WASHINGTON (5/29/14)--The largest real estate firm in Alabama has been ordered to pay $500,000 for an inadequate disclosure practice that left some consumers unaware of their right to choose a service provider during the home-buying process, according to the Consumer Financial Protection Bureau.

The CFPB, in a release Wednesday announcing its action against RealtySouth's, charged the firm's disclosures violated the Real Estate Settlement and Practices Act (RESPA). RESPA protects consumers during the home-buying process by prohibiting such things as kickbacks for referrals of real estate settlement services. 

The bureau said RealtySouth's preprinted form purchase contracts, given to homebuyers preparing to make an offer on a home, either "explicitly directed or suggested" that title and closing services be conducted by TitleSouth, an affiliated company owned by the same holding company that owns RealtySouth.

"While RESPA allows real estate companies to refer their customers to affiliated businesses, the law requires them to provide consumers an 'Affiliated Business Arrangement' disclosure that clearly states their right to shop around for a better price and that they are not required to use the affiliated company," the CFPB noted.

The disclosure RealtySouth gave consumers did not comply with the law; it did not properly highlight consumers' rights, and the required language was buried in a section of text that also made marketing claims about the company's prices. 

The case was referred to the CFPB by the Department of Housing and Urban Development. RealtySouth changed its disclosure forms immediately after being contacted by the CFPB, the release said.

CFPB Consent Order (PDF)