American Land Title Association
Home  >  News Room
News Room

SoftPro is the nation's leading provider of Real Estate Closing and Title Insurance software

North American Title Insurance Company is a seasoned title insurance underwriter that has been helping customers achieve the American dream of homeownership for more than 50 years. In the past several years, we have become known as the “underwriter next door,� because our associates are always easy to reach and our processes are, at all times, quick and straightforward. Our agency application process is fast and transparent for qualified agents. NATIC offers a one-hour underwriting response guarantee that is unparallelled in our industry. In addition, we value our agents based on their title industry knowledge and experience, not just on profits alone.

Industry News

Cendant squabbles with Homestore

August 16, 2002

Renegotiating 18-month-old stock ownership agreement

Inman News Features

Cendant Corp. may be looking to turn Homestore's past accounting irregularities into an opportunity to renegotiate the terms of a prior agreement between the two companies.

Homestore CEO Mike Long told investors this week that the real estate franchisor has accused Homestore of breaching certain representations made in connection with Homestore's acquisition of Cendant's Web site and Welcome Wagon International operations and has asked Homestore to consider amending the acquisition agreement signed 18 months ago.

"(Cendant) let us know they felt we hadn't honored all of the reps and warranties that we made (in the acquisition agreement), particularly tied back to (Homestore's) financial restatements that occurred for 2000 and 2001....They've asked if we would in fairness consider amending that agreement," Long said.

The Homestore CEO declined to discuss the specifics of the discussion, but said he believed it was "prudent to disclose" that renegotiation talks were under way.

"We've disclosed that there is a discussion going on. Some of the terms of the original agreement may or may not change, but we wanted to put everyone on notice," he said.

The disclosure is included in Homestore's Form 10-Q filing with the Securities and Exchange Commission for the second quarter ended June 30. The report states:

"Cendant has proposed amendments to certain of the related agreements in consideration of settling any potential claims related to the company's acquisition of the Group. The company has been engaged with Cendant in discussions relating to Cendant's allegations, and the company and Cendant have considered certain amendments to the agreements that would materially alter the company's rights and Cendant's obligations and restrictions in order to settle these potential claims. There is no assurance that these discussions will yield a satisfactory resolution."

Long told Inman News on Monday that the discussion was "less a financial negotiation than it is (about the) terms and restrictions on the operating behavior of the two companies." He characterized the conversations as "friendly and nonthreatening."

Homestore acquired and Welcome Wagon from Cendant Corp. in February 2001 in a stock deal worth $745.7 million. Homestore issued 21.4 million shares of its common stock in exchange for all the outstanding shares of capital stock of Group, and assumed Group's approximately 3.2 million outstanding stock options at that time.

The agreement placed restrictions on Cendant's rights to sell the Homestore shares and required Cendant to vote the shares on all corporate matters in proportion to the voting decisions of all other stockholders. Cendant also agreed to a 10-year standstill agreement that under most conditions prohibits Cendant from acquiring additional Homestore shares, according to Homestore's SEC filing.

Does Cendant want to sell the Homestore shares it wrote off its books last year? Or does Cendant want to accumulate an even larger stake in Homestore while its shares are trading in penny-stock territory? Or maybe Cendant wants to rewrite the rules that require it to vote proportionally to other stockholders on Homestore corporate matters? Or what?

Whatever the dispute is, Cendant isn't saying. A corporate-level spokesperson declined to provide any information about the matter and said the company is referring all inquires about it to Homestore.

This dispute isn't the first time Cendant and Homestore have tangled their fishing lines. Cendant sued Homestore in 1999 just prior to Homestore's initial public offering. That lawsuit alleged that Homestore failed to honor a promised IPO equity participation for Cendant.

Richard Smith, head of Cendant's real estate division, said at that time that Cendant was "extremely disappointed and frustrated with's conduct."

That matter was quickly settled out of court and the lawsuit was dropped.

And Cendant's, prior to being acquired by Homestore, was a formidable challenger to, the National Association of Realtors' official Web site that Homestore operates.

But all that was in the Stuart Wolff era, and a new man is now in charge at Homestore.

Copyright: Inman News Service

Print Friendly

How To Find Us:
American Land Title Association
1800 M Street, NW, Suite 300S
Washington, D.C. 20036-5828
P. 202.296.3671 F. 202.223.5843
Copyright © 2004-2015 American Land Title Association. All rights reserved.
SecurityMetrics for PCI Compliance, QSA, IDS, Penetration Testing, Forensics, and Vulnerability Assessment