HB5582 102ND GENERAL ASSEMBLY

LRB102 25308 BMS 34582 b

102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB5582

Introduced 1/31/2022, by Rep. Camille Y. Lilly

SYNOPSIS AS INTRODUCED:

215 ILCS 155/3	from Ch. 73, par. 1403
215 ILCS 155/5	from Ch. 73, par. 1405
215 ILCS 155/12	from Ch. 73, par. 1412
215 ILCS 155/14	from Ch. 73, par. 1414
215 ILCS 155/16	from Ch. 73, par. 1416
215 ILCS 155/17	from Ch. 73, par. 1417
215 ILCS 155/18	from Ch. 73, par. 1418
215 ILCS 155/18.2 new
215 ILCS 155/19	from Ch. 73, par. 1419
215 ILCS 155/21	from Ch. 73, par. 1421

Amends the Title Insurance Act. Provides that it is unlawful for any person, firm, partnership, association, corporation, or other legal entity to act as or hold itself out to be a title insurance agent without first procuring a license from the Secretary of Financial and Professional Regulation. Provides that the Secretary or the Secretary's authorized representative shall have the power and authority to compel an independent escrowee's compliance with the provisions of the Act. Provides that every title insurance agent shall pay specified fees. Provides that the Secretary may require participation in a third-party, multi-state licensing system for licensing. Sets forth additional title insurance licensing requirements for applicants. Provides that a title insurance license shall be renewed every 2 years (rather than annually). Sets forth provisions concerning premiums and endorsement charges. Provides that the Secretary may refuse to grant, and may suspend or revoke, any certificate of authority, registration, or license or may impose a fine if he or she determines that the holder of or applicant for such certificate, registration, or license has engaged in specified acts. Removes language that provides that expenses incurred in the course of such examinations will be the responsibility of the title insurance company, and that if a present or former registered agent or its successor refuses or is unable to cooperate with a title insurance company in furnishing the records requested by the Secretary or his or her authorized agent, then the Secretary or his or her authorized agent shall have the power and authority to obtain those records directly from the registered agent. Makes other changes. Defines terms. Effective January 1, 2023.

A BILL FOR

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Title Insurance Act is amended by changing Sections 3, 5, 12, 14, 16, 17, 18, 19, and 21 and by adding Section 18.2 as follows:

(215 ILCS 155/3) (from Ch. 73, par. 1403)

Sec. 3. As used in this Act, the words and phrases following shall have the following meanings unless the context requires otherwise:

(1) "Title insurance business" or "business of title insurance" means:

(A) Issuing as insurer or offering to issue as insurer title insurance; and

(B) Transacting or proposing to transact one or more of the following activities when conducted or performed in contemplation of or in conjunction with the issuance of title insurance;

(i) soliciting or negotiating the issuance of title insurance;

(ii) guaranteeing, warranting, or otherwise insuring the correctness of title searches for all instruments affecting titles to real property, any interest in real property, cooperative units and proprietary leases, and for all liens or charges affecting the same;

(iii) handling of escrows, settlements, or closings;

(iv) executing title insurance policies;

(v) effecting contracts of reinsurance;

(vi) abstracting, searching, or examining titles; or

(vii) issuing insured closing letters or closing protection letters;

(C) Guaranteeing, warranting, or insuring searches or examinations of title to real property or any interest in real property, with the exception of preparing an attorney's opinion of title; or

(D) Guaranteeing or warranting the status of title as to ownership of or liens on real property and personal property by any person other than the principals to the transaction; or

(E) Doing or proposing to do any business substantially equivalent to any of the activities listed in this subsection, provided that the preparation of an attorney's opinion of title pursuant to paragraph (1)(C) is not intended to be within the definition of "title insurance business" or "business of title insurance".

(1.5) "Title insurance" means insuring, guaranteeing, warranting, or indemnifying owners of real or personal property or the holders of liens or encumbrances thereon or others interested therein against loss or damage suffered by reason of liens, encumbrances upon, defects in, or the unmarketability of the title to the property; the invalidity or unenforceability of any liens or encumbrances thereon; or doing any business in substance equivalent to any of the foregoing. "Warranting" for purpose of this provision shall not include any warranty contained in instruments of encumbrance or conveyance. Title insurance is a single line form of insurance, also known as monoline. An attorney's opinion of title pursuant to paragraph (1)(C) is not intended to be within the definition of "title insurance".

(2) "Title insurance company" means any domestic company organized under the laws of this State for the purpose of conducting the business of title insurance and any title insurance company organized under the laws of another State, the District of Columbia or foreign government and authorized to transact the business of title insurance in this State.

(3) "Title insurance agent" means a person, firm, partnership, association, corporation or other legal entity licensed under this Act registered by a title insurance company and authorized by a title insurance such company to determine insurability of title in accordance with generally acceptable underwriting rules and standards in reliance on either the public records or a search package prepared from a title plant, or both, and authorized by such title insurance company in addition to do any of the following: act as an escrow agent pursuant to subsections (f), (g), and (h) of Section 16 of this Act, solicit title insurance, collect premiums, or issue title insurance commitments, policies, and endorsements of the title insurance company; provided, however, the term "title insurance agent" shall not include officers and salaried employees of any title insurance company.

(4) "Producer of title business" is any person, firm, partnership, association, corporation or other legal entity engaged in this State in the trade, business, occupation or profession of (i) buying or selling interests in real property, (ii) making loans secured by interests in real property, or (iii) acting as broker, agent, attorney, or representative of natural persons or other legal entities that buy or sell interests in real property or that lend money with such interests as security.

(5) "Associate" is any firm, association, partnership, corporation or other legal entity organized for profit in which a producer of title business is a director, officer, or partner thereof, or owner of a financial interest, as defined herein, in such entity; any legal entity that controls, is controlled by, or is under common control with a producer of title business; and any natural person or legal entity with whom a producer of title business has any agreement, arrangement, or understanding or pursues any course of conduct the purpose of which is to evade the provisions of this Act.

(6) "Financial interest" is any ownership interest, legal or beneficial, of more than 1% in a privately held or except ownership of publicly traded company stock.

(7) "Refer" means to place or cause to be placed, or to exercise any power or influence over the placing of title business, whether or not the consent or approval of any other person is sought or obtained with respect to the referral.

(8) "Escrow Agent" means any title insurance company or any title insurance agent, including independent contractors of either, acting on behalf of a title insurance company, which receives deposits, in trust, of funds or documents, or both, for the purpose of effecting the sale, transfer, encumbrance or lease of real property to be held by such escrow agent until title to the real property that is the subject of the escrow is in a prescribed condition. An escrow agent conducting closings shall be subject to the provisions of paragraphs (1) through (4) of subsection (e) of Section 16 of this Act.

(9) "Independent Escrowee" means any firm, person, partnership, association, corporation or other legal entity, other than a title insurance company or a title insurance agent, which receives deposits, in trust, of funds or documents, or both, for the purpose of effecting the sale, transfer, encumbrance or lease of real property to be held by such escrowee until title to the real property that is the subject of the escrow is in a prescribed condition. Federal and State chartered banks, savings and loan associations, credit unions, mortgage bankers, banks or trust companies authorized to do business under the Illinois Corporate Fiduciary Act, licensees under the Consumer Installment Loan Act, real estate brokers licensed pursuant to the Real Estate License Act of 2000, as such Acts are now or hereafter amended, and licensed attorneys when engaged in the attorney-client relationship are exempt from the escrow provisions of this Act. "Independent Escrowee" does not include employees or independent contractors of a title insurance company or title insurance agent authorized by a title insurance company to perform closing, escrow, or settlement services.

(10) "Single risk" means the insured amount of any title insurance policy, except that where 2 or more title insurance policies are issued simultaneously covering different estates in the same real property, "single risk" means the sum of the insured amounts of all such title insurance policies. Any title insurance policy insuring a mortgage interest, a claim payment under which reduces the insured amount of a fee or leasehold title insurance policy, shall be excluded in computing the amount of a single risk to the extent that the insured amount of the mortgage title insurance policy does not exceed the insured amount of the fee or leasehold title insurance policy.

(11) "Department" means the Department of Financial and Professional Regulation.

(12) "Secretary" means the Secretary of Financial and Professional Regulation.

(13) "Insured closing letter" or "closing protection letter" means an indemnification or undertaking to a party to a real property transaction, from a principal such as a title insurance company, setting forth in writing the extent of the principal's responsibility for intentional misconduct or errors in closing the real property transaction on the part of a settlement agent, such as a title insurance agent or other settlement service provider, or an indemnification or undertaking given by a title insurance company or an independent escrowee setting forth in writing the extent of the title insurance company's or independent escrowee's responsibility to a party to a real property transaction which indemnifies the party against the intentional misconduct or errors in closing the real property transaction on the part of the title insurance company or independent escrowee and includes protection afforded pursuant to subsections (f), (g), and (h) of Section 16, Section 16.1, subsection (h) of Section 17, and Section 17.1 of this Act even if such protection is afforded by contract.

(14) "Residential real property" means a building or buildings consisting of one to 4 residential units or a residential condominium unit where at least one of the residential units or condominium units is occupied or intended to be occupied as a residence by the purchaser or borrower, or in the event that the purchaser or borrower is the trustee of a trust, by a beneficiary of that trust.

(15) "Financial institution" means any bank subject to the Illinois Banking Act, any savings and loan association subject to the Illinois Savings and Loan Act of 1985, any savings bank subject to the Savings Bank Act, any credit union subject to the Illinois Credit Union Act, and any federally chartered commercial bank, savings and loan association, savings bank, or credit union organized and operated in this State pursuant to the laws of the United States.

(16) "Core title services" means to:

(A) determine insurability of title, which includes title examination and title clearance; and

(B) issue or cause to issue title insurance commitments, policies, and endorsements.

(17) "Multi-state licensing system" means a web-based platform that allows an applicant to submit his or her application or license renewal application to the Department online.

(Source: P.A. 100-485, eff. 9-8-17.)

(215 ILCS 155/5) (from Ch. 73, par. 1405)

Sec. 5. Certificate of authority required to engage in activities under this Act.

(a) It is unlawful for any company to engage or to continue in the business of title insurance without first procuring from the Secretary a certificate of authority stating that the company has complied with the requirements of Section 4 of this Act. An insurer that transacts any class of insurance other than title insurance anywhere in the United States is not eligible for the issuance of a certificate of authority to transact title insurance in this State nor for a renewal of a certificate of authority.

(b) It is unlawful for any person, firm, partnership, association, corporation, or other legal entity to act as or hold itself out to be a title insurance agent without first procuring from the Secretary a license subject to the conditions of Section 16.

(c) As used in this Act, the terms "license" and "certificate of authority" have the same meaning.

(Source: P.A. 94-893, eff. 6-20-06.)

(215 ILCS 155/12) (from Ch. 73, par. 1412)

Sec. 12. Examinations; compliance.

(a) The Secretary or his authorized representative shall have the power and authority, and it shall be his duty, to cause to be visited and examined annually any title insurance company doing business under this Act, and to verify and compel compliance with the provisions of law governing it.

(b) The Secretary or his authorized representative agent shall have power and authority to compel compliance with the provisions of this Act, may visit a title insurance agent, and shall, only upon the showing of good cause, require a title insurance agent to make appropriate records any title insurance company to take all legal means to obtain the appropriate records of its registered agents and make them available for examination at a time and place designated by the Secretary. Expenses incurred in the course of such examinations will be the responsibility of the title insurance company. In the event that a present or former registered agent or its successor refuses or is unable to cooperate with a title insurance company in furnishing the records requested by the Secretary or his or her authorized agent, then the Secretary or his or her authorized agent shall have the power and authority to obtain those records directly from the registered agent.

(c) The Secretary or the Secretary's authorized representative shall have the power and authority to compel an independent escrowee's compliance with the provisions of this Act pursuant to subsection (f) of Section 17.

(Source: P.A. 94-893, eff. 6-20-06.)

(215 ILCS 155/14) (from Ch. 73, par. 1414)

Sec. 14. Fees.

(a) Every title insurance company and every independent escrowee subject to this Act shall pay the following fees:

(1) for filing the original application for a certificate of authority and receiving the deposit required under this Act, $500;

(2) for the certificate of authority, $10;

(3) for every copy of a paper filed in the Department under this Act, $1 per folio;

(4) for affixing the seal of the Department and certifying a copy, $2; and

(5) for filing the annual statement, $50.

(b) Each title insurance company shall remit, for all of its title insurance agents subject to this Act for filing an annual registration of its agents, an amount equal to $3 for each policy issued by all of its title insurance agents in the immediately preceding calendar year.

(c) Every title insurance agent subject to this Act shall pay the following fees:

(1) for a resident of this State filing the original application for a certificate of authority and for the certificate of authority, $80;

(2) for a nonresident of this State filing the original application for a certificate of authority and for the certificate of authority, $120;

(3) for a resident or nonresident of this State filing for renewal of a certificate of authority, $80; and

(4) for a resident or nonresident of this State filing for reinstatement of a lapsed certificate of authority, $120.

(Source: P.A. 99-104, eff. 1-1-16.)

(215 ILCS 155/16) (from Ch. 73, par. 1416)

Sec. 16. Title insurance agents.

(a) No person, firm, partnership, association, corporation or other legal entity shall act as or hold itself out to be a title insurance agent unless it is authorized to perform core title services duly registered by a title insurance company and has a license from with the Secretary. Every title insurance agent registration issued before, on, or after the effective date of this amendatory Act of the 102nd General Assembly shall satisfy the requirements for a license under this amendatory Act of the 102nd General Assembly until January 1 of the calendar year immediately following the adoption of rules by the Department as may be necessary for the administration of granting of the license for title insurance agents under this amendatory Act of the 102nd General Assembly, and until the related application is either approved or disapproved. The continued recognition of such title insurance agent registrations during this period does not relieve title insurance agents and title insurance companies of their other obligations under this Act before, on, or after the effective date of this amendatory Act of the 102nd General Assembly.

(b) Each application for a license registration shall be made on a form specified by the Secretary and prepared by each title insurance company which the agent represents. The title insurance company shall retain the copy of the application and forward a copy to the Secretary. The Secretary may require participation in a third-party, multi-state licensing system for licensing under this Act. The third-party, multi-state licensing system may share regulatory information and maintain records in compliance with the provisions of this Act. The third-party, multi-state licensing system may charge an administration fee. The title insurance agent licensing fees that are set forth in Section 14 shall be paid by the title insurance agent to the Department.

(c) License applications shall comply with the following:

(1) Every applicant for a license registration, except a firm, partnership, association, limited liability company, or corporation, must be 18 years or more of age.

(2) Every applicant for a license that is a firm, partnership, association, corporation, or other legal entity shall designate and name at least one individual who:

(i) has a financial interest in the licensee; and

(ii) is authorized by at least one title insurance company to determine insurability of title.

(3) Included in every application for a license registration of a title insurance agent, including a firm, partnership, association, limited liability company, or corporation, shall be an affidavit of the applicant title insurance agent, signed and notarized in front of a notary public, affirming that the applicant and every owner, officer, director, principal, member, or manager of the applicant has never been convicted or pled guilty to any felony or misdemeanor involving a crime of theft or dishonesty or otherwise accurately disclosing any such felony or misdemeanor involving a crime of theft or dishonesty. No person who has had a conviction or pled guilty to any felony or misdemeanor involving theft or dishonesty may be appointed registered by a title insurance company without a written notification to the Secretary disclosing the conviction or plea, and no such person may serve as an owner, officer, director, principal, or manager of any registered title insurance agent without the written permission of the Secretary.

(4) Every applicant shall obtain and maintain errors and omissions insurance or its equivalent, such as malpractice insurance covering title insurance agent services, in an amount acceptable to the title insurance company authorizing the agent, but in no event in an amount less than $250,000 per claim and an aggregate limit of $500,000 with a deductible in an amount acceptable to the title insurance company appointing the agent. A title insurance company shall not provide the insurance directly or indirectly on behalf of a title insurance agent. If errors and omissions insurance is unavailable generally, the Department shall adopt rules for alternative methods to comply with this paragraph.

(d) A license Registration shall be renewed by February 1 every 2 years made annually by a filing with the Secretary or other method using a multi-state licensing system as determined by the Secretary through the adoption of rules; supplemental filings registrations for a new agency agreement with a title insurance company agents to be added between license renewal annual filings shall be made from time to time in the manner provided by the Secretary; licenses registrations shall remain in effect unless revoked or suspended by the Secretary, or voluntarily withdrawn by the title insurance agent, registrant or the title insurance agent no longer has any agency agreement with a title insurance company.

(e) Funds deposited in connection with any escrows, settlements, or closings shall be deposited in a separate fiduciary trust account or accounts in a bank or other financial institution insured by an agency of the federal government unless the instructions provide otherwise. The funds shall be the property of the person or persons entitled thereto under the provisions of the escrow, settlement, or closing and shall be segregated by escrow, settlement, or closing in the records of the escrow agent. The funds shall not be subject to any debts of the escrowee and shall be used only in accordance with the terms of the individual escrow, settlement, or closing under which the funds were accepted.

Interest received on funds deposited with the escrow agent in connection with any escrow, settlement, or closing shall be paid to the depositing party unless the instructions provide otherwise.

The escrow agent shall maintain separate records of all receipts and disbursements of escrow, settlement, or closing funds.

The escrow agent shall comply with any rules adopted by the Secretary pertaining to escrow, settlement, or closing transactions.

(f) A title insurance agent shall not act as an escrow agent in a nonresidential real property transaction where the amount of settlement funds on deposit with the escrow agent is less than $2,000,000 or in a residential real property transaction unless the title insurance agent, title insurance company, or another authorized title insurance agent has committed for the issuance of title insurance in that transaction and the title insurance agent is authorized to act as an escrow agent on behalf of the title insurance company for which the commitment for title insurance has been issued. The authorization under the preceding sentence shall be given either (1) by an agency contract with the title insurance company which contract, in compliance with the requirements set forth in subsection (g) of this Section, authorizes the title insurance agent to act as an escrow agent on behalf of the title insurance company or (2) by a closing protection letter in compliance with the requirements set forth in Section 16.1 of this Act, issued by the title insurance company to the seller, buyer, borrower, and lender. A closing protection letter shall not be issued by a title insurance agent. The provisions of this subsection (f) shall not apply to the authority of a title insurance agent to act as an escrow agent under subsection (g) of Section 17 of this Act.

(g) If an agency contract between the title insurance company and the title insurance agent is the source of the authority under subsection (f) of this Section for a title insurance agent to act as escrow agent for a real property transaction, then the agency contract shall provide for no less protection from the title insurance company to all parties to the real property transaction than the title insurance company would have provided to those parties had the title insurance company issued a closing protection letter in conformity with Section 16.1 of this Act.

(h) A title insurance company shall be liable for the acts or omissions of its title insurance agent as an escrow agent if the title insurance company has authorized the title insurance agent under subsections (f) and (g) of this Section 16 and only to the extent of the liability undertaken by the title insurance company in the agency agreement or closing protection letter. The liability, if any, of the title insurance agent to the title insurance company for acts and omissions of the title insurance agent as an escrow agent shall not be limited or otherwise modified because the title insurance company has provided closing protection to a party or parties to a real property transaction escrow, settlement, or closing. The escrow agent shall not charge a fee for protection provided by a title insurance company to parties to real property transactions under subsections (f) and (g) of this Section 16 and Section 16.1, but shall collect from the parties the fee charged by the title insurance company and shall promptly remit the fee to the title insurance company. The title insurance company may charge the parties a reasonable fee for protection provided pursuant to subsections (f) and (g) of this Section 16 and Section 16.1 and shall not pay any portion of the fee to the escrow agent. The payment of any portion of the fee to the escrow agent by the title insurance company, shall be deemed a prohibited inducement or compensation in violation of Section 24 of this Act. Any other charges to a party to the transaction that are related to escrow services shall not be duplicative of any other charges to that party and shall be commensurate with the actual cost of the work performed and the material furnished.

(i) The Secretary shall adopt and amend such rules as may be required for the proper administration and enforcement of this Section 16 consistent with the federal Real Estate Settlement Procedures Act and Section 24 of this Act.

(Source: P.A. 98-398, eff. 1-1-14; 98-832, eff. 1-1-15; 99-104, eff. 1-1-16.)

(215 ILCS 155/17) (from Ch. 73, par. 1417)

Sec. 17. Independent escrowees.

(a) Every independent escrowee shall be subject to the same certification and deposit requirements to which title insurance companies are subject under Section 4 of this Act.

(b) No person, firm, corporation or other legal entity shall hold itself out to be an independent escrowee unless it has been issued a certificate of authority by the Secretary.

(c) Every applicant for a certificate of authority, except a firm, partnership, association or corporation, must be 18 years or more of age.

(d) Every certificate of authority shall remain in effect one year unless revoked or suspended by the Secretary or voluntarily surrendered by the holder.

(e) An independent escrowee may engage in the escrow, settlement, or closing business, or any combination of such business, and operate as an escrow, settlement, or closing agent, provided that:

(1) Funds deposited in connection with any escrow, settlement, or closing shall be deposited in a separate fiduciary trust account or accounts in a bank or other financial institution insured by an agency of the federal government unless the instructions provide otherwise. Such funds shall be the property of the person or persons entitled thereto under the provisions of the escrow, settlement, or closing and shall be segregated by escrow, settlement or closing in the records of the independent escrowee. Such funds shall not be subject to any debts of the escrowee and shall be used only in accordance with the terms of the individual escrow, settlement or closing under which the funds were accepted.

(2) Interest received on funds deposited with the independent escrowee in connection with any escrow, settlement or closing shall be paid to the depositing party unless the instructions provide otherwise.

(3) The independent escrowee shall maintain separate records of all receipt and disbursement of escrow, settlement or closing funds.

(4) The independent escrowee shall comply with any rules or regulations promulgated by the Secretary pertaining to escrow, settlement or closing transactions.

(f) The Secretary or his authorized representative shall have the power and authority to visit and examine at any time any independent escrowee certified under this Act and to verify and compel compliance with the provisions of this Act.

(g) A title insurance company or title insurance agent, not qualified as an independent escrowee, may act in the capacity of an escrow agent when it is supplying an abstract of title, grantor-grantee search, tract search, lien search, tax assessment search, or other limited purpose search to the parties to the transaction even if it is not issuing a title insurance commitment or title insurance policy. A title insurance agent may act as an escrow agent only when specifically authorized in writing on forms prescribed by the Secretary by a title insurance company that has duly registered the agent with the Secretary and only when notice of the authorization is provided to and receipt thereof is acknowledged by the Secretary. The authority granted to a title insurance agent may be limited or revoked at any time by the title insurance company.

(h) An independent escrowee may, pursuant to Section 17.1 of this Act, issue an insured closing letter if, in addition to complying with the same certification and deposit requirements that title insurance companies are subject to under Section 4 of this Act, the independent escrowee:

(1) Satisfies the Secretary that it has a minimum capital and surplus of $2,000,000. The Secretary may provide the forms and standards for this purpose by rule. This paragraph applies only to independent escrowees licensed under this Act for the first time on or after the effective date of this amendatory Act of the 100th General Assembly.

(2) Files with and has approved by the Secretary proof of a fidelity bond in the minimum amount of $2,000,000 per occurrence.

(3) Establishes and maintains a statutory closing protection letter reserve for the protection of parties named in warranties of services consisting of a sum of 25% of the closing protection letter revenue received by the independent escrowee on or after the effective date of this amendatory Act of the 100th General Assembly. The reserve shall be reported as a liability of the independent escrowee in its financial statements. Amounts placed in the statutory closing protection letter reserve shall be deducted in determining the net profit of the independent escrowee for the year. Except as provided in this subsection, assets in value equal to the statutory closing protection letter reserve are not subject to distribution among creditors, stockholders, or other owners of the independent escrowee until all claims of parties named in warranties of services have been paid in full and discharged.

(4) Releases from the statutory closing protection letter reserve a sum equal to 10% of the amount added to the reserve during a calendar year on July 1 of each of the 5 years following the year in which the sum was added and releases from the statutory closing protection letter reserve a sum equal to 3 1/3% of the amount added to the reserve during that year on each succeeding July 1 until the entire amount for that year has been released.

Notwithstanding an insured closing letter pursuant to Section 17.1, any other charges to a party to the transaction that are related to escrow services shall not be duplicative of any other charges to that party and shall be commensurate with the actual cost of the work performed and the material furnished.

The Secretary shall adopt and amend rules as may be required for the proper administration and enforcement of this subsection (h) consistent with the federal Real Estate Settlement and Procedures Act and Section 24 of this Act.

(Source: P.A. 100-485, eff. 9-8-17.)

(215 ILCS 155/18) (from Ch. 73, par. 1418)

Sec. 18. Disclosure of financial interests No referral payments; kickbacks.

(a) Application of this Section is limited to residential properties of 4 or fewer units, at least one of which units is occupied or to be occupied by an owner, legal or beneficial.

(b) No title insurance company, independent escrowee, or title insurance agent may issue a title insurance policy to, or provide services to an applicant if it knows or has reason to believe that the applicant was referred to it by any producer of title business or by any associate of such producer, where the producer, the associate, or both, have a financial interest in the title insurance company, independent escrowee, or title insurance agent to which business is referred unless the producer has disclosed to any party paying for the products or services, or his representative, the financial interest of the producer of title business or associate referring the title business and a disclosure of an estimate of those charges to be paid as described in Section 19. Such disclosure must be made in writing on forms prescribed by the Secretary prior to the time that the commitment for title insurance is issued. The title insurance company, independent escrowee, or title insurance agent shall maintain the disclosure forms for a period of 3 years.

(c) Each title insurance company, independent escrowee, and title insurance agent shall file with the Secretary, on forms prescribed by the Secretary, reports setting forth the names and addresses of those persons, if any, who have had a financial interest in the title insurance company, independent escrowee, or title insurance agent during the calendar year, who are known or reasonably believed by the title insurance company, independent escrowee, or title insurance agent to be producers of title business or associates of producers.

(1) Each title insurance company and independent escrowee shall file the report required under this subsection with its application for a certificate of authority and at any time there is a change in the information provided in the last report.

(2) Each title insurance agent shall file the report required under this subsection with its title insurance company for inclusion with its application for registration and at any time there is a change in the information provided in its last report.

(3) Each title insurance company, independent escrowee, or title insurance agent doing business on the effective date of this Act shall file the report required under this subsection within 90 days after such effective date.

(Source: P.A. 94-893, eff. 6-20-06.)

(215 ILCS 155/18.2 new)

Sec. 18.2. Retention and remittance of premiums and endorsement charges.

(a) Regarding residential real property transactions, from the owner's policy premium, loan policy premium, and endorsement charges, not including closing protection letter charges, a title insurance agent shall retain 85% and remit 15% to a title insurance company for each premium and endorsement that the title insurance agent performs at least core title services. For such residential real property transactions, if the title insurance agent does not perform at least core title services for a premium or endorsement charge, then the title insurance agent or title insurance company performing the core title services shall be compensated an amount equal to 85% of each premium or endorsement charge for which they perform the core title services. If title services subject to this Act are provided to a title insurance agent by another entity or individual, there shall be a written service agreement for such services, payment shall be made pursuant to the agreement if the transaction closes or the policy is issued, any charges to a party to the transaction that are related to such services shall not be duplicative of any other charges to that party, and, if applicable, shall be in compliance with subparagraph (F) of paragraph (18) of subsection (a) of Section 21.

(b) Any fees charged to the parties to the transaction other than the owner's policy premium, loan policy premium, and endorsement charges shall not be duplicative of any other charges to that party, shall be retained or remitted in an amount commensurate with the actual cost of the work performed and material furnished, and, if applicable, shall be in compliance with subparagraph (F) of paragraph (18) of subsection (a) of Section 21.

(215 ILCS 155/19) (from Ch. 73, par. 1419)

Sec. 19. Secretary powers; pricing. Notwithstanding the minimum fees set forth in subparagraph (F) of paragraph (18) of subsection (a) of Section 21, nothing Nothing contained in this Act shall be construed as giving any authority to the Secretary to set or otherwise adjust the fees charged to the parties to the transaction for:

(1) issuing a title insurance policy, including any service charge or administration fee for the issuance of a title insurance policy;

(2) abstracting, searching and examining title;

(3) preparing or issuing preliminary reports, property profiles, commitments, binders, or like product;

(4) closing fees, escrow fees, settlement fees, and like charges.

(Source: P.A. 94-893, eff. 6-20-06.)

(215 ILCS 155/21) (from Ch. 73, par. 1421)

Sec. 21. Regulatory action.

(a) The Secretary may refuse to grant, and may suspend or revoke, any certificate of authority, registration, or license issued pursuant to this Act or may impose a fine for a violation of this Act if he determines that the holder of or applicant for such certificate, registration or license:

(1) has intentionally made a material misstatement or fraudulent misrepresentation in relation to a matter covered by this Act;

(2) has misappropriated or tortiously converted to its own use, or illegally withheld, monies held in a fiduciary capacity;

(3) has demonstrated untrustworthiness or incompetency in transacting the business of guaranteeing titles to real estate in such a manner as to endanger the public;

(4) has materially misrepresented the terms or conditions of contracts or agreements to which it is a party;

(5) has paid any commissions, discounts or any part of its premiums, fees or other charges to any person in violation of any State or federal law or regulations or opinion letters issued under the federal Real Estate Settlement Procedures Act of 1974;

(6) has failed to comply with the deposit and reserve requirements of this Act or any other requirements of this Act;

(7) has committed fraud or misrepresentation in applying for or procuring any certificate of authority, registration, or license issued pursuant to this Act;

(8) has a conviction or plea of guilty or plea of nolo contendere in this State or any other jurisdiction to (i) any felony or (ii) a misdemeanor, an essential element of which is dishonesty or fraud or larceny, embezzlement, or obtaining money, property, or credit by false pretenses or by means of a confidence game;

(9) has been disciplined by another state, the District of Columbia, a territory, foreign nation, a governmental agency, or any entity authorized to impose discipline if at least one of the grounds for that discipline is the same as or equivalent to one of the grounds for which a title insurance company, title insurance agent, or independent escrowee may be disciplined under this Act or if at least one of the grounds for that discipline involves dishonesty; a certified copy of the record of the action by the other state or jurisdiction shall be prima facie evidence thereof;

(10) has advertising that is inaccurate, misleading, or contrary to the provisions of this Act;

(11) has knowingly and willfully made any substantial misrepresentation or untruthful advertising;

(12) has made any false promises of a character likely to influence, persuade, or induce;

(13) has knowingly failed to account for or remit any money or documents coming into the possession of a title insurance company, title insurance agent, or independent escrowee that belong to others;

(14) has engaged in dishonorable, unethical, or unprofessional conduct of a character likely to deceive, defraud, or harm the public;

(15) has violated the terms of a disciplinary order issued by the Department;

(16) has disregarded or violated any provision of this Act or the published rules adopted by the Department to enforce this Act or has aided or abetted any individual, partnership, registered limited liability partnership, limited liability company, or corporation in disregarding any provision of this Act or the published rules; or

(17) has acted as a title insurance company, title insurance agent, or independent escrowee without a certificate of authority, registration, or license after the title insurance company, title insurance agent, or independent escrowee's certificate of authority, registration, or license was inoperative; or .

(18) regarding residential real property transactions:

(A) has disbursed funds before the actual delivery of funds acceptable to the closing and settlement services agent;

(B) has disbursed closing and settlement services funds before all necessary conditions of the transaction have been met;

(C) has paid for, furnished, or offered to pay for or furnish any reward or compensation for any past, present, or future title insurance business or closing and settlement services or any other title business, including, but not limited to, the payment of a fee to an attorney for the referral of title business;

(D) has paid or offered to pay any fee to a producer of title business for making an inspection or appraisal of property;

(E) has received securities of the title insurance company, title insurance agent, or independent escrowee at prices below the normal market price or bonds or debentures that guarantee a higher than normal interest rate, whether or not the consummation of the transaction is directly or indirectly related to the number of closing and settlement services or title orders coming to the title insurance company, title insurance agent, or independent escrowee through the efforts of that person;

(F) has furnished to any producer of title business or associate of a producer reports containing publicly recorded information, appraisals, estimates of income production potential, information kits, or similar packages containing information about one or more parcels of real property helpful to any producer of title business without making a charge that is commensurate with the actual cost of the work performed and the material furnished; additionally:

(i) if search services subject to this Act are provided to a title insurance agent by another entity or individual there shall be a written service agreement for such search services, payment shall be made pursuant to the agreement if the transaction closes or the policy is issued, and any charges to a party to the transaction that are related to such search services shall not be duplicative of any other charges to that party; and

(ii) if services other than search services subject to this Act are provided to a title insurance agent by another entity or individual there shall be a written service agreement for such services, payment shall be made pursuant to the agreement in a cumulative total amount no less than set forth in items (I) and (II) of this subdivision if the transaction closes or the policy is issued, and any charges to a party to the transaction that are related to such services shall not be duplicative of any other charges to that party:

(I) $350 for transactions with any residential real property in the counties of Cook, Lake, DuPage, McHenry, Kane, Will, Grundy, and Kendall; and

(II) $175 for transactions with any residential real property in any other county within the State.

(G) has made or guaranteed or has offered to make or guarantee, either directly or indirectly, any loan to any producer of title business or associate of a producer with terms more favorable than otherwise available to the producer;

(H) has guaranteed or offered to guarantee the proper performance of closing and settlement services or undertakings that are to be performed by any producer of title business, except as authorized pursuant to Sections 16 and 16.1;

(I) has provided or offered to provide, either directly or indirectly, a compensating balance or deposit in a lending institution either for the express or implied purpose of influencing the placement or channeling of title insurance business by the lending institution; this paragraph does not prohibit the maintenance by a title insurance company, title agent, or independent escrowee of demand deposits or escrow deposits that are reasonably necessary for use in the ordinary course of the business of the title insurance company, title agent, or independent escrowee;

(J) has paid for or offered to pay for the fees or charges of an outside professional, such as an attorney, engineer, appraiser, or surveyor, whose services are required by any producer of title business to structure or complete a particular transaction;

(K) has provided or offered to provide non-title services, such as computerized bookkeeping, forms management, computer programming, or any similar benefit, without a charge that is commensurate with the actual cost to any producer of title business or to any associate of a producer of title business;

(L) has furnished or offered to furnish all or any part of the time or productive effort of any employee of the title insurance company, title insurance agent, or independent escrowee, such as an office manager, escrow officer, secretary, clerk, or messenger, to any producer of title business or associate of a producer of title business;

(M) has paid for or offered to pay for all or any part of the salary of an employee of any producer of title business;

(N) has paid for or offered to pay for the salary or any part of the salary of a relative of any producer of title business if that payment is in excess of the reasonable value of work performed by the relative on behalf of the title insurance company, title insurance agent, or independent escrowee;

(O) has paid for or offered to pay for services by any producer of title business that are ordinarily to be performed by the producer of title business in his or her licensed capacity as a real estate or mortgage broker, salesman, or agent;

(P) has furnished or offered to furnish or paid for or offered to pay for furniture, office supplies, telephones, facsimile machines, equipment, or automobiles to any producer of title business, or has paid for or offered to pay for any portion of the cost of renting, leasing, operating, or maintaining any of these items;

(Q) has paid for, furnished, or waived, or offered to pay for, furnish, or waive, all or any part of the rent for space occupied by any producer of title business;

(R) has rented or offered to rent space from any producer of title business, regardless of the purpose, at a rent that is excessive when compared with rents for comparable space in the geographic area, or has paid or offered to pay rent based in whole or in part on the volume of business generated by any producer of title business;

(S) has paid for or offered to pay for gifts, vacations, business trips, convention expenses, travel expenses, membership fees, registration fees, lodging, or meals on behalf of a producer of title business, directly or indirectly, or supplied letters of credit, credit cards, or any such benefits;

(T) has paid for or offered to pay for the cancellation fee for a title report or other fee on behalf of any producer of title business either before or after inducing the producer of title business to cancel an order with another title insurance company, title insurance agent, or independent escrowee;

(U) has paid for, furnished, or offered to pay for or furnish any business form to any producer of title business, other than a form regularly used in the conduct of the title insurance company's business, that is furnished for the convenience of the title insurance company and does not constitute a direct monetary benefit to any producer of title business; or

(V) has given trading stamps, cash redemption coupons, or similar items to any producer of title business.

(a-1) Nothing in paragraph (18) of subsection (a) shall be construed as prohibiting:

(1) publishing or printing and disseminating any educational information, notwithstanding that the information may be of benefit to a producer of title business;

(2) distributing information, whether printed or oral, advertising novelties, and gift items not to exceed $25 in value that bear the name of the giver but not the name of the recipient to producers of title business;

(3) providing reasonable promotional and educational activities that are not conditioned on the referral of business and that do not involve the defraying of expenses that otherwise would be incurred by persons in a position to refer settlement services or business incident to those services, such as a reception by a title company, seminars on title matters offered to professionals, furnishing property descriptions and names of record owners without charge to lenders, real estate brokers, attorneys, or others, or distribution of calendars and other promotional material that do not exceed $25 in value;

(4) the payment of a fee:

(A) that bears a reasonable relationship to the value of the services rendered or performed:

(i) by any person or party to attorneys at law for services actually rendered;

(ii) by a title company to its duly appointed agent for services actually performed in the issuance of a policy of title insurance; or

(iii) by a lender to its duly appointed agent for services actually performed in the making of a loan; and

(B) to a settlement service provider for services outside of the normal scope of that provider's services to the parties to the transaction;

(5) the payment of a bona fide salary or compensation or other payment for goods or facilities actually furnished or for services actually performed, so long as the salary, compensation, or other payment bears a reasonable relationship to the value of the services, goods, or facilities;

(6) proportionate returns on an ownership or franchise interest; or

(7) ordinary and customary business entertainment or promotional activities not to exceed $200 in value per person, per quarter of each year beginning January 1 by title insurance companies, title insurance agents, or independent escrowees that are not directly or indirectly consideration as an inducement or compensation for the referral of title business or for the referral of any escrow or other service from a title insurance company, title insurance agent, or independent escrowee.

(b) In every case where a registration or certificate is suspended or revoked, or an application for a registration or certificate or renewal thereof is refused, the Secretary shall serve notice of his action, including a statement of the reasons for his action, as provided by this Act. When a notice of suspension or revocation of a certificate of authority is given to a title insurance company, the Secretary shall also notify all the registered agents of that title insurance company of the Secretary's action.

(c) In the case of a refusal to issue or renew a certificate or accept a registration, the applicant or registrant may request in writing, within 30 days after the date of service, a hearing. In the case of a refusal to renew, the expiring registration or certificate shall be deemed to continue in force until 30 days after the service of the notice of refusal to renew, or if a hearing is requested during that period, until a final order is entered pursuant to such hearing.

(d) The suspension or revocation of a registration or certificate shall take effect upon service of notice thereof. The holder of any such suspended registration or certificate may request in writing, within 30 days of such service, a hearing.

(e) In cases of suspension or revocation of registration pursuant to subsection (a), the Secretary may, in the public interest, issue an order of suspension or revocation which shall take effect upon service of notification thereof. Such order shall become final 60 days from the date of service unless the registrant requests in writing, within such 60 days, a formal hearing thereon. In the event a hearing is requested, the order shall remain temporary until a final order is entered pursuant to such hearing.

(f) Hearing shall be held at such time and place as may be designated by the Secretary either in the City of Springfield, the City of Chicago, or in the county in which the principal business office of the affected registrant or certificate holder is located.

(g) The suspension or revocation of a registration or certificate or the refusal to issue or renew a registration or certificate shall not in any way limit or terminate the responsibilities of any registrant or certificate holder arising under any policy or contract of title insurance to which it is a party. No new contract or policy of title insurance may be issued, nor may any existing policy or contract to title insurance be renewed by any registrant or certificate holder during any period of suspension or revocation of a registration or certificate.

(h) The Secretary may issue a cease and desist order to a title insurance company, agent, or other entity doing business without the required license or registration, when in the opinion of the Secretary, the company, agent, or other entity is violating or is about to violate any provision of this Act or any law or of any rule or condition imposed in writing by the Department.

The Secretary may issue the cease and desist order without notice and before a hearing.

The Secretary shall have the authority to prescribe rules for the administration of this Section.

If it is determined that the Secretary had the authority to issue the cease and desist order, he may issue such orders as may be reasonably necessary to correct, eliminate or remedy such conduct.

Any person or company subject to an order pursuant to this Section is entitled to judicial review of the order in accordance with the provisions of the Administrative Review Law.

The powers vested in the Secretary by this Section are additional to any and all other powers and remedies vested in the Secretary by law, and nothing in this Section shall be construed as requiring that the Secretary shall employ the powers conferred in this Section instead of or as a condition precedent to the exercise of any other power or remedy vested in the Secretary.

(Source: P.A. 98-398, eff. 1-1-14.)

Section 99. Effective date. This Act takes effect January 1, 2023.