California Insurance Commissioner John Garamendi signed an order April 19 fining San Diego-based Stewart Title of California Inc. $750,000 and ordering it to pay $160,000 in costs for alleged illegal rebating activity discovered during a 30-month investigation.

In a second inquiry, along with virtually every other state in the nation, California is also investigating Richmond, Va.-based Land America Group (including Commonwealth Title, Lawyers Title and Transnation Title), the Jacksonville, Fla.-based Fidelity National Financial (including Ticor Title, Security Union Title, Chicago Title and National Title Insurance of New York), as well as lenders, builders, real estate agents and others engaging in title insurance risk-sharing partnerships.

State investigators allege that the partnerships are no more than ruses designed to provide partners with kickbacks in exchange for referring business to title companies, and consumers--unwittingly caught in the exchange--may be led to believe they can't choose their own title company.

Kickbacks are illegal under both federal and state law, and so is directing consumers to a single title insurance company. Title companies say they are innocent, that the partnerships are legitimate business practices and that they disclose the relationships to consumers as well as letting them know they can shop around for a title company.

"We wouldn't have done these things if we thought they were kickbacks. We will respect the commission. Now that they have ruled it is illegal it is not going to happen again," said Ted C. Jones, director of investor relations for parent company Houston, Texas-based Stewart Information Services Corp.

It's not certain how long the investigation will continue, but it should also help raise consumers' awareness about title insurance.

"The typical consumer, when he or she gets into a real estate transaction, is overwhelmed with information and, I believe, underwhelmed with understanding that they have the ability to control the transaction," said Mark Bogetich, spokesman for the Sacramento-based industry trade group, the California Land Title Association.

Title companies are hired, in part, to issue title insurance protection for both home buyers and lenders. Consumers foot the bill for both coverages.

In Santa Clara County, the seller typically pays the premiums for resale homes; the buyer pays when the home is new.

A policy is issued after the title company has investigated the title to make sure it is clear of any encumbrances, such as liens or judgments, forgeries or fraud and any other title anomalies that could give someone or some entity claim to some or all of the title. Title companies charge additional fees for acting as a neutral third party handling the paperwork and monies associated with a real estate transaction.

To pay title and escrow companies only what they are due, experts suggest following these guidelines:

* Educate yourself. The title industry's California Land Title Association and the American Land Title Association provide consumer information, but for independent insight, consider Sandy Gadow's Your Real Estate Closing (McGraw Hill. $19.95) book and website;

* Before hiring a title or escrow company or escrow attorney, obtain several referrals from those you trust--family, friends, co-workers, real estate agents and others who've recently closed a satisfactory escrow;

* Ask for a referral to the title or escrow officer, not the company. The officer should be familiar with the type of home you are selling, especially if it's a condo or other multiplex home, an older historic home or other special house;

* Compare the costs of different escrow and title companies before agreeing to use one. Fees can and do vary widely. Ask for title insurance premiums for the homeowner and for the lender as well as any escrow fees and other costs the company will charge. Make cost comparisons online with the California Department of Insurance's (CDI) "2033 Title Insurance Survey." The website also offers educational information;

* Refinance-related discounts may be available for half the cost of the original title insurance if you use the same lender and title company for the refinance;

* Be sure when you complete an application for a loan, you get settlement costs and good faith estimate information. Federal law requires the lender or mortgage broker deliver these documents to you within three days of receiving the application. Costs on the good faith estimate and final settlement sheet are not only title insurance and escrow related fees, but a host of other costs for the mortgage, insurance and taxes, among others.

Real estate writer Broderick Perkins, executive editor of San Jose-based DeadlineNews.Com, writes regularly for this newspaper.