Bill not drafted by TLC or Senate E&E.
Line and page numbers may not match official copy.
By: Harris S.B. No. 1155
A BILL TO BE ENTITLED
AN ACT
1-1 relating to business practices in the writing of title insurance.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Article 9.37, Insurance Code, is amended to read
1-4 as follows:
1-5 Art. 9.37. AGENT'S LICENSE: SURRENDER, FORFEITURE; GROUNDS
1-6 FOR REVOCATION; NOTICE, HEARING AND APPEAL
1-7 A. Any title insurance agent or direct operation may
1-8 voluntarily surrender his license at any time by giving notice to
1-9 the Board and to the title insurance company concerned. Any agent
1-10 or direct operation shall automatically forfeit the license under
1-11 the title insurance company represented if he shall terminate his
1-12 agency contract with such company.
1-13 B. The department may discipline any agent or direct
1-14 operation or deny an application under Section 5, Article 21.01-2,
1-15 of this code and its subsequent amendments if it finds that the
1-16 applicant for or holder of such license:
1-17 (1) Has wilfully violated any provision of this Act;
1-18 (2) Has intentionally made a material misstatement in
1-19 the application for such license;
1-20 (4) Has misappropriated or converted to his own use or
1-21 illegally withheld money belonging to a title insurance company, an
1-22 insured or any other person;
1-23 (5) Has been guilty of fraudulent or dishonest
2-1 practices;
2-2 (6) Has materially misrepresented the terms and
2-3 conditions of title insurance policies or contracts; or
2-4 (7) Has failed to maintain a separate and distinct
2-5 accounting of escrow funds, and has failed to maintain an escrow
2-6 bank account or accounts separate and apart from all other
2-7 accounts.
2-8 C. Repealed. Acts 1993, ch. 685, Sec. 12.51(3).
2-9 D. No applicant or licensee whose license has been denied,
2-10 refused or revoked hereunder shall be entitled to file another
2-11 application for a license as an agent or direct operation within
2-12 one year from the effective date of such denial, refusal or
2-13 revocation, or, if judicial review of such denial, refusal or
2-14 revocation is sought, within one year from the date of final court
2-15 order or decree affirming such action. Such application, when
2-16 filed after one year, may be refused by the Board unless the
2-17 applicant shows good cause why the denial, refusal or revocation of
2-18 his license shall not be deemed a bar to the issuance of a new
2-19 license.
2-20 E. A disciplinary action or denial of an application under
2-21 this article may be appealed under Article 1.04 of this code and
2-22 its subsequent amendments.
2-23 F. After notice and hearing, the commissioner may revoke or
2-24 suspend any license issued under this chapter if he or she finds
2-25 the existence of any fact or condition that, if it had existed at
3-1 the time of the original application for the license, clearly would
3-2 have warranted the refusal to issue the license.
3-3 SECTION 2. Chapter Nine, Insurance Code, is amended by
3-4 adding a new Article 9.60 as follows:
3-5 Art. 9.60. ACTIVE TITLE INSURANCE AGENTS OR DIRECT
3-6 OPERATIONS ONLY TO BE LICENSED.
3-7 A. In addition to any other licensing requirements under
3-8 Chapter 9, no license shall be granted to any person, firm,
3-9 association or corporation as a title insurance agent or direct
3-10 operation unless it is found by the Commissioner of Insurance that
3-11 such person, firm, association or corporation, is or intends to be,
3-12 actively engaged in the writing of title insurance for the public
3-13 generally; that each person or individual of a firm is a resident
3-14 of Texas and is to be actively engaged in good faith in the
3-15 business of title insurance, and that the application is not being
3-16 made in order to evade the laws against rebating and discrimination
3-17 either for the applicant or for some other person, firm,
3-18 partnership or corporation. Nothing herein contained shall
3-19 prohibit an applicant insuring title to property which the
3-20 applicant owns or in which the applicant has an interest; but it is
3-21 the intent of this Section to preserve to each citizen the right to
3-22 choose his own agent or insurance carrier, and to prohibit the
3-23 licensing of an individual, firm, partnership or corporation to
3-24 engage in the title insurance business principally to handle
3-25 business which the applicant controls through a person, including
4-1 an officer, director or owner of five percent (5%) or more of the
4-2 entity or capital of any person, engaged in this state in the
4-3 trade, business, occupation or profession of: (1) buying or
4-4 selling interest in real property; (2) making loans secured by
4-5 interests in real property; or (3) acting as broker, agent,
4-6 representative or attorney of a person who buys or sells an
4-7 interest in real property or who lends or borrows money with the
4-8 interest as security. The foregoing shall be taken to mean that an
4-9 applicant who is making an original application for license shall
4-10 show the Commissioner of Insurance that the applicant has a bona
4-11 fide intention to engage in business in which, in any calendar
4-12 year, at least fifty per cent (50%) of the total volume of title
4-13 insurance premiums shall be derived from persons or organizations
4-14 other than applicant and from property other than that on which the
4-15 applicant shall control the placing of title insurance through
4-16 ownership, mortgage, sale, family relationship or employment. For
4-17 purposes of this section, the percentage limitation set forth shall
4-18 be ten per cent (10%) in the first year ending December 31, 1998,
4-19 twenty five per cent (25%) in the second year ending December 31,
4-20 1999 and fifty (50%) per cent in any later year. The Commissioner
4-21 of Insurance shall adopt rules and definitions to implement this
4-22 Article.
4-23 SECTION 3. This Act takes effect September 1, 1997.
4-24 SECTION 4. The importance of this legislation and the
4-25 crowded condition of the calendars in both houses create an
5-1 emergency and an imperative public necessity that the
5-2 constitutional rule requiring bills to be read on three several
5-3 days in each house be suspended, and this rule is hereby suspended.