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1 | AN ACT concerning insurance.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Title Insurance Act is amended by changing | ||||||
5 | Section 3 and by adding Section 18.1 as follows:
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6 | (215 ILCS 155/3) (from Ch. 73, par. 1403)
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7 | Sec. 3. As used in this Act, the words and phrases | ||||||
8 | following shall
have the following meanings unless the context | ||||||
9 | requires otherwise:
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10 | (1) "Title insurance business" or "business of title | ||||||
11 | insurance" means:
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12 | (A) Issuing as insurer or offering to issue as insurer | ||||||
13 | title insurance;
and
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14 | (B) Transacting or proposing to transact one or more of | ||||||
15 | the following
activities when
conducted or performed in | ||||||
16 | contemplation of or in conjunction with the issuance
of | ||||||
17 | title insurance;
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18 | (i) soliciting or negotiating the issuance of | ||||||
19 | title insurance;
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20 | (ii) guaranteeing, warranting, or otherwise | ||||||
21 | insuring the correctness of
title
searches for all | ||||||
22 | instruments affecting titles to real property, any | ||||||
23 | interest in
real property, cooperative units and |
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1 | proprietary leases, and for all liens or
charges | ||||||
2 | affecting the same;
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3 | (iii) handling of escrows, settlements, or | ||||||
4 | closings;
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5 | (iv) executing title insurance policies;
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6 | (v) effecting contracts of reinsurance;
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7 | (vi) abstracting, searching, or examining titles; | ||||||
8 | or
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9 | (vii) issuing insured closing letters or closing | ||||||
10 | protection letters;
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11 | (C) Guaranteeing, warranting, or insuring searches or | ||||||
12 | examinations of
title to real property or any interest in | ||||||
13 | real property, with the exception of
preparing an | ||||||
14 | attorney's opinion of title; or
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15 | (D) Guaranteeing or warranting the status of title as | ||||||
16 | to ownership of or
liens on real property and personal | ||||||
17 | property by any person other than the
principals to the | ||||||
18 | transaction; or
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19 | (E) Doing or proposing to do any business substantially | ||||||
20 | equivalent to any
of the activities listed in this | ||||||
21 | subsection,
provided that the preparation of an attorney's | ||||||
22 | opinion
of title pursuant to paragraph (1)(C) is not | ||||||
23 | intended to be within the
definition of "title insurance | ||||||
24 | business" or "business of title insurance".
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25 | (1.5) "Title insurance" means insuring, guaranteeing, | ||||||
26 | warranting, or
indemnifying owners of real or personal property |
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1 | or the holders of liens or
encumbrances thereon or others | ||||||
2 | interested therein against loss or damage
suffered by reason of | ||||||
3 | liens, encumbrances upon, defects in, or the
unmarketability of | ||||||
4 | the title to the property; the invalidity or
unenforceability | ||||||
5 | of any liens or encumbrances thereon; or doing any business in
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6 | substance equivalent to any of the foregoing.
"Warranting" for | ||||||
7 | purpose of this provision shall not
include any warranty | ||||||
8 | contained in instruments of encumbrance or conveyance.
Title | ||||||
9 | insurance is a single line form of insurance, also known as | ||||||
10 | monoline. An attorney's opinion of title pursuant to paragraph | ||||||
11 | (1)(C) is not intended to
be within the definition of "title | ||||||
12 | insurance".
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13 | (2) "Title insurance company" means any domestic company | ||||||
14 | organized under
the laws of this State for the purpose of | ||||||
15 | conducting the business of
title insurance and any title | ||||||
16 | insurance
company organized under the laws of another State, | ||||||
17 | the District of Columbia
or foreign government and authorized | ||||||
18 | to transact the business of
title insurance in this State.
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19 | (3) "Title insurance agent" means a person, firm, | ||||||
20 | partnership,
association, corporation or other legal entity | ||||||
21 | registered by a title
insurance company and authorized by such | ||||||
22 | company to determine insurability
of title in accordance with | ||||||
23 | generally acceptable underwriting rules and
standards in | ||||||
24 | reliance on either the public records or a search package
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25 | prepared from a title plant, or both, and authorized in | ||||||
26 | addition to do any
of the following: act as an escrow agent, |
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1 | solicit title insurance, collect
premiums, issue title | ||||||
2 | reports, binders or commitments to insure and
policies in its | ||||||
3 | behalf, provided, however, the term "title insurance agent"
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4 | shall not include officers and salaried employees of any title | ||||||
5 | insurance
company.
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6 | (4) "Producer of title business" is any person, firm, | ||||||
7 | partnership,
association, corporation or other legal entity | ||||||
8 | engaged in this State in the
trade, business, occupation or | ||||||
9 | profession of (i) buying or selling
interests in real property, | ||||||
10 | (ii) making loans secured by interests in real
property, or | ||||||
11 | (iii) acting as broker, agent, attorney, or representative of
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12 | natural persons or other legal entities that buy or sell | ||||||
13 | interests in real
property or that lend money with such | ||||||
14 | interests as security.
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15 | (5) "Associate" is any firm, association, partnership, | ||||||
16 | corporation or
other legal entity organized for profit in which | ||||||
17 | a producer of title
business is a director, officer, or partner | ||||||
18 | thereof, or owner of a
financial interest, as defined herein, | ||||||
19 | in such entity; any legal entity
that controls, is controlled | ||||||
20 | by, or is under common control with a producer
of title | ||||||
21 | business; and any natural person or legal entity with whom a
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22 | producer of title business has any agreement, arrangement, or | ||||||
23 | understanding
or pursues any course of conduct the purpose of | ||||||
24 | which is to evade the
provisions of this Act.
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25 | (6) "Financial interest" is any ownership interest, legal | ||||||
26 | or beneficial,
except ownership of publicly traded stock.
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1 | (7) "Refer" means to place or cause to be placed, or to | ||||||
2 | exercise any
power or influence over the placing of title | ||||||
3 | business, whether or not the
consent or approval of any other | ||||||
4 | person is sought or obtained with respect
to the referral.
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5 | (8) "Escrow Agent" means any title insurance company or any | ||||||
6 | title
insurance agent, including independent contractors of | ||||||
7 | either, acting on behalf of a title insurance company which
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8 | receives deposits, in trust, of funds or documents, or both, | ||||||
9 | for the purpose
of effecting the sale, transfer, encumbrance or | ||||||
10 | lease of real property to
be held by such escrow agent until | ||||||
11 | title to the real property that is the
subject of the escrow is | ||||||
12 | in a prescribed condition. An escrow agent conducting closings | ||||||
13 | shall be subject to the provisions of paragraphs (1) through | ||||||
14 | (4) of subsection (e) of Section 16 of this Act.
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15 | (9) "Independent Escrowee" means any firm, person, | ||||||
16 | partnership,
association, corporation or other
legal entity, | ||||||
17 | other than a title insurance company or a title insurance
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18 | agent, which receives deposits, in trust, of funds or | ||||||
19 | documents, or both, for
the purpose of effecting the sale, | ||||||
20 | transfer, encumbrance or lease of real
property to be held by | ||||||
21 | such escrowee until title to the real property that
is the | ||||||
22 | subject of the escrow is in a prescribed condition. Federal and
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23 | State chartered banks, savings and loan associations, credit | ||||||
24 | unions,
mortgage bankers, banks or trust companies authorized | ||||||
25 | to do business under
the Illinois Corporate Fiduciary Act, | ||||||
26 | licensees under the Consumer
Installment Loan Act, real estate |
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1 | brokers licensed pursuant to the Real
Estate License Act of | ||||||
2 | 2000, as such Acts are now or hereafter amended, and
licensed | ||||||
3 | attorneys when engaged in the attorney-client relationship are
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4 | exempt from the escrow provisions of this Act. "Independent | ||||||
5 | Escrowee" does not include employees or independent | ||||||
6 | contractors of a title insurance company or title insurance | ||||||
7 | agent authorized by a title insurance company to perform | ||||||
8 | closing, escrow, or settlement services.
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9 | (10) "Single risk" means the insured amount of any title | ||||||
10 | insurance
policy, except that where 2 or more title insurance | ||||||
11 | policies are issued
simultaneously covering different estates | ||||||
12 | in the same real property, "single
risk" means the sum of the | ||||||
13 | insured amounts of all such title insurance
policies. Any title | ||||||
14 | insurance policy insuring a mortgage interest, a claim
payment | ||||||
15 | under which reduces the insured amount of a fee or leasehold | ||||||
16 | title
insurance policy, shall be excluded in computing the | ||||||
17 | amount of a single
risk to the extent that the insured amount | ||||||
18 | of the mortgage title insurance
policy does not exceed the | ||||||
19 | insured amount of the fee or leasehold title
insurance policy.
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20 | (11) "Department" means the Department of Financial and | ||||||
21 | Professional Regulation.
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22 | (12) "Secretary" means the Secretary
of Financial and | ||||||
23 | Professional Regulation.
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24 | (13) "Insured closing letter" or "closing protection | ||||||
25 | letter" means
an indemnification or undertaking to a party to a | ||||||
26 | real estate transaction, from
a principal such as a title |
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1 | insurance company or similar entity, setting forth
in writing | ||||||
2 | the extent of the principal's responsibility for intentional
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3 | misconduct or errors in closing the real estate transaction on | ||||||
4 | the part of a
settlement agent, such as a title insurance agent | ||||||
5 | or other settlement service
provider.
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6 | (14) "Residential real property" means a building or | ||||||
7 | buildings consisting of one to 4 residential units or a | ||||||
8 | residential condominium unit where at least one of the | ||||||
9 | residential units or condominium units is occupied or intended | ||||||
10 | to be occupied as a residence by the purchaser or borrower, or | ||||||
11 | in the event that the purchaser or borrower is the trustee of a | ||||||
12 | trust, by a beneficiary of that trust.
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13 | (Source: P.A. 94-893, eff. 6-20-06.)
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14 | (215 ILCS 155/18.1 new) | ||||||
15 | Sec. 18.1. Choice of title insurance company. It is | ||||||
16 | declared to be the public policy of this State that a party to | ||||||
17 | a contract for the sale of residential real property who is | ||||||
18 | obligated by the contract to pay for title insurance has the | ||||||
19 | right to choose the title insurance company and title insurance | ||||||
20 | agent that will provide the title insurance. No lender or | ||||||
21 | producer of title business shall, as a condition of making a | ||||||
22 | loan, providing services of any kind, including, but not | ||||||
23 | limited to, services as a broker, agent, lender, attorney, or | ||||||
24 | otherwise, require a party to a contract for the sale of | ||||||
25 | residential real property who is obligated by that contract to |
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1 | furnish and pay for title insurance at their expense, to | ||||||
2 | procure title insurance from a title insurance company or title | ||||||
3 | insurance agent other than a title insurance company or title | ||||||
4 | insurance agent that is chosen by the party paying for the | ||||||
5 | title insurance.
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6 | Section 99. Effective date. This Act takes effect upon | ||||||
7 | becoming law.
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