By: Harris S.B. No. 1155
A BILL TO BE ENTITLED
AN ACT
1-1 relating to certain business practices in and licenses for the
1-2 writing of title insurance.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 9.37, Insurance Code, is amended by
1-5 adding Section F to read as follows:
1-6 F. After notice and hearing, the commissioner may revoke or
1-7 suspend a license issued under this chapter if the commissioner
1-8 finds the existence of any material fact or condition that either
1-9 did not exist or was not disclosed at the time of the original
1-10 application for the license but was required to be disclosed at
1-11 that time and that, had such fact or condition existed or been
1-12 disclosed at that time, clearly would have warranted refusal to
1-13 issue the license.
1-14 SECTION 2. Chapter 9, Insurance Code, is amended by adding
1-15 Article 9.36B to read as follows:
1-16 Art. 9.36B. ADDITIONAL LICENSING REQUIREMENTS. (a) A
1-17 person, firm, entity, association, or corporation licensed or
1-18 applying for a license as a title insurance agent or direct
1-19 operation in a county in this state shall provide evidence to the
1-20 department that:
1-21 (1) the title insurance agent or direct operation owns
1-22 or leases, in accordance with this chapter, an abstract plant or
1-23 plants for the county or counties in this state for which the title
2-1 insurance agent or direct operation is licensed and from which the
2-2 furnished title evidence must be utilized for title examination by
2-3 the independent, bona fide employees of such title insurance agent
2-4 or direct operation in connection with any transaction in such
2-5 county or counties for which such title insurance agent or direct
2-6 operation receives a portion of the title premium;
2-7 (2) the title insurance agent or direct operation is
2-8 actually involved in closing the transaction, as defined by the
2-9 procedural rules, and that such services are performed by
2-10 (i) independent, bona fide employees or officers of the title
2-11 insurance agent or direct operation who are licensed escrow
2-12 officers of the title insurance agent or direct operation; or
2-13 (ii) in a county with a population in excess of 500,000 or adjacent
2-14 county thereto with a population in excess of 100,000, another
2-15 licensed title insurance agent or direct operation pursuant to a
2-16 written agreement; provided, however, that the fee paid for such
2-17 services shall be no less than 40 percent of the total retained
2-18 title premium;
2-19 (3) the title insurance agent or direct operation will
2-20 not close or settle real estate transactions for real property
2-21 located in a county in this state other than a county for which the
2-22 title insurance agent or direct operation is licensed, unless the
2-23 title insurance agent or direct operation pays a fee for the
2-24 furnishing of title evidence and title examination to the licensed
2-25 title insurance agents or direct operations from which such other
3-1 counties' title evidence and title examination is derived of not
3-2 less than:
3-3 (A) 24.5 percent of the total retained premium
3-4 collected in the settlement for the services, if the county for
3-5 which the title evidence and title examination is performed has a
3-6 population of 100,000 or more; and
3-7 (B) 36.5 percent of the total retained premium
3-8 collected in the settlement for the services if the county for
3-9 which the title evidence and title examination is performed has a
3-10 population of less than 100,000;
3-11 (4) except as provided in Subdivision (5) of this
3-12 subsection, the title insurance agent or direct operation will not
3-13 engage in the title examination of furnished title evidence for a
3-14 fee with respect to a county other than a county in which the title
3-15 insurance agent's or direct operation's abstract plant is licensed;
3-16 and
3-17 (5) in a county with a population in excess of 500,000
3-18 or county adjacent thereto with a population in excess of 100,000,
3-19 a title insurance agent or direct operation may engage in the title
3-20 examination of furnished title evidence for a fee with respect to a
3-21 county other than the county in which the title insurance agent's
3-22 or direct operation's abstract plant is licensed only so long as
3-23 the fee paid for such service is no more than 20 percent of the
3-24 total retained premium collected in the settlement.
3-25 (b) This article does not apply to services provided by an
4-1 attorney in connection with a title examination or closing a
4-2 transaction if the services are provided in accordance with this
4-3 chapter and department rules.
4-4 (c) A material agreement, as defined by the commissioner,
4-5 between title insurance companies, between title insurance agents,
4-6 between direct operations, or between any of these persons, must,
4-7 for informational purposes, be provided to the commissioner by all
4-8 parties to the agreement. A subsequent material agreement, as
4-9 defined by the commissioner, between such parties must, for
4-10 informational purposes, be provided to the commissioner at the time
4-11 the agreement is executed.
4-12 (d) This article does not impair any insurance activity
4-13 expressly authorized by federal law.
4-14 (e) Subject to the provisions of this Act, no person, firm,
4-15 entity, association, or corporation shall be denied a license
4-16 pursuant to the provisions of this Act as a title insurance agent
4-17 or direct operation because all or any portion of the title premium
4-18 is received from the owner or affiliates of the title insurance
4-19 agent or direct operation.
4-20 (f) The commissioner, in accordance with the provisions of
4-21 this Act, may promulgate rules with respect to the enforcement and
4-22 interpretation of this article, the materiality of agreements, and
4-23 all information to be provided with respect thereto.
4-24 (g) The only services for which title premiums may be
4-25 divided among licensed title agents, direct operations, and their
5-1 title companies under this Act are for (i) closing the transaction;
5-2 (ii) the furnishing of title evidence from a licensed title plant
5-3 as described in this article; (iii) the title examination of such
5-4 title evidence; or (iv) the purposes of the division of premium
5-5 described in Section B(1) of Article 9.30 of this Act.
5-6 (h)(1) In addition to any other licensing requirements under
5-7 this Act, no license or renewal of license shall be granted to any
5-8 person, firm, association, or corporation as a title agent or
5-9 direct operation unless it is found by the commissioner that such
5-10 person, firm, association, or corporation is, or intends to be,
5-11 actively engaged in the business of title insurance.
5-12 (2) Notwithstanding any other law to the contrary, the
5-13 commissioner shall adopt rules to implement this article.
5-14 SECTION 3. This Act takes effect September 1, 1997, and
5-15 applies to new applicants who apply for licensing under Chapter 9,
5-16 Insurance Code, as amended by this Act, on or after that date.
5-17 Beginning September 1, 1998, this Act applies to title insurance
5-18 agents and direct operations licensed before the effective date of
5-19 this Act.
5-20 SECTION 4. The importance of this legislation and the
5-21 crowded condition of the calendars in both houses create an
5-22 emergency and an imperative public necessity that the
5-23 constitutional rule requiring bills to be read on three several
5-24 days in each house be suspended, and this rule is hereby suspended.