By: Counts H.B. No. 889
73R3877 PB-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of title insurance.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 9.02, Insurance Code, is amended by
1-5 adding Subsection (r) to read as follows:
1-6 (r) "Examined title evidence" means title evidence that has
1-7 been subjected to a title examination and that is prepared from an
1-8 abstract plant owned by, or leased and operated by, a licensed
1-9 title insurance agent or direct operation.
1-10 SECTION 2. Article 9.30, Insurance Code, is amended by
1-11 amending Sections B and C and by adding Section F to read as
1-12 follows:
1-13 B. This Article may not be construed as prohibiting:
1-14 (1) a foreign or domestic title insurance company
1-15 doing business in this state under this Chapter, from appointing as
1-16 its title insurance agent pursuant to this Chapter a person owning
1-17 or leasing and operating an abstract plant of such county and
1-18 making the arrangement for division of premiums with the agent as
1-19 shall be set by the Board;
1-20 (2) payments for services actually performed by a
1-21 title insurance company, a title insurance agent, or a direct
1-22 operation, in connection with closing the transaction, furnishing
1-23 of title evidence, or title examination<, which payment may not
1-24 exceed the percentages of the premium or amounts established by the
2-1 Board for those payments>; <or>
2-2 (3) payment of bona fide compensation to a bona fide
2-3 employee principally employed by a title insurance company, direct
2-4 operation, title insurance agent, or other reasonable payment for
2-5 goods or facilities actually furnished and received; or
2-6 (4) payments for services actually performed by an
2-7 attorney in connection with title examination or closing a
2-8 transaction, which payment may not exceed a reasonable charge for
2-9 such services.
2-10 (5) Nothing in this article shall affect the division
2-11 of premium between a title insurance company and its subsidiary
2-12 title insurance agent when the title insurance company directly
2-13 issues its policy or contract of title insurance pursuant to
2-14 Article 9.34. For purposes of this provision, a subsidiary is a
2-15 company at least 50 percent of the voting stock of which is owned
2-16 by the title insurance company or by a wholly owned subsidiary of
2-17 the title insurance company.
2-18 C. A person receiving any form of compensation under Section
2-19 B(2) or F of this Article must be licensed as provided for under
2-20 this Chapter.
2-21 F. (a) Notwithstanding Section B of this Article, no
2-22 portion, split, or percentage of any title insurance premium may be
2-23 paid, either directly or indirectly, to any person, firm, or
2-24 organization for title insurance, title evidence, title
2-25 examination, determining status of title, or closing a transaction
2-26 regarding the issuance of a title insurance policy, binder,
2-27 commitment, or endorsement except as provided by this Section:
3-1 (b) A title insurance company licensed to do business in
3-2 this state and a licensed title insurance agent may divide a
3-3 premium under an agency agreement approved by the Texas Department
3-4 of Insurance. A title insurance company may divide a premium with
3-5 a licensed title insurance agent or direct operation in a county in
3-6 which the title insurance company does not have an agency agreement
3-7 or direct operation if the licensed agent or direct operation is
3-8 furnishing examined title evidence for a directly issued policy. A
3-9 division of premium under this Subsection must be equal to a
3-10 division promulgated by the Texas Department of Insurance for the
3-11 division of a title insurance premium between a title insurance
3-12 company and its licensed title insurance agent under an approved
3-13 agency agreement.
3-14 (c) A licensed title insurance agent and direct operation
3-15 that cooperate on the issuance of a title policy, binder,
3-16 commitment, or endorsement on property located in more than one
3-17 county in this state to be insured in a single policy may divide a
3-18 premium if each agent or direct operation renders part of the
3-19 services included in the premium.
3-20 (d) A licensed title insurance agent or direct operation and
3-21 another licensed title insurance agent or direct operation in a
3-22 county that shares a common boundary line that cooperate on the
3-23 issuance of a policy and the closing of a transaction may divide a
3-24 premium if the agent or direct operation in each county has entered
3-25 a prior written agreement describing the split or percentage to be
3-26 paid and accepted for the services each entity shall render and
3-27 that agreement is filed with the Texas Department of Insurance.
4-1 The Texas Department of Insurance may, after notice and hearing,
4-2 require termination of the agreement if it finds the agreement has
4-3 an adverse affect on consumers or rates for title insurance.
4-4 SECTION 3. Article 9.34, Insurance Code, is amended to read
4-5 as follows:
4-6 Art. 9.34. POLICY ISSUANCE; DETERMINATION OF INSURABILITY
4-7 Sec. 1. (a) Except as otherwise provided by this section,
4-8 each policy, binder, commitment, or endorsement of title insurance
4-9 must be based on an examination of title made from title evidence
4-10 prepared from an abstract plant owned, or leased and operated, by a
4-11 licensed title insurance agent or direct operation and issued by a
4-12 licensed title insurance agent or direct operation in the county in
4-13 which the real property is located under an agency agreement
4-14 approved by the Texas Department of Insurance.
4-15 (b) If a title insurance company does not have an approved
4-16 agency agreement with a licensed title insurance agent or direct
4-17 operation in the county in which the affected real property is
4-18 located, the title insurance company may issue directly its policy,
4-19 binder, commitment, or endorsement of title insurance based on
4-20 examined title evidence furnished to the title insurance company by
4-21 a licensed title insurance agent or direct operation in the county
4-22 in which the real property is located. If a licensed title
4-23 insurance agent or direct operation does not exist for the county
4-24 in which the real property is located, a title insurance company
4-25 may issue directly its policy of title insurance based on the best
4-26 available evidence.
4-27 (c) If, within a reasonable time as determined by the Board,
5-1 all of the licensed title insurance agents and direct operations in
5-2 the county in which the real property is located refuse to issue
5-3 the policy or contract of title insurance or to provide examined
5-4 title evidence for a directly issued policy, a title insurance
5-5 company may issue directly its policy of title insurance based on
5-6 the best available evidence.
5-7 Sec. 2. If a policy or contract of title insurance covers
5-8 properties located in more than one county, to be insured in a
5-9 single policy, the policy or contract of title insurance shall be
5-10 issued directly by the title insurance company in compliance with
5-11 this Article.
5-12 Sec. 3. A licensed title insurance agent or direct operation
5-13 may request that a policy, binder, commitment, or endorsement of
5-14 title insurance be issued directly by a title insurance company
5-15 with which the agent or direct operation has an approved agency
5-16 contract. The title insurance company may issue directly the
5-17 policy, binder, commitment, or endorsement of title insurance if:
5-18 (1) the licensed title insurance agent or direct
5-19 operation perceives or determines a conflict of interest in issuing
5-20 the policy on behalf of the title insurance company; or
5-21 (2) the licensed title insurance agent or direct
5-22 operation cooperates on the issuance of a policy and closing of a
5-23 transaction with a licensed title insurance agent or direct
5-24 operation in a county that shares a common boundary line under a
5-25 written agreement between the licensed title insurance agents or
5-26 direct operations in each county that:
5-27 (A) is executed before the issuance of the
6-1 policy;
6-2 (B) describes the services to be provided and
6-3 the split or percentage of premium to be paid and accepted by each
6-4 licensed title insurance agent or direct operation; and
6-5 (C) is filed with the Texas Department of
6-6 Insurance.
6-7 Sec. 4. A policy or contract of title insurance may not be
6-8 written or issued except in compliance with Article 9.30 of this
6-9 code and its subsequent amendments and with a determination of
6-10 insurability of title made in accordance with sound underwriting
6-11 practices.
6-12 Sec. 5. Examined title evidence or the best evidence on
6-13 which a policy, binder, commitment, or endorsement of title
6-14 insurance is issued must be preserved and retained in the files of
6-15 the title insurance company, direct operation, or licensed title
6-16 insurance agent for at least 15 years after the date on which the
6-17 policy or contract is issued.
6-18 Sec. 6. <No policy or contract of title insurance shall be
6-19 written unless (1) there has been compliance with the provisions of
6-20 Article 9.30(B), (2) said policy or contract of title insurance is
6-21 based on an examination of title made from title evidence prepared
6-22 from an abstract plant owned, or leased and operated by a licensed
6-23 Texas title insurance agent or direct operation for the county in
6-24 which the real property is located, (3) there has been made a
6-25 determination of insurability of title in accordance with sound
6-26 title underwriting practices, and (4) evidence thereof shall be
6-27 preserved and retained in the files of the title insurance company,
7-1 direct operation, or title insurance agent for a period of not less
7-2 than fifteen (15) years after the policy or contract of title
7-3 insurance has been issued. If no licensed title insurance agent or
7-4 direct operation exists for the county in which the real property
7-5 is located, a title insurance company may directly issue its policy
7-6 of title insurance based on the best title evidence available. If
7-7 all licensed title insurance agents and direct operations for the
7-8 county refuse to provide the title evidence within such reasonable
7-9 time as determined by the Board, and in compliance with the
7-10 provisions of Article 9.30(B)(2), the title insurance company may
7-11 directly issue its policy if the title insurance company obtains
7-12 the best title evidence available.> The licensed <Texas> title
7-13 insurance agent or direct operation that provides <which provided>
7-14 the examined title evidence on which the directly issued policies
7-15 or contracts of title insurance are issued shall be provided with
7-16 legible complete copies of all policies or contracts of title
7-17 insurance actually issued in the transactions within a reasonable
7-18 period of time as determined by the Board.
7-19 Sec. 7. This Article shall not apply to (a) a company
7-20 assuming no primary liability in a contract of reinsurance, or (b)
7-21 a company acting as a co-insurer if one of the other co-insuring
7-22 companies has complied with this Article.
7-23 SECTION 4. This Act takes effect September 1, 1993, and
7-24 applies to a policy or contract of title insurance that is
7-25 delivered, issued for delivery, or renewed on or after January 1,
7-26 1994. A policy or contract delivered, issued for delivery, or
7-27 renewed before January 1, 1994, is governed by the law that existed
8-1 immediately before the effective date of this Act, and that law is
8-2 continued in effect for that purpose.
8-3 SECTION 5. The importance of this legislation and the
8-4 crowded condition of the calendars in both houses create an
8-5 emergency and an imperative public necessity that the
8-6 constitutional rule requiring bills to be read on three several
8-7 days in each house be suspended, and this rule is hereby suspended.