Northern Push Fuels Gateway : Expansion: The Burbank title company is among those expanding beyond Los Angeles to increase business.

Title insurance--now there’s an unsexy business. Even Norman (Spike) Burlingame, who with Martin S. Evans runs Gateway Title Co. in Burbank, concedes that most customers view title insurance “as a necessary evil.”

But Evans and Burlingame aren’t after glamour, they’re after growth. And in the nine years since they bought a then-dormant Gateway, they’ve managed to keep the company growing in a hotly competitive title industry that serves Southern California’s enormous real estate market.

The revenue of privately held Gateway, which the pair bought with $450,000 after both left Safeco Title Insurance Co., reached $38.5 million last year and should climb to $50 million in 1990, they said. They also are shooting for $100 million in revenue by 1995.

Gateway, in fact, is one of several local title companies that are expanding beyond their back yards. A Gateway neighbor, World Title Co. in Burbank, now operates 11 offices in seven counties, expects $40 million in revenue this year and plans to move into the Antelope and San Joaquin valleys, said World President Michael Lowther.

“Gateway reflects the emergence of a more aggressive style” of title companies “by virtue of expanding into new markets,” said Lawrence Green, executive vice president of the California Land Title Assn., the industry’s statewide trade group.

For a fee, title companies such as Gateway guarantee titles to real estate when the property changes hands, or when someone borrows money using the property as collateral. When someone buys a house, for instance, the title company makes sure that no one else has any right to the property, such as a lien or right of way.

If later it turns out that the title company erred, and someone does have a right to the property, the title company is liable for reimbursing the person to whom it originally sold the title insurance. The exact amount is usually negotiated, and most policies have a cap that limits the dollar amount of claims, Evans said.

Banks and other lenders in California, to protect their investment, almost always require title insurance before funding a mortgage loan, he said. There are about a dozen major title insurers that operate nationwide, and thousands of title agencies, such as Gateway, that sell and service policies actually underwritten by the insurers. Gateway’s main underwriter, for example, is Commonwealth Land Title Insurance Co., a unit of financier Saul Steinberg’s Reliance Group Holdings Inc.

Some title companies are focusing their expansion on such burgeoning real estate markets as the Antelope Valley, the Riverside/San Bernardino area and north San Diego, where they can fight for business with fewer rivals than in Los Angeles County, where nearly 30 competitors vie for market share.

A good part of Gateway’s expansion will come from its planned march into Northern California, a move that will include acquisitions. Currently pending is Gateway’s purchase of American Title Insurance Co. in Santa Clara County, and once completed, Gateway will have 770 employees spread over 16 offices in seven counties.

There are other reasons for Gateway’s growth: the area’s strong real estate market and inflation, both of which keep lifting property values and hence Gateway’s fees, which generally are set as a percentage of value of the property involved. California alone accounts for about a quarter of the nation’s $4-billion title business.

And there’s another factor that doesn’t hurt Gateway. Fred Sands, whose Fred Sands Realtors is one of the biggest real estate agencies in Los Angeles, is one of Gateway’s two outside stockholders and naturally a customer, although Sands said his firm accounts for less than 5% of Gateway’s business. (Evans, 58, and Burlingame, 49, together own the controlling stake in Gateway.)

Still, Sands asserted that Gateway “is the best title company in L.A.” because of its service. “We’ve had occasions where agents have called them at night and end up talking to the president because they have a problem,” he said.

Burlingame said Gateway wants to expand because “there’s a vibrancy created with growth that translates to people’s attitudes in the company. The monetary rewards speak for themselves,” he said without disclosing specific earnings figures. “If you can make 5% or 10% profit on $100 million versus 5% or 10% on $10 million, it’s better for the stockholders, too.”

Title executives agree there’s not much difference between companies in terms of prices, which must be approved by state insurance regulators and typically are set as a percentage of the value of the property involved.

“It’s a pretty narrow spectrum” of prices between companies, Burlingame said.

The trick in generating business, he and Evans said, is in having top-rate personnel, client relationships and service--as mundane as that sounds. Gateway salespeople hound real estate agents, escrow companies, lenders and real estate lawyers trying to get Gateway involved in their deals.

“We’re not a product that’s differentiated from our competitors’, except insofar as the people we have are better,” Evans said.

Sands, the real estate chief, agreed. “That’s all a title company can offer is service,” he said.

Gateway’s service has its competitors taking notice. Lawrence White, executive vice president of First American Title Insurance, a unit of First American Financial Corp. in Santa Ana and one of the nation’s biggest title insurers, said Gateway has “good people and they know the markets they’re in.”

But like all title companies, Gateway must watch the kind of business it writes. Along with California’s swelling real estate market has come an increase in title fraud and forgery, which can increase a title company’s losses. Evans estimated that Gateway pays out about $7.50 in claims for every $100 that its title policies generate in revenue. The California Land Title Assn. said the average in the state is $10 or more.

Gateway’s record also has attracted potential suitors. Evans said the company gets about a phone call per month from would-be buyers, but that Gateway turns them away. However, the company does plan to consider issuing its first stock to the public during the next year, to raise cash for--what else--expansion.

Said Evans: “The major counties in the north would all be possible targets for us down the line.”