1-1  By:  Montford                                          S.B. No. 900
    1-2        (In the Senate - Filed March 11, 1993; March 15, 1993, read
    1-3  first time and referred to Committee on Economic Development;
    1-4  May 19, 1993, reported favorably by the following vote:  Yeas 7,
    1-5  Nays 2; May 19, 1993, sent to printer.)
    1-6                            COMMITTEE VOTE
    1-7                          Yea     Nay      PNV      Absent 
    1-8        Parker             x                               
    1-9        Lucio                      x                       
   1-10        Ellis                      x                       
   1-11        Haley              x                               
   1-12        Harris of Dallas                              x    
   1-13        Harris of Tarrant  x                               
   1-14        Leedom             x                               
   1-15        Madla                                         x    
   1-16        Rosson             x                               
   1-17        Shapiro            x                               
   1-18        Wentworth          x                               
   1-19                         A BILL TO BE ENTITLED
   1-20                                AN ACT
   1-21  relating to the regulation of title insurance.
   1-22        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
   1-23        SECTION 1.  Article 9.02, Insurance Code, is amended by
   1-24  adding Subsection (r) to read as follows:
   1-25        (r)  "Examined title evidence" means title evidence that has
   1-26  been subjected to a title examination and that is prepared from an
   1-27  abstract plant owned by, or leased and operated by, a licensed
   1-28  title insurance agent or direct operation.
   1-29        SECTION 2.  Article 9.30, Insurance Code, is amended by
   1-30  amending Sections B and C and by adding Section F to read as
   1-31  follows:
   1-32        B.  This Article may not be construed as prohibiting:
   1-33              (1)  a foreign or domestic title insurance company
   1-34  doing business in this state under this Chapter, from appointing as
   1-35  its title insurance agent pursuant to this Chapter a person owning
   1-36  or leasing and operating an abstract plant of such county and
   1-37  making the arrangement for division of premiums with the agent as
   1-38  shall be set by the Board;
   1-39              (2)  payments for services actually performed by a
   1-40  title insurance company, a title insurance agent, or a direct
   1-41  operation, in connection with closing the transaction, furnishing
   1-42  of title evidence, or title examination<, which payment may not
   1-43  exceed the percentages of the premium or amounts established by the
   1-44  Board for those payments>; <or>
   1-45              (3)  payment of bona fide compensation to a bona fide
   1-46  employee principally employed by a title insurance company, direct
   1-47  operation, title insurance agent, or other reasonable payment for
   1-48  goods or facilities actually furnished and received; or
   1-49              (4)  payments for services actually performed by an
   1-50  attorney in connection with title examination or closing a
   1-51  transaction, which payment may not exceed a reasonable charge for
   1-52  such services.
   1-53              (5)  Nothing in this article shall affect the division
   1-54  of premium between a title insurance company and its subsidiary
   1-55  title insurance agent when the title insurance company directly
   1-56  issues its policy or contract of title insurance pursuant to
   1-57  Article 9.34. For purposes of this provision, a subsidiary is a
   1-58  company at least 50 percent of the voting stock of which is owned
   1-59  by the title insurance company or by a wholly owned subsidiary of
   1-60  the title insurance company.
   1-61        C.  A person receiving any form of compensation under Section
   1-62  B(2) or F of this Article must be licensed as provided for under
   1-63  this Chapter.
   1-64        F.  (a)  Notwithstanding Section B of this Article, no
   1-65  portion, split, or percentage of any title insurance premium may be
   1-66  paid, either directly or indirectly, to any person, firm, or
   1-67  organization for title insurance, title evidence, title
   1-68  examination, determining status of title, or closing a transaction
    2-1  regarding the issuance of a title insurance policy, binder,
    2-2  commitment, or endorsement except as provided by this Section.
    2-3        (b)  A title insurance company licensed to do business in
    2-4  this state and a licensed title insurance agent may divide a
    2-5  premium under an agency agreement approved by the Texas Department
    2-6  of Insurance.  A title insurance company may divide a premium with
    2-7  a licensed title insurance agent or direct operation in a county in
    2-8  which the title insurance company does not have an agency agreement
    2-9  or direct operation if the licensed agent or direct operation is
   2-10  furnishing examined title evidence for a directly issued policy.  A
   2-11  division of premium under this Subsection must be equal to a
   2-12  division promulgated by the Texas Department of Insurance for the
   2-13  division of a title insurance premium between a title insurance
   2-14  company and its licensed title insurance agent under an approved
   2-15  agency agreement.
   2-16        (c)  A licensed title insurance agent and direct operation
   2-17  that cooperate on the issuance of a title policy, binder,
   2-18  commitment, or endorsement on property located in more than one
   2-19  county in this state to be insured in a single policy may divide a
   2-20  premium if each agent or direct operation renders part of the
   2-21  services included in the premium.
   2-22        (d)  A licensed title insurance agent or direct operation and
   2-23  another licensed title insurance agent or direct operation in a
   2-24  county that shares a common boundary line that cooperate on the
   2-25  issuance of a policy and the closing of a transaction may divide a
   2-26  premium if the agent or direct operation in each county has entered
   2-27  a prior written agreement describing the split or percentage to be
   2-28  paid and accepted for the services each entity shall render and
   2-29  that agreement is filed with the Texas Department of Insurance.
   2-30  The Texas Department of Insurance may, after notice and hearing,
   2-31  require termination of the agreement if it finds the agreement has
   2-32  an adverse affect on consumers or rates for title insurance.
   2-33        SECTION 3.  Article 9.34, Insurance Code, is amended to read
   2-34  as follows:
   2-35        Art. 9.34.  POLICY ISSUANCE; DETERMINATION OF INSURABILITY
   2-36        Sec. 1.  (a)  Except as otherwise provided by this section,
   2-37  each policy, binder, commitment, or endorsement of title insurance
   2-38  must be based on an examination of title made from title evidence
   2-39  prepared from an abstract plant owned, or leased and operated, by a
   2-40  licensed title insurance agent or direct operation and issued by a
   2-41  licensed title insurance agent or direct operation in the county in
   2-42  which the real property is located under an agency agreement
   2-43  approved by the Texas Department of Insurance.
   2-44        (b)  If a title insurance company does not have an approved
   2-45  agency agreement with a licensed title insurance agent or direct
   2-46  operation in the county in which the affected real property is
   2-47  located, the title insurance company may issue directly its policy,
   2-48  binder, commitment, or endorsement of title insurance based on
   2-49  examined title evidence furnished to the title insurance company by
   2-50  a licensed title insurance agent or direct operation in the county
   2-51  in which the real property is located.  If a licensed title
   2-52  insurance agent or direct operation does not exist for the county
   2-53  in which the real property is located, a title insurance company
   2-54  may issue directly its policy of title insurance based on the best
   2-55  available evidence.
   2-56        (c)  If, within a reasonable time as determined by the Board,
   2-57  all of the licensed title insurance agents and direct operations in
   2-58  the county in which the real property is located refuse to issue
   2-59  the policy or contract of title insurance or to provide examined
   2-60  title evidence for a directly issued policy, a title insurance
   2-61  company may issue directly its policy of title insurance based on
   2-62  the best available evidence.
   2-63        Sec. 2.  If a policy or contract of title insurance covers
   2-64  properties located in more than one county, to be insured in a
   2-65  single policy, the policy or contract of title insurance shall be
   2-66  issued directly by the title insurance company in compliance with
   2-67  this Article.
   2-68        Sec. 3.  A licensed title insurance agent or direct operation
   2-69  may request that a policy, binder, commitment, or endorsement of
   2-70  title insurance be issued directly by a title insurance company
    3-1  with which the agent or direct operation has an approved agency
    3-2  contract.  The title insurance company may issue directly the
    3-3  policy, binder, commitment, or endorsement of title insurance if:
    3-4              (1)  the licensed title insurance agent or direct
    3-5  operation perceives or determines a conflict of interest in issuing
    3-6  the policy on behalf of the title insurance company; or
    3-7              (2)  the licensed title insurance agent or direct
    3-8  operation cooperates on the issuance of a policy and closing of a
    3-9  transaction with a licensed title insurance agent or direct
   3-10  operation in a county that shares a common boundary line under a
   3-11  written agreement between the licensed title insurance agents or
   3-12  direct operations in each county that:
   3-13                    (A)  is executed before the issuance of the
   3-14  policy;
   3-15                    (B)  describes the services to be provided and
   3-16  the split or percentage of premium to be paid and accepted by each
   3-17  licensed title insurance agent or direct operation; and
   3-18                    (C)  is filed with the Texas Department of
   3-19  Insurance.
   3-20        Sec. 4.  A policy or contract of title insurance may not be
   3-21  written or issued except in compliance with Article 9.30 of this
   3-22  code and its subsequent amendments and with a determination of
   3-23  insurability of title made in accordance with sound underwriting
   3-24  practices.
   3-25        Sec. 5.  Examined title evidence or the best evidence on
   3-26  which a policy, binder, commitment, or endorsement of title
   3-27  insurance is issued must be preserved and retained in the files of
   3-28  the title insurance company, direct operation, or licensed title
   3-29  insurance agent for at least 15 years after the date on which the
   3-30  policy or contract is issued.
   3-31        Sec. 6.  <No policy or contract of title insurance shall be
   3-32  written unless (1) there has been compliance with the provisions of
   3-33  Article 9.30(B), (2) said policy or contract of title insurance is
   3-34  based on an examination of title made from title evidence prepared
   3-35  from an abstract plant owned, or leased and operated by a licensed
   3-36  Texas title insurance agent or direct operation for the county in
   3-37  which the real property is located, (3) there has been made a
   3-38  determination of insurability of title in accordance with sound
   3-39  title underwriting practices, and (4) evidence thereof shall be
   3-40  preserved and retained in the files of the title insurance company,
   3-41  direct operation, or title insurance agent for a period of not less
   3-42  than fifteen (15) years after the policy or contract of title
   3-43  insurance has been issued.  If no licensed title insurance agent or
   3-44  direct operation exists for the county in which the real property
   3-45  is located, a title insurance company may directly issue its policy
   3-46  of title insurance based on the best title evidence available.  If
   3-47  all licensed title insurance agents and direct operations for the
   3-48  county refuse to provide the title evidence within such reasonable
   3-49  time as determined by the Board, and in compliance with the
   3-50  provisions of Article 9.30(B)(2), the title insurance company may
   3-51  directly issue its policy if the title insurance company obtains
   3-52  the best title evidence available.>  The licensed <Texas> title
   3-53  insurance agent or direct operation that provides <which provided>
   3-54  the examined title evidence on which the directly issued policies
   3-55  or contracts of title insurance are issued shall be provided with
   3-56  legible complete copies of all policies or contracts of title
   3-57  insurance actually issued in the transactions within a reasonable
   3-58  period of time as determined by the Board.
   3-59        Sec. 7.  This Article shall not apply to (a) a company
   3-60  assuming no primary liability in a contract of reinsurance, or (b)
   3-61  a company acting as a co-insurer if one of the other co-insuring
   3-62  companies has complied with this Article.
   3-63        SECTION 4.  This Act takes effect September 1, 1993, and
   3-64  applies to a policy or contract of title insurance that is
   3-65  delivered, issued for delivery, or renewed on or after January 1,
   3-66  1994.  A policy or contract delivered, issued for delivery, or
   3-67  renewed before January 1, 1994, is governed by the law that existed
   3-68  immediately before the effective date of this Act, and that law is
   3-69  continued in effect for that purpose.
   3-70        SECTION 5.  The importance of this legislation and the
    4-1  crowded condition of the calendars in both houses create an
    4-2  emergency and an imperative public necessity that the
    4-3  constitutional rule requiring bills to be read on three several
    4-4  days in each house be suspended, and this rule is hereby suspended.
    4-5                               * * * * *
    4-6                                                         Austin,
    4-7  Texas
    4-8                                                         May 19, 1993
    4-9  Hon. Bob Bullock
   4-10  President of the Senate
   4-11  Sir:
   4-12  We, your Committee on Economic Development to which was referred
   4-13  S.B. No. 900, have had the same under consideration, and I am
   4-14  instructed to report it back to the Senate with the recommendation
   4-15  that it do pass and be printed.
   4-16                                                         Parker,
   4-17  Chairman
   4-18                               * * * * *
   4-19                               WITNESSES
   4-20                                                  FOR   AGAINST  ON
   4-21  ___________________________________________________________________
   4-22  Name:  L. Dean Cobb                              x
   4-23  Representing:  Tx Assn/Abstractors & Title Ag
   4-24  City:  Austin
   4-25  -------------------------------------------------------------------
   4-26  Name:  Cordell Hull                              x
   4-27  Representing:  Tx Assn/Abstractors & Title
   4-28  City:  Austin
   4-29  -------------------------------------------------------------------
   4-30  Name:  Nick Kralj                                        x
   4-31  Representing:  Lawyers Title Co.
   4-32  City:  Austin
   4-33  -------------------------------------------------------------------
   4-34  Name:  Dave Ginger                                       x
   4-35  Representing:  Business Resources Corp.
   4-36  City:  Austin
   4-37  -------------------------------------------------------------------
   4-38  Name:  Nancy Fisher                                      x
   4-39  Representing:  Ind. Title Agents of Texas
   4-40  City:  Austin
   4-41  -------------------------------------------------------------------
   4-42  Name:  Glen Cochran, Jr.                                 x
   4-43  Representing:  Commonwealth Land Title
   4-44  City:  Bedford
   4-45  -------------------------------------------------------------------
   4-46  Name:  Michael Curtis Barrett                            x
   4-47  Representing:  Self - Fee Attorney
   4-48  City:  Dallas
   4-49  -------------------------------------------------------------------
   4-50  Name:  Bert V. Massey II                         x
   4-51  Representing:  Tx Assn/Abstractors & Title
   4-52  City:  Brownwood
   4-53  -------------------------------------------------------------------