Weekend Interview: Proper Title's Kathy Kwak On The Resilience Of The Title Industry

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Title insurance isn't one of real estate's glamour niches, but its place at the foundation of a deal is as important as a building's physical foundation, according to Proper Title Chief Operating Officer Kathy Kwak.

“I don't know how a transaction could truly be successful without title insurance,” Kwak said. “Without title insurance, I don't know where the protections and assurances and coverage is going to go.”

From a background as a real estate attorney and an underwriter, Kwak joined Chicago-based Proper Title in 2017, rising from director of title to chief operating officer in only a few years.

Kwak has been instrumental in the company's recent further expansion into commercial real estate title and expanding its scope into more of a national player. She also set up Proper Title's diversity, equity and inclusion initiative, to build on what she says is an already diverse company in an industry that isn't particularly diverse.

This interview has been edited for length and clarity.

Bisnow: In 50 words or less, what's the state of the commercial real estate title business?

Kathy Kwak: Very steady, though deals are getting harder to get to a fully executed purchase and sale agreement, with properties being more distressed and complicated. However, title agencies like us can provide a more clear snapshot of what the properties look like, so that the parties are more aware of what they're getting into.

Bisnow: Your firm recently announced an expansion in commercial title, establishing a national commercial services division. Why?

Kwak: A lot of commercial deals were at a standstill during Covid, and once restrictions were lifted these deals resurfaced. So we've had a lot of deals pop up in the past two years. The firms we were working with, our customers, had national commercial transactions that came to us organically as a bonus. Last year we closed about 80 national commercial deals, and that showed that I needed to start building a team that could handle national commercial transactions.

Bisnow: Title is sometimes regarded as a sleepy, unchanging part of the real estate business. What's your take on that perception?

Kwak: Many times when I'm working on my elevator pitch, I always make a little joke saying, Are you still awake? Do I need to give you a little jolt because I just said ”title insurance?”

I do feel that perception is incorrect. Title is constantly changing. It's not sleepy. The structure of transactions are changing when there's more due diligence completed prior to a PSA being executed. For example, there's a lot more distressed properties. What does that mean when there are judgments on commercial property?

Bisnow: How will emerging technologies, such as blockchain, impact the title business? Do they have the potential to render title companies less important in real estate transactions?

Kwak: Blockchain was once a big topic at the conferences that I've attended, but not anymore. AI and ChatGPT are the technologies I'm focused on to see how that can either help or provide more obstacles for title experts or title agencies. Those technologies definitely help parties become more aware of general questions before they reach out to a title company to discuss them, versus just placing an order.

But there isn't a real human behind it. No veterans in the industry who started from the ground up doing tract searches or drawing up legal descriptions from tract books. We still need those title experts, people that have all this knowledge and information. 

Bisnow: Why should CRE care about the fate of title insurance, especially as an expense that could conceivably go away?

Kwak: It's not going away. You can't have clean title without looking into it and so if you don't have title insurance, who's going to do that? 

Purchasing residential property is one of the largest purchases a person will make, and commercial is also one of the largest an entity or an investor is going to make.

You're going to need protections because not everything is going to be clear-cut, especially now as a lot of properties have a lot of stuff happening. And I'm calling it "stuff" because there are liens or exceptions that have popped up on title like I've never seen before. People are getting really creative placing liens on real property.

Bisnow: How did title insurance adapt to pandemic restrictions and have they proved to be permanent?

Kwak: What remains is the hybrid model. I found out that many of the roles in commercial can be done successfully and efficiently from home. The only thing lacking is a culture and being part of a culture. At Proper Title, we pride ourselves on our culture. Even just having discussions over a complicated title issue is hard to do by email or remotely versus sitting there in person.

Bisnow: Tell us about your effort to establish an in-house DEI committee at your company. Why was that thought necessary? Was there any pushback?

Kwak: I went to a conference that had a speaker talking about DEI and I'd never really heard of it.

When I heard about what it stood for, it made sense to me. Also, I really took a look at myself as Korean-American title executive. There are not many of us. I knew I wanted to stand out not because I'm Korean, but because it is part of my struggles and my experiences and how I got to where I am. It was more about sharing my story.

Of course there was pushback. There was pushback in the sense that, “Why is this important? Why do we have to talk about it?” I said, “It's important because we all need to get to know each other.” The reason our culture is so special is because of each and every one of us.

Bisnow: What has been your experience as one of the few women of color in the business?

Kwak: I've been undervalued. I've been judged, honestly, for being the only Asian-American. It isn't like I walk around telling everyone that I'm COO, so many assumptions have been made about me when I enter a room, such as that I'm either there to provide the coffee or clean up. There's definitely been those experiences, and it's demoralizing.

However, I pride myself in those moments in not becoming resentful or bitter. Instead, I learn from it and I remain true to myself and I am just very direct when something like that happens. 

Bisnow: What do you tell potential recruits about working in the title business? What about recruits who are not men or not white?

Kwak: At Proper we're very fortunate that our staff is diverse, and it happened naturally and organically. Because I'm diverse, I feel that I'm a lot more open when I interview people. I always have an in-person interview with the candidate, doesn't matter what position that they're applying for, because I feel that it's very important to meet in person and it just so happens that I'm accepting of all backgrounds. What I tell recruits is 'You will find a place here, but you need a desire to ask questions and meet other people and get outside your role and your comfort zone.' 

Bisnow: Give us a bold prediction for the rest of the year.

Kwak: My crystal ball is cracked, and it's been cracked for years. I don't like to give bold predictions. Even the past five years were so unexpected. I feel that's why no one's really giving forecasts anymore. I'm glad to say that I always prepare for the up, down, sideways and upside-down, just to be ready for whatever's coming our way.

Bisnow: What is your weekend routine or favorite weekend activity?

Kwak: I have a passion for traveling and spending time with my friends and family. I don't have children of my own, but I'm an aunt to many and they keep me very busy with all their activities.