
PO Box40255
LA - 1618059 - 1 Olympia, WA 98504-0255
DocuSign Envelope ID: 544C62C2-D3B4-4F1E-8FF0-863C47ECC544

with the Washington State Department of Revenue.


4. The web address for Modus Technologies, Inc. i~ www.modusclosing.com;
however, "Modus Closing" is a trade name for Modus Title LLC, the entity licensed by the
Insurance Commissioner.
5. Both Modus Title and Modus Technologies share "Modus" as a common
registered trade name.
6. On February 8, 2021, the email address of"kelsie.eagon@modusclosing.com" was
added at the Licensee's request to the licensing record for Modus Title as maintained by the
Insurance Commissioner. Again, www.modusclosing.com is the web address for Modus
Technologies, Inc.; however, an "@modusclosing.com" email address has been registered by
Modus Title as the current "mailing email address" for Modus Title.
7. The Insurance Commissioner opened an investigation upon receipt of complaints
from two (2) Washington title companies. Both companies allege that the Licensee is providing
rebate and inducements through a technology platform operating under the tradenames "Modus
Technologies" and "Modus." Modus Technologies, Inc. ("Modus") wholly owns Modus Title. As
Steve Theodore ("Theodore"), Modus' in-market representative, says in a YouTube video: "We
are two companies in one." Registration information from the Washington Secretary of State show
that Modus Technologies and Modus Title share a common governor, Jai Sim.
8. Modus (www.modusclosing.com) is a proprietary software platform ("the
platform"). Modus does not require real estate agents to use Modus Title (www.modustitle.com).
Modus offers the following services to real estate agents via its platform:

• Staging Boost," a service to secure cleaning, landscaping, staging, and listing


preparation renovation with payment deferred until closing of the home sale or for up
to 365 days. "ZingFix" is the third-party vendor the realtor contracts with directly to
provide for the services. Invoices are sent at a later date or fees are deducted from the
net proceeds at closing.

• "List Assist," wherein Modus partners with Virtuance Photography to provide


professional listing photos. Realtors contract directly with Virtuance.

• Earnest money deposits, document storage from real estate transactions, wire transfers,
notary services, complimentary home books, farming reports, pre-listing materials to
give a competitive edge on the next listing presentation, and 24/7 concierge service.

9. ModusTeceives no compensation from the realtor, or from Virtuance or ZingFix,

ORDER TO CEASE AND DESIST 2 State of Washington


ORDER NO. 21-0127 Office oflnsurance Commissioner
PO Box 40255
LA- 1618059 - 1 Olympia, WA 98504-0255
DocuSign Envelope ID: 544C62C2-D3B4-4F1 E-8FF0-863C47ECC544

for using Modus to arrange for these services. Nor does Modus receive any compensation from
the realtor to use the platform for the other offered services.
10. In addition, the platform states that Modus is a distinct entity from Modus Title
LLC, and that use of the platform does not require the use of Modus Title LLC.

Closings were moved from other title companies to Modus Title LLC

11. Fidelity National Title ("Fidelity"), one of the complainants, provided


documentation that four (4) closings were moved to Modus Title because of services provided
under the Staging Boost program offered on the platform or because of a home warranty issue. As
one broker, "S.C.D.", stated:
I wanted to write you to say that I'm going with Modus Title & Escrow with my upcoming
listing because my clients need financial support to stage their home and I don't have the
capability to help them at the moment. ... (Modus offers a partnership with ZingFix where
the company will front the cost of staging, and then it's taken out of the sellers net
proceeds.) I'm so bummed out, but I look forward to working with you hopefully in the
near future!

12. In a February 1, 2020 email, realtor "D.B." notified Fidelity:

Unfortunately we are having to switch the escrow portion to Modus for the [L.S.]
transaction because of the contractors doing repairs.

13. The Insurance Commissioner contacted D .B. who confirmed he used the services
of Modus Title one time because he had a client who required renovation work for the home sale,
and those services were not charged until the closing of escrow.
14. In a text message provided by Fidelity on April 3, 2020, another realtor, "J.R.",
said:
Sorry, this transaction is moving to Modus. Buyers negotiated this through inspection so
they can get a free warranty from escrow.

15. The Insurance Commissioner contacted J.R. who confirmed he used the services of
Modus Title one time. He was selling a house using Ticor Title, but the buyer wanted a home
warranty. The buyer's agent, L.Y. of The Cascade Team (see below), identified that Modus
provided a free warranty. As a result, the buyer requested the switch to Modus Title. It was J.R. 's
understanding that the free warranty was only available to the buyer if escrow and title services
were switched to Modus.

ORDER TO CEASE AND DESIST 3 State of Washington


ORDER NO. 21-0127 Office of Insurance Commissioner
PO Box 40255
LA- 1618059 - 1 Olympia, WA 98504-0255
DocuSign Envelope ID: 544C62C2-D3B4-4F1 E-8FF0-863C47ECC544

16. Finally, in a March 29, 2020, Addendum to Purchase and Sale Agreement
between buyers, "M.B./A.B.", and seller, "A .C.", the closing agent was changed as
follows:
Closing agent will change to Modus Escrow whom will provide a home warranty for the
buyers.

Modus' Statements

17. In a December 9, 2019, email from Steve Theodore ("Theodore"), a Modus in-
market Growth Executive, to Chicago Title Company, Theodore explained:

An interesting side benefit of partnering with us for escrow is that you can even leverage
our amazing Staging Boost program to help you deal with post-inspection results when in
contract, meaning your seller would be able to have needed repairs performed with no
money down, and then the fees would be paid to contractors out of net proceeds when the
home closes.

18. Further, at a January 29, 2020, presentation to a real· estate agency found on
Y ouTube, Theodore said, "From the buy side, if you didn't have the ability to dictate who was
doing escrow on a deal, but it would be a creative way to write in Modus if you could kind of talk
about some of these things [Staging Boost] so effectively you are selling Modus from the buy side
whereas we are usually talking to a listing agent."
19. Modus is acting as an agent or other representative of Modus Title, and is directly
and indirectly offering a "thing of value" to influence the referral of title insurance business,
Modus' disclaimer notwithstanding.

Modus' offerings to and advertisements on behalfofrealtors are violations of 48.29.210


and WAC 284-29-215

20. Fidelity provided the following communications between Modus and various real
estate agents:

• A February 5, 2020, email written by Danny Taylor, Partner Success Executive for
Modus/Modus Closing (Daniel.taylor@modusclosing.com) to real estate agent, Erin
Myers, identifying Modus as "a tech-powered Title and Escrow company.... Please
see attached, our Staging Boost program. These are digital flyers, I can, of course, get
you co-branded material if you wish." The email contains a disclaimer that any title or
escrow company can be utilized.

ORDER TO CEASE AND DESIST 4 State of Washington


ORDER NO. 21-0127 Office oflnsurance Commissioner
PO Box40255
LA- 1618059 - 1 Olympia, WA 98504-'0255
DocuSign Envelope ID: 544C62C2-D3B4-4F1 E-8FF0-863C47ECC544

Realtor Erin Myers ("Myers") signed a declaration attesting, in part, that she used
Modus one time for the convenience of doing everything online in one place. Myers
said that Modus' selling point was that everything could be done through their
company, from the preparation of documents to closing.

• A February 10, 2020 email from Jessica Lane ("Lane")


(Jessica.lane@modusclosing.com) to TeamBauman@johnlscott.com, offering a
hyperlink for "List Assist", a photography service offered through a partnership with
Virtuance photography.

The Insurance Commissioner contacted realtor Joe Bauman ("Bauman") who


confirmed, by declaration, that he received the referenced email from Lane of Modus
which offered List Assist, described as photography services for agents and clients with
costs differed [sic] to commission. Bauman said he is also aware that Modus Closing
offers to stage, clean, and remodel homes prior to listing and collecting payment at
closing. Bauman believes that the products offered by Modus Closing were only
offered if the Modus Title agency was utilized.

• A link to a real estate agency website, www.thecascadeteam.com/marketing.php,


which offers their "Prime Marketing" full service marketing system to sellers that
included Staging Boost through "Modus" and "The Cascade Team Real Estate" (co-
branded);

• An April 17, 2020, email sent by Lane, Growth Executive for Modus
(jessica.lane@modusclosing.com), describing Modus as the fastest growing Title &
Escrow Company in the nation. Included in the email is a description of Staging Boost,
which allows clients to defer payments up to $55,000 to prepare their home for sale,
arid Modus coordinates the contractors. In addition, Modus provides "Transaction
tracker," "l 00% Secure Digital Earnest Money Deposits" by phone, complimentary
mobile notary service and courier options, 24/7 concierge services, and List Assist
through Virtuance Photography. The emails contain a postscript: "PS - Ready to open
title? Visit Modustitle.com anytime, anywhere to begin", as well as a hyperlink to
Modus Title.

Lane also included a "Competitive Comparison" chart in the email, comparing the
services offered by Modus to three other title companies: Old Republic Title Company,
First American Title, and Fidelity National Title Agency.

• A June 4, 2020, email from Lane of Modus attaching the "Greater Seattle Housing
Report", offering co-branding to the recipients, and providing a postscript hyperlink to
www .Modustitle.com.

• A June, 2020, Instagram post showing the Greater Seattle Housing Report co-branded
with both Modus' logo and real estate agent, D.H., of Compass Real Estate.

• In a social media post Modus representative, Theodore, promoted a brokers open

ORDER TO CEASE AND DESIST 5 State of Washington


ORDER NO. 21-0127 Office of Insurance Commissioner
PO Box 40255
LA- 1618059 - 1 Olympia, WA 98504-0255
DocuSign Envelope ID: 544C62C2-D3B4-4F1 E-8FF0-863C47ECC544

representing a condo with real estate agent, "C.V.V."

Modus provides free materials to realtors

21. In a December 9, 2019, email to realtor, J.S., Modus Growth Executive, Nathan
Whalen, said Modus offers the following:
• Title and Escrow - "Team with over 50+ years of experience"
• Staging Boost
• Earnest Money Deposits
• Complimentary HomeBooks, Farming Reports, and Pre-Listing Materials to give you
a competitive edges at your next listing presentation; and
• 24/7 concierge - "Your very own dedicated home closing team."

22. The Insurance Commissioner documented that the HomeBooks offered by Modus
Title, doing business as Modus and Modus Closing, are valued at $6, but were offered as
"complimentary" through email solicitation to real estate agents promoting Modus. Modus
provided sample invoices for Home Books and Farming Listings identifying a billing of $6.61 per
book/listing charged by "The Modus Team" to the real estate agent.
23. Modus responded as follows:
• Modus Technologies and Modus Title are two separate entities, with separate offices,
and operate independent websites that do not link to each other. Jai Sim is the co-
founder and Executive Chairman of Modus Technologies, and since Modus
Technologies owns Modus Title, Mr. Sim occupies the position of Managing Officer
at Modus Title.

• Modus Title and Modus Escrow do not benefit from Modus Technologies' software
platform. Brokers have made over 200 transactions through the platform without using
Modus Title.

• Modus Technologies provides a proprietary software platfmm to real estate brokers


supporting real estate transactions and workflow tracking including "List Assist" and
"Staging Boost". Title insurance and escrow are deliberately not listed on their platform
to avoid a referral to either Modus Title (or Modus Escrow).

• Staging Boost is a service available through Modus Technologies' platform for


ZingFix. It allows the costs of the staging born by the seller to be deferred until closing.
Staging Boost's marketing materials supp01i that brokers are not required to use Modus
Title. Modus plays no further part of those transactions, as both Vittuance and ZingFix
directly communicate with the real estate brokers.

• "Elevate" was a program offered by Modus Technologies to educate brokers on how


to use the software. Modus Technologies discontinued Elevate in January 2020.

ORDER TO CEASE AND DESIST 6 State of Washington


ORDER NO. 21-0127 Office of Insurance Commissioner
PO Box40255
LA- 1618059 - i Olympia, WA 98504-0255
DocuSign Envelope ID: 544C62C2-D3B4-4F1 E-8FF0-863C47ECC544

Brokers were instructed they were free to use any title insurance company.

• Modus Technology, a separate entity, makes home books and farm reports available
for purchase ($6) by real estate brokers, who are invoiced quarterly.

24. Modus provided a spreadsheet to the Insurance Commissioner which documented:


a) From 12/20/2019 to 3/31/2020, Modus Title sold 297 policies, collecting $583,468 in premium;
and b) From 7/2/19 to 3/18/20, business performed via the Modus platform involved 348
transactions through 14 (including Modus Title) title companies.
25. RCW 48.29.210(1) prohibits a title insurer, title insurance agent, or employee,
agent, or other representative of a title insurer or title insurance agent from, directly or indirectly,
giving any fee, kickback, or other thing of value to any person as an inducement, payment, or
reward for placing business, referring business, or causing title insurance business to be given to
either the title insurer, or title insurance agent, or both.
. 26. RCW 48.29.210(2) provides that a title insurer, title insurance agent, or employee,
agent, or other representative of a title insurer or title insurance agent shall not, directly or
indirectly, give anything of value to any person in a position to refer or influence the referral of
title insurance business to either the title insurance company or title insurance agent, or both,
except as permitted under rules adopted by the Insurance Commissioner.
27. WAC 284-29-200(2) provides that RCW 48.29.210 not only applies to title
insurance producers or associates of producers, but to every person in position, directly or
indirectly, to refer or influence the referral of title insurance business.
28. WAC 284-29-205(9) defines "representative of a title company" as any person
acting directly or indirectly on behalf of the title company.
29. WAC 284-29-205(13) defines "title company" as either a title insurance company
authorized to conduct title insurance business in this state under chapter 48.05 RCW or a title
insurance agent defined in RCW 48.17.010(15), or both. The term includes employees,
representatives, and agents of title insurance companies and title insurance agents.
30. WAC 284-29-205(5) defines 'give' as "to transfer to another person, or cause
another person to receive, retain, use or otherwise benefit from a thing of value whether or not the
title company receives compensation in return. It also means the transfer to a third person of
anything of value that in any manner benefits a person in a position to refer or influence the referral
of title insurance business."

ORDER TO CEASE AND DESIST 7 State of Washington


ORDER NO. 21-0127 Office oflnsurance Commissioner
PO Box 40255
LA- 1618059 - 1 Olympia, WA 98504-0255
DocuSign Envelope ID: 544C62C2-D3B4-4F1 E-8FF0-863C47ECC544

31. WAC 284-29-205(12) defines "thing of value" as anything that has a monetary
value. It includes but is not limited to cash or its equivalent, tangible objects, services, use of
facilities, monetary advances, extensions oflines of credit, creation of compensating balances, title
company employee time, advertisements, discounts, salaries, commissions, services at special
prices or rates, sales or rentals at special prices or rates, and any other form of consideration, reward
or compensation.
32. WAC 284-29-215(2) states that except as provided in subsection (1) of this section,
a title company must not directly, indirectly, by payment to a third-party or otherwise, use any
means of communication or media to advertise on behalf of, for, or with a producer, including but
not limited to:
(a) Advertising real property for sale or lease unless the property is owned by the title
company;
(b) Advertising or promoting the listings of real property for sale by real estate licensees;
(c) Advertising in connection with the promotion, sale, or encumbrance of real property.

33. WAC 284-29-215(3) states that no advertisement may be placed in a publication


that is published or distributed by or on behalf of a producer of title business, including but not
limited to, websites, flyers, postcards, for sale signs, flyer boxes, or any other means of
communication or any other media.
34. WAC 284-29-260(6)(i) prohibits a title company from giving, paying or offering
to pay, either directly or indirectly, or make payment to a third party for the benefit of any producer
for any advertisement published in the name of, for, or on behalf of any producer.
35. WAC 284-29-255(1) provides that a title company must not give, offer to give,
provide, or offer to provide nontitle services (for example: Computerized bookkeeping, forms
management, computer programming, trust accounting for trust accounts not held in the name of
the title company, short sale consultants, or transaction coordination) or any similar benefit to a
producer, without charging and actually receiving a fee equal to the value of the services provided
and in an amount at not less than what the producer would pay if the services were purchased on
the open market or the title company's cost to provide the service, whichever is greater.
36. WAC 284-29-200(6) provides that title companies much not enter into any
agreement, arrangement, scheme or understanding, or in any other manner pursue any course of
conduct designed to avoid RCW 48.29.210 and WAC 284-29-200 through WAC 284-29-265.

ORDER TO CEASE AND DESIST 8 State of Washington


ORDER NO. 21-0127 Office oflnsurance Commissioner
PO Box 40255
LA- 1618059 - 1 Olympia, WA 98504-0255
DocuSign Envelope ID: 544C62C2-D384-4F1 E-8FF0-863C47ECC544

37. RCW 48.02.080(3)(a) states that if the Insurance Commissioner has cause to
believe that any person is violating or is about to violate any provision of this code or any
regulation or order of the Insurance Commissioner, he or she may issue a cease and desist order.
38. The Respondent's actions described herein violate the following Insurance Code
provisions that include: RCW 48.29.210(1) and RCW 48.29.210(2) [inducements prohibited];
WAC 284-29-200(6) [engaging in a scheme to avoid regulation]; WAC 284-29-215(2), WAC 284-
29-215(3) and WAC 284-29-260(6)(i) [governing the prohibition of advertising with producers
of title business]; and WAC 284-29-255(1) [governing the provision ofnontitle services].
39. Any violation of the terms of this Order by the Respondent and its officers,
directors, trustees, employees, agents, and affiliates or the Respondent's failure to fulfill or perform
its contracts subject to this Order will render the violator(s) subject to the full penalties authorized
by RCW 48.02.080, and other applicable sections of the Insurance Code of the state of
Washington.
The Respondent has the right to demand a hearing in accordance with RCW 48.04.010,
WAC 284-02-070 and WAC 10-08-110.
This Order shall remain in effect subject to the further order of the Insurance
Commissioner.

THIS ORDER IS EFFECTIVE IMMEDIATELY AND IS ENTERED at Tumwater,


Washington, this 17th day of March, 2021.

MIKE KREIDLER
Insurance Commissioner

By and through his designee

(Y.;~&uu..,:__:,,,,,Q8_ _ _ __

TIM ASCHER
Insurance Enforcement Specialist
Legal Affairs Division

ORDER TO CEASE AND DESIST 9 State of Washington


ORDER NO. 21-0127 Office of Insurance Commissioner
PO Box 40255
LA - 1618059 - 1 Olympia, WA 98504-0255
DocuSign Envelope ID: 544C62C2-D3B4-4F1 E-8FF0-863C47ECC544

CERTIFICATE OF MAILING
The undersigned certifies under the penalty of perjury under the laws of the state of
Washington that I am now and at all times herein mentioned, a citizen of the United States, a
resident of the state of Washington, over the age of eighteen years, not a party to or interested in
the above-entitled action, and competent to be a witness herein.
On the date given below I caused to be served the foregoing Order to Cease and Desist on
the following individual(s) by email and by depositing in the U.S. mail via state Consolidated Mail
Service with proper postage affixed to:

Modus Technologies, Inc.


901 5th Avenue, Ste 3300
Seattle, WA 981'64-2024
cameron@modusclosing.com

CT Corporation System
Registered Agent for Modus Technologies, Inc.
711 Capitol Way South, Ste 204
Olympia, WA 98501

Courtesy copy to:


Hunter G. Jeffers
Attorney at Law
Stoel Rives, LLP
600 University Street, Ste 3600
Seattle, WA 98101
Hunter.jeffers@stoel.com

DATED this /1:t":;; day of (Y)0£-cl--, , 2021, at Tumwater, Washington.

(LL~
~PACE
Legal Assistant
Legal Affairs Division

ORDER TO CEASE AND DESIST 10 State of Washington


ORDER NO. 21-0127 Office of Insurance Commissioner
PO Box 40255
LA- 1618059 - 1 Olympia, WA 98504-0255

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