Lease Changes Give California Escrow Firms, Insurers Headaches (1)

New lease accounting rules could put title insurance and escrow industries in California on the wrong side of their state regulator.

But state lawmakers have developed some remedies.

Two bills await Gov. Gavin Newsom’s (D) signature to ensure these companies don’t violate liquid-asset requirements once they put liabilities from renting office space and equipment on their balance sheets for the first time.

The issue: state regulators require title insurance and escrow companies to maintain a certain amount of liquid assets after accounting for all liabilities. Under the Financial Accounting Standards Board’s new lease accounting standard, lease obligations are considered ...