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 -------------------------------------------------------------------