Illinois General Assembly - Full Text of HB2449
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Full Text of HB2449  103rd General Assembly

HB2449 103RD GENERAL ASSEMBLY

  
  

 


 
103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB2449

 

Introduced 2/15/2023, by Rep. Ann M. Williams

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 155/3  from Ch. 73, par. 1403
215 ILCS 155/15.2 new
215 ILCS 155/16  from Ch. 73, par. 1416
215 ILCS 155/16.2 new
215 ILCS 155/17.2 new

    Amends the Title Insurance Act. Provides that the amendatory Act may be referred to as the Title Insurance Reform Act of 2023. Provides that no person, firm, partnership, association, corporation or other legal entity shall act as or hold itself out to be a title insurance agent without first procuring a certificate of authority from the Secretary of Financial and Professional Regulation (rather than unless duly registered by a title insurance company with the Secretary). Provides that a certificate of authority shall remain in effect unless revoked or suspended by the Secretary or voluntarily withdrawn by the holder, or when the holder of the certificate of authority is no longer authorized as a title insurance agent of a title insurance company. Provides that every applicant that is not duly registered as a title insurance agent on the effective date of the amendatory Act shall comply with specified requirements. Provides that the Secretary shall maintain a database of title insurance agents in good standing on a publicly accessible website that any person may use to verify the authority of a particular title insurance agent. Sets forth duties applicable to transactions involving residential real property for title insurance companies, title insurance agents, and independent escrowees. Effective immediately.


LRB103 25293 BMS 51638 b

 

 

A BILL FOR

 

HB2449LRB103 25293 BMS 51638 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. This Act may be referred to as the Title
5Insurance Reform Act of 2023.
 
6    Section 5. The Title Insurance Act is amended by changing
7Sections 3 and 16 and by adding Sections 15.2, 16.2, and 17.2
8as follows:
 
9    (215 ILCS 155/3)  (from Ch. 73, par. 1403)
10    Sec. 3. As used in this Act, the words and phrases
11following shall have the following meanings unless the context
12requires otherwise:
13    (1) "Title insurance business" or "business of title
14insurance" means:
15        (A) Issuing as insurer or offering to issue as insurer
16    title insurance; and
17        (B) Transacting or proposing to transact one or more
18    of the following activities when conducted or performed in
19    contemplation of or in conjunction with the issuance of
20    title insurance;
21            (i) soliciting or negotiating the issuance of
22        title insurance;

 

 

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1            (ii) guaranteeing, warranting, or otherwise
2        insuring the correctness of title searches for all
3        instruments affecting titles to real property, any
4        interest in real property, cooperative units and
5        proprietary leases, and for all liens or charges
6        affecting the same;
7            (iii) handling of escrows, settlements, or
8        closings;
9            (iv) executing title insurance policies;
10            (v) effecting contracts of reinsurance;
11            (vi) abstracting, searching, or examining titles;
12        or
13            (vii) issuing insured closing letters or closing
14        protection letters;
15        (C) Guaranteeing, warranting, or insuring searches or
16    examinations of title to real property or any interest in
17    real property, with the exception of preparing an
18    attorney's opinion of title; or
19        (D) Guaranteeing or warranting the status of title as
20    to ownership of or liens on real property and personal
21    property by any person other than the principals to the
22    transaction; or
23        (E) Doing or proposing to do any business
24    substantially equivalent to any of the activities listed
25    in this subsection, provided that the preparation of an
26    attorney's opinion of title pursuant to paragraph (1)(C)

 

 

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1    is not intended to be within the definition of "title
2    insurance business" or "business of title insurance".
3    (1.5) "Title insurance" means insuring, guaranteeing,
4warranting, or indemnifying owners of real or personal
5property or the holders of liens or encumbrances thereon or
6others interested therein against loss or damage suffered by
7reason of liens, encumbrances upon, defects in, or the
8unmarketability of the title to the property; the invalidity
9or unenforceability of any liens or encumbrances thereon; or
10doing any business in substance equivalent to any of the
11foregoing. "Warranting" for purpose of this provision shall
12not include any warranty contained in instruments of
13encumbrance or conveyance. Title insurance is a single line
14form of insurance, also known as monoline. An attorney's
15opinion of title pursuant to paragraph (1)(C) is not intended
16to be within the definition of "title insurance".
17    (2) "Title insurance company" means any domestic company
18organized under the laws of this State for the purpose of
19conducting the business of title insurance and any title
20insurance company organized under the laws of another State,
21the District of Columbia or foreign government and authorized
22to transact the business of title insurance in this State.
23    (3) "Title insurance agent" means a person, firm,
24partnership, association, corporation or other legal entity
25that is the holder of a certificate of authority provided
26pursuant to Section 16 and that is authorized registered by a

 

 

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1title insurance company to solicit title insurance, collect
2title insurance premiums and endorsement charges, perform core
3title services, and, if authorized by a title insurance
4company, and authorized by such company to determine
5insurability of title in accordance with generally acceptable
6underwriting rules and standards in reliance on either the
7public records or a search package prepared from a title
8plant, or both, and authorized by such title insurance company
9in addition to do any of the following: act as an escrow agent
10pursuant to Sections subsections (f), (g), and (h) of Section
1116, 16.1, and 16.2 of this Act, solicit title insurance,
12collect premiums, or issue title insurance commitments,
13policies, and endorsements of the title insurance company;
14provided, however, the term "title insurance agent" shall not
15include officers and salaried employees of any title insurance
16company.
17    (4) "Producer of title business" is any person, firm,
18partnership, association, corporation or other legal entity
19engaged in this State in the trade, business, occupation or
20profession of (i) buying or selling interests in real
21property, (ii) making loans secured by interests in real
22property, or (iii) acting as broker, agent, attorney, or
23representative of natural persons or other legal entities that
24buy or sell interests in real property or that lend money with
25such interests as security.
26    (5) "Associate" is any firm, association, partnership,

 

 

HB2449- 5 -LRB103 25293 BMS 51638 b

1corporation or other legal entity organized for profit in
2which a producer of title business is a director, officer, or
3partner thereof, or owner of a financial interest, as defined
4herein, in such entity; any legal entity that controls, is
5controlled by, or is under common control with a producer of
6title business; and any natural person or legal entity with
7whom a producer of title business has any agreement,
8arrangement, or understanding or pursues any course of conduct
9the purpose of which is to evade the provisions of this Act.
10    (6) "Financial interest" is any ownership interest, legal
11or beneficial, except ownership of publicly traded stock.
12    (7) "Refer" means to place or cause to be placed, or to
13exercise any power or influence over the placing of title
14business, whether or not the consent or approval of any other
15person is sought or obtained with respect to the referral.
16    (8) "Escrow Agent" means any title insurance company or
17any title insurance agent, including independent contractors
18of either, acting on behalf of a title insurance company,
19which receives deposits, in trust, of funds or documents, or
20both, for the purpose of effecting the sale, transfer,
21encumbrance or lease of real property to be held by such escrow
22agent until title to the real property that is the subject of
23the escrow is in a prescribed condition. An escrow agent
24conducting closings shall be subject to the provisions of
25Sections paragraphs (1) through (4) of subsection (e) of
26Section 16, 16.1, and 16.2 of this Act.

 

 

HB2449- 6 -LRB103 25293 BMS 51638 b

1    (9) "Independent Escrowee" means any firm, person,
2partnership, association, corporation or other legal entity,
3other than a title insurance company or a title insurance
4agent, which receives deposits, in trust, of funds or
5documents, or both, for the purpose of effecting the sale,
6transfer, encumbrance or lease of real property to be held by
7such escrowee until title to the real property that is the
8subject of the escrow is in a prescribed condition. Federal
9and State chartered banks, savings and loan associations,
10credit unions, mortgage bankers, banks or trust companies
11authorized to do business under the Illinois Corporate
12Fiduciary Act, licensees under the Consumer Installment Loan
13Act, real estate brokers licensed pursuant to the Real Estate
14License Act of 2000, as such Acts are now or hereafter amended,
15and licensed attorneys when engaged in the attorney-client
16relationship are exempt from the escrow provisions of this
17Act. "Independent Escrowee" does not include employees or
18independent contractors of a title insurance company or title
19insurance agent authorized by a title insurance company to
20perform closing, escrow, or settlement services.
21    (10) "Single risk" means the insured amount of any title
22insurance policy, except that where 2 or more title insurance
23policies are issued simultaneously covering different estates
24in the same real property, "single risk" means the sum of the
25insured amounts of all such title insurance policies. Any
26title insurance policy insuring a mortgage interest, a claim

 

 

HB2449- 7 -LRB103 25293 BMS 51638 b

1payment under which reduces the insured amount of a fee or
2leasehold title insurance policy, shall be excluded in
3computing the amount of a single risk to the extent that the
4insured amount of the mortgage title insurance policy does not
5exceed the insured amount of the fee or leasehold title
6insurance policy.
7    (11) "Department" means the Department of Financial and
8Professional Regulation.
9    (12) "Secretary" means the Secretary of Financial and
10Professional Regulation.
11    (13) "Insured closing letter" or "closing protection
12letter" means an indemnification or undertaking to a party to
13a real property transaction, from a principal such as a title
14insurance company, setting forth in writing the extent of the
15principal's responsibility for intentional misconduct or
16errors in closing the real property transaction on the part of
17a settlement agent, such as a title insurance agent or other
18settlement service provider, or an indemnification or
19undertaking given by a title insurance company or an
20independent escrowee setting forth in writing the extent of
21the title insurance company's or independent escrowee's
22responsibility to a party to a real property transaction which
23indemnifies the party against the intentional misconduct or
24errors in closing the real property transaction on the part of
25the title insurance company or independent escrowee and
26includes protection afforded pursuant to subsections (p), (q),

 

 

HB2449- 8 -LRB103 25293 BMS 51638 b

1and (r) (f), (g), and (h) of Section 16, Section 16.1,
2subsection (h) of Section 17, and Section 17.1 of this Act even
3if such protection is afforded by contract.
4    (14) "Residential real property" means a building or
5buildings consisting of one to 4 residential units or a
6residential condominium unit where at least one of the
7residential units or condominium units is occupied or intended
8to be occupied as a residence by the purchaser or borrower, or
9in the event that the purchaser or borrower is the trustee of a
10trust, by a beneficiary of that trust.
11    (15) "Financial institution" means any bank subject to the
12Illinois Banking Act, any savings and loan association subject
13to the Illinois Savings and Loan Act of 1985, any savings bank
14subject to the Savings Bank Act, any credit union subject to
15the Illinois Credit Union Act, and any federally chartered
16commercial bank, savings and loan association, savings bank,
17or credit union organized and operated in this State pursuant
18to the laws of the United States.
19    (16) "Core title services" means:
20        (A) review and evaluation of title, tax, judgment,
21    lien, and other searches or search products, private title
22    plant records, records of grantor-grantee and other
23    indices, public records and other records, and any other
24    information and materials which are relevant to a
25    particular property and transaction to determine
26    insurability of title to the property;

 

 

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1        (B) issuance of title commitments on behalf of a title
2    insurance company, including the determination of the
3    conditions under which the title insurance company will
4    issue the required title insurance policies;
5        (C) determination of, in accordance with applicable
6    law and the title insurance company's underwriting
7    requirements, principles, or guidelines, whether or not
8    underwriting objections stated on the title insurance
9    commitments may be cleared and the circumstances under
10    which the objections will be waived or insured before
11    issuance of the title insurance policies; and
12        (D) issuance of required title insurance policies when
13    all conditions for the issuance have been satisfied.
14    (17) "Title search" means any abstract of title, tract,
15tax, judgment, or lien searches, limited purpose searches, and
16any other searches and search products, private title plant
17records, records of grantor-grantee and other indices, public
18records and other records, property inspections, records
19related to the status of title to land, and any other
20information, materials, and transactions that are relevant to
21a particular residential real property.
22(Source: P.A. 100-485, eff. 9-8-17.)
 
23    (215 ILCS 155/15.2 new)
24    Sec. 15.2. Title insurance company duties.
25    (a) This Section applies only to transactions involving

 

 

HB2449- 10 -LRB103 25293 BMS 51638 b

1residential real property.
2    (b) In the conduct of its title insurance business, every
3title insurance company shall:
4        (1) Post and publish its current rates and charges
5    associated with its title insurance business with a clear
6    and complete description thereof; including, without
7    limitation, title insurance premiums, endorsements to
8    policies, fees for services as an escrow agent, and all
9    other services and products it provides; conspicuously in
10    its offices and on its websites, social media, and
11    digital, electronic, online, and any other platforms and
12    places that are intended to be visited or viewed by the
13    public. Title insurance companies must also provide their
14    registered title insurance agents with the posted and
15    published rates and charges. A title insurance company
16    must not make a charge which exceeds its published rates
17    and charges. This subsection (b) does not apply to special
18    risk title insurance and endorsement premiums, general
19    advertising, and marketing in media not controlled by the
20    title insurance company, but any such advertising shall
21    contain information, such as an Internet web address or a
22    hyperlink, to a website where the published rates and
23    charges can be viewed by the public.
24        (2) Require all of its title insurance agents to
25    perform, at a minimum in each transaction, all core title
26    services as a condition to that title insurance agent's

 

 

HB2449- 11 -LRB103 25293 BMS 51638 b

1    compensation as set forth in the agency contract, and may
2    not interfere with, assume in whole or in part, or prevent
3    the title insurance agent's performance of any core title
4    service.
5        (3) Agree upon the terms of the agency in writing with
6    its title insurance agents; the terms shall include that
7    the title insurance agent must perform, at a minimum, all
8    core title services as a condition of the title insurance
9    agent's compensation for each title insurance product and
10    endorsement issued and the compensation that the title
11    insurance agent shall receive for the performance of such
12    core title services. Compensation to the title insurance
13    agent for the performance of core title services shall be
14    as stated in the written agency contract.
15        (4) Share title insurance premiums and endorsement
16    charges only with its title insurance agent performing the
17    core title services in a transaction.
18        (5) Agree in writing with any title insurance agent to
19    which the title insurance company provides products or
20    services that are not core title services but are related
21    to the title insurance agent's performance of core title
22    services and are included in the cost of the title
23    insurance premiums and endorsements, such as, if
24    applicable, title searches, underwriting research
25    assistance, quality control, document recording, retention
26    of title documentation, commitment and policy typing, or

 

 

HB2449- 12 -LRB103 25293 BMS 51638 b

1    other products and services to the title insurance agent;
2    the written agreement must set forth, at a minimum, a
3    description of the products and services to be provided
4    and the compensation to be paid for such products and
5    services; such compensation must be commensurate with the
6    actual value of the products and services.
7        (6) Retain any remedy or right of action against its
8    title insurance agent as provided in any law, rule, or
9    regulation for the title insurance agent's failure to
10    perform its obligations under the written agency contract,
11    underwriting requirements, or otherwise as provided by
12    law.
13    (c) In any residential real property transaction in which
14a title insurance company acts as an escrow agent pursuant to
15any provision in this Act:
16        (1) A title insurance company's current rates and
17    charges for its products and services rendered as an
18    escrow agent must be included in the posting and
19    publication provided for in subsection (b).
20        (2) A title insurance company shall disburse all title
21    insurance premiums and endorsement charges as directed by
22    the title insurance agent performing core title services
23    under Section 16.2 at the time of settlement or closing.
24    The disbursements shall be in accordance with the written
25    agency or other contracts between the title insurance
26    agent and the title insurance company acting as the escrow

 

 

HB2449- 13 -LRB103 25293 BMS 51638 b

1    agent in the transaction and the distributions shall be
2    clearly and unambiguously disclosed on any applicable
3    closing disclosure or settlement statement and delivered
4    to the parties to the transaction at the time of closing or
5    settlement.
6        (3) A title insurance company shall not share or allow
7    to be shared, either directly or indirectly, any of its
8    compensation for its service as an escrow agent or other
9    products or services with any title insurance agent except
10    as provided in this Section. Any payment which is contrary
11    to this paragraph (3) is a prohibited inducement or
12    compensation for a referral in violation of Section 24.
13    (d) Nothing in this Section shall be construed to restrict
14or impair a title insurance company's right or ability to
15determine and promulgate its underwriting requirements,
16principles, and conditions for insuring any risk that would be
17covered in a policy of insurance or an endorsement to a policy,
18or to educate, instruct, or inform its title insurance agents
19as to its underwriting requirements generally or in a
20particular transaction or otherwise. Nothing in this Section
21shall be construed to restrict or impair a title insurance
22company's right or ability to determine and charge special
23risk title insurance and endorsement premiums that are
24different from the posted or published rates and premiums, or
25to waive or vary from its title insurance underwriting
26requirements, principles, and conditions for insuring any risk

 

 

HB2449- 14 -LRB103 25293 BMS 51638 b

1that would be covered in a policy of insurance or an
2endorsement to a policy in any given case as it, in its sole
3discretion, may decide.
 
4    (215 ILCS 155/16)  (from Ch. 73, par. 1416)
5    Sec. 16. Title insurance agents.
6    (a) No person, firm, partnership, association, corporation
7or other legal entity shall act as or hold itself out to be a
8title insurance agent without first procuring a certificate of
9authority from the Secretary. A certificate of authority shall
10remain in effect unless revoked or suspended by the Secretary,
11voluntarily withdrawn by the holder, or the holder of the
12certificate of authority is no longer authorized as a title
13insurance agent of a title insurance company unless duly
14registered by a title insurance company with the Secretary.
15    (b) Each application for a certificate of authority
16registration shall be made on a form specified by the
17Secretary and prepared by each title insurance company which
18the agent represents. The title insurance company shall retain
19the copy of the application and forward a copy to the
20Secretary.
21    (c) Every applicant for a certificate of authority
22registration, except a firm, partnership, association, limited
23liability company, or corporation, must be 18 years or more of
24age. Included in every application for a certificate of
25authority registration of a title insurance agent, including a

 

 

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1firm, partnership, association, limited liability company, or
2corporation, shall be an affidavit of the applicant title
3insurance agent, signed and notarized in front of a notary
4public, affirming that the applicant and every owner, officer,
5director, principal, member, or manager of the applicant has
6never been convicted or pled guilty to any felony or
7misdemeanor involving a crime of theft or dishonesty or
8otherwise accurately disclosing any such felony or misdemeanor
9involving a crime of theft or dishonesty. No person who has had
10a conviction or pled guilty to any felony or misdemeanor
11involving theft or dishonesty may qualify for a certificate of
12authority be registered by a title insurance company without a
13written notification to the Secretary disclosing the
14conviction or plea, and no such person may serve as an owner,
15officer, director, principal, or manager of any registered
16title insurance agent without the written permission of the
17Secretary.
18    (d) Every applicant that is not duly registered as a title
19insurance agent on the effective date of this amendatory Act
20of the 103rd General Assembly shall: Registration shall be
21made annually by a filing with the Secretary; supplemental
22registrations for new title insurance agents to be added
23between annual filings shall be made from time to time in the
24manner provided by the Secretary; registrations shall remain
25in effect unless revoked or suspended by the Secretary or
26voluntarily withdrawn by the registrant or the title insurance

 

 

HB2449- 16 -LRB103 25293 BMS 51638 b

1company.
2        (1) Successfully complete a 4-year course of study in
3    a high school or secondary school approved by the state in
4    which the school is located, or possess a State of
5    Illinois High School Diploma, which shall be verified
6    under oath by the applicant.
7        (2) Pass an examination that is designed to determine
8    the competency of the applicant to conduct the business of
9    a title agent and knowledge of basic real property law and
10    title insurance procedures. The applicant shall file with
11    its application satisfactory proof that the applicant has
12    passed the competency examination. The Department shall
13    have the authority to adopt administrative rules to
14    approve testing providers, establish the testing
15    procedures, including, but not limited to, the
16    requirements for passing the examination, and the content
17    of the examination that shall, at a minimum, determine the
18    competency of an applicant in the following subject
19    matters and any other subject matter which the Secretary
20    may determine to be basic and essential to the competent
21    conduct of the business of a title insurance agent, which
22    must include, at a minimum:
23            (i) the Title Insurance Act and its requirements;
24            (ii) Illinois real property law, including, but
25        not limited to, forms of ownership, conveyancing,
26        transfers on death, taxes, judgments, liens, surveys;

 

 

HB2449- 17 -LRB103 25293 BMS 51638 b

1            (iii) basic knowledge of the federal Real Estate
2        Settlement Procedures Act;
3            (iv) core title services; and
4            (v) title examinations and methods, title
5        objections, policy and endorsement forms, waivers of
6        policy exceptions, and escrow procedures.
7    (e) The requirements of subsection (d) do not apply to
8applicants who are admitted to practice law by the Supreme
9Court of Illinois and who are in active standing.
10    (f) The Secretary shall issue a certificate of authority
11to conduct business as a title insurance agent upon
12determination that an applicant has passed the required
13examination and is otherwise in compliance with this Act and
14all applicable laws.
15    (g) Any title insurance agent who is registered on the
16effective date of this amendatory Act of the 103rd General
17Assembly may continue to conduct the business of title
18insurance as a title insurance agent for a period of 90 days
19after the effective date of this amendatory Act of the 103rd
20General Assembly and shall be issued a certificate of
21authority upon the filing by a title insurance company with
22the Secretary a written agency agreement that complies with
23this Act within 90 days after the effective date of this
24amendatory Act of the 103rd General Assembly.
25    (h) A title insurance company shall annually file with the
26Secretary a list of all title insurance agents authorized to

 

 

HB2449- 18 -LRB103 25293 BMS 51638 b

1conduct the business of title insurance as an agent of the
2title insurance company. Supplemental filings for new title
3insurance agents to be added between annual filings shall be
4made from time to time in the manner provided by the Secretary.
5A title insurance company shall immediately notify the
6Secretary of any title insurance agent whose agency has been
7terminated, and shall immediately file with the Secretary any
8new title insurance agency agreement that replaces an
9agreement already on file or which has been revised or amended
10in any way.
11    (i) The Secretary shall maintain a database of title
12insurance agents in good standing on a publicly accessible
13website that any person may use to verify the authority of a
14particular title insurance agent.
15    (j) (e) Funds deposited in connection with any escrows,
16settlements, or closings shall be deposited in a separate
17fiduciary trust account or accounts in a bank or other
18financial institution insured by an agency of the federal
19government unless the instructions provide otherwise. The
20funds shall be the property of the person or persons entitled
21thereto under the provisions of the escrow, settlement, or
22closing and shall be segregated by escrow, settlement, or
23closing in the records of the escrow agent. The funds shall not
24be subject to any debts of the escrowee and shall be used only
25in accordance with the terms of the individual escrow,
26settlement, or closing under which the funds were accepted.

 

 

HB2449- 19 -LRB103 25293 BMS 51638 b

1    Interest received on funds deposited with the escrow agent
2in connection with any escrow, settlement, or closing shall be
3paid to the depositing party unless the instructions provide
4otherwise.
5    The escrow agent shall maintain separate records of all
6receipts and disbursements of escrow, settlement, or closing
7funds.
8    The escrow agent shall comply with any rules adopted by
9the Secretary pertaining to escrow, settlement, or closing
10transactions.
11    (k) A title insurance agent shall not act as an escrow
12agent in a residential real property transaction unless the
13title insurance agent files with the Secretary and the
14Secretary approves cash or bonds of the United States, this
15State, or any body politic of this State in the amounts
16specified in subsection (l). The deposit is not to be
17otherwise pledged or subject to distribution among creditors
18or stockholders until all claims of escrow depositors have
19been paid in full or discharged, reinsured, or otherwise
20assumed by a title insurance company authorized to do business
21under this Act. The cash, bonds, and securities so deposited
22may be exchanged for other such securities. No such cash,
23bond, or security shall be sold or transferred by the
24Secretary except on order of the circuit court or as provided
25in subsection (o). The company shall be permitted to receive
26from the Secretary the interest on the deposit as long as the

 

 

HB2449- 20 -LRB103 25293 BMS 51638 b

1company depositing such securities remains solvent.
2    (l) The deposit required under subsection (k) must have a
3then current value of $500,000. All deposits shall be held for
4the benefit of any named party to a written escrow it accepted.
5The deposit is not to be otherwise pledged or subject to
6distribution among creditors or stockholders.
7    (m) The Secretary may provide for custody of the deposits
8by any trust company or bank located in this State and
9qualified to do business under the Corporate Fiduciary Act.
10The compensation, if any, of such custodian shall be paid by
11the depositing company. When the required deposits have been
12made by a title insurance agent that intends to act as an
13escrow agent in any residential real property transaction, the
14Secretary shall certify that the title insurance agent has
15complied with the provisions of this Section and is authorized
16to transact the business of a title insurance agent acting as
17an escrow agent in residential real property transactions.
18    (n) Before doing business in the State of Illinois in a
19residential real property transaction, an escrow agent must
20file with and have approved by the Secretary proof of a
21fidelity bond in the minimum amount of $1,000,000 per
22occurrence, errors and omissions insurance in the minimum
23amount of $1,000,000 per occurrence, and cybercrime insurance
24coverage in the minimum amount of $500,000 per occurrence. The
25insurance policies required shall be issued by insurers that
26are authorized to conduct such insurance business in the State

 

 

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1of Illinois. The title insurance agent may not conduct title
2insurance business as an escrow agent unless the deposit,
3fidelity bond, errors and omissions insurance, and cybercrime
4insurance coverage required by this Section are continuously
5maintained.
6    (o) The Secretary may revoke the certificate of authority
7of a title insurance agent acting as an escrow agent that fails
8to maintain the deposit, fidelity bond, errors and omissions
9insurance, or cybercrime insurance coverage required by this
10Section. The Secretary shall give notice of that revocation to
11such title insurance agent as provided by this Act, and during
12the time of the revocation the title insurance agent may not
13conduct any title insurance business as an escrow agent. A
14revocation shall not be set aside until the title insurance
15agent has filed with and has been approved by the Secretary in
16accordance with the requirements of this Section and the title
17insurance agent is otherwise in compliance with this Act.
18    (p) (f) A title insurance agent shall not act as an escrow
19agent in a nonresidential real property transaction where the
20amount of settlement funds on deposit with the escrow agent is
21less than $2,000,000 or in a residential real property
22transaction unless the title insurance agent, title insurance
23company, or another authorized title insurance agent has
24committed for the issuance of title insurance in that
25transaction and the title insurance agent is authorized to act
26as an escrow agent on behalf of the title insurance company for

 

 

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1which the commitment for title insurance has been issued. The
2authorization under the preceding sentence shall be given
3either (1) by an agency contract with the title insurance
4company which contract, in compliance with the requirements
5set forth in subsection (q) (g) of this Section, authorizes
6the title insurance agent to act as an escrow agent on behalf
7of the title insurance company or (2) by a closing protection
8letter in compliance with the requirements set forth in
9Section 16.1 of this Act, issued by the title insurance
10company to the seller, buyer, borrower, and lender. A closing
11protection letter shall not be issued by a title insurance
12agent. The provisions of this subsection (f) shall not apply
13to the authority of a title insurance agent to act as an escrow
14agent under subsection (g) of Section 17 of this Act.
15    (q) (g) If an agency contract between the title insurance
16company and the title insurance agent is the source of the
17authority under subsection (p) (f) of this Section for a title
18insurance agent to act as escrow agent for a real property
19transaction, then the agency contract shall provide for no
20less protection from the title insurance company to all
21parties to the real property transaction than the title
22insurance company would have provided to those parties had the
23title insurance company issued a closing protection letter in
24conformity with Section 16.1 of this Act.
25    (r) (h) A title insurance company shall be liable for the
26acts or omissions of its title insurance agent as an escrow

 

 

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1agent if the title insurance company has authorized the title
2insurance agent under subsections (p) through (q) (f) and (g)
3of this Section 16 and only to the extent of the liability
4undertaken by the title insurance company in the agency
5agreement or closing protection letter. The liability, if any,
6of the title insurance agent to the title insurance company
7for acts and omissions of the title insurance agent as an
8escrow agent shall not be limited or otherwise modified
9because the title insurance company has provided closing
10protection to a party or parties to a real property
11transaction escrow, settlement, or closing. The escrow agent
12shall not charge a fee for protection provided by a title
13insurance company to parties to real property transactions
14under subsections (p) through (q) (f) and (g) of this Section
1516 and Section 16.1, but shall collect from the parties the fee
16charged by the title insurance company and shall promptly
17remit the fee to the title insurance company. The title
18insurance company may charge the parties a reasonable fee for
19protection provided pursuant to subsections (p) through (q)
20(f) and (g) of this Section 16 and Section 16.1 and shall not
21pay any portion of the fee to the escrow agent. The payment of
22any portion of the fee to the escrow agent by the title
23insurance company, shall be deemed a prohibited inducement or
24compensation in violation of Section 24 of this Act.
25    (s) (i) The Secretary shall adopt and amend such rules as
26may be required for the proper administration and enforcement

 

 

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1of this Section 16 consistent with the federal Real Estate
2Settlement Procedures Act and Section 24 of this Act.
3(Source: P.A. 98-398, eff. 1-1-14; 98-832, eff. 1-1-15;
499-104, eff. 1-1-16.)
 
5    (215 ILCS 155/16.2 new)
6    Sec. 16.2. Title insurance agent duties.
7    (a) This Section shall apply only to transactions
8involving residential real property.
9    (b) In the conduct of its title insurance business, every
10title insurance agent shall:
11        (1) Post and publish the current rates and charges of
12    each of its title insurance company principals, as
13    provided by the title insurance company, conspicuously in
14    its offices and on its websites, social media, and
15    digital, electronic, online, and any other platforms and
16    places that are intended to be visited or viewed by the
17    public. A title insurance agent shall not make a charge
18    that exceeds the published rates and charges. This
19    subsection (b) does not apply to special risk title
20    insurance and endorsements premiums, general advertising,
21    and marketing in media not controlled by the title
22    insurance agent, but any such advertising shall contain
23    information, such as an Internet web address or a
24    hyperlink, to a website where such published rates and
25    charges can be viewed by the public.

 

 

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1        (2) Agree upon the terms of the agency in writing with
2    each title insurance company for which it is a registered
3    agent; the terms shall include that the title insurance
4    agent must perform, at a minimum, all core title services
5    as a condition of the title insurance agent's compensation
6    for each title insurance product and endorsement issued,
7    and the compensation that the title insurance agent shall
8    receive for the performance of such core title services.
9    Compensation received by the title insurance agent for the
10    performance of core title services shall not exceed that
11    which is stated in the written agency contract.
12        (3) Enter into an agreement in writing with any escrow
13    agent or title insurance agent that provides products or
14    services that are not core title services but that are
15    related to the title insurance agent's performance of core
16    title services and are included in the title insurance and
17    endorsements premiums, such as, if applicable, title
18    searches, underwriting research assistance, quality
19    control, document recording, retention of title
20    documentation, commitment and policy typing, or other
21    products and services to the title insurance agent; the
22    agreement shall set forth, at a minimum, a description of
23    the product and services to be provided and the
24    compensation to be paid for such products and services;
25    such compensation shall be commensurate with the actual
26    value of such products and services.

 

 

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1        (4) Perform, at a minimum, all core title services;
2    core title services shall not be duplicative of any
3    professional or other service rendered in a transaction as
4    a condition of its compensation as set forth in the agency
5    agreement.
6        (5) Direct the escrow agent or independent escrowee as
7    to the disbursement at the time of settlement or closing
8    of title insurance premiums and endorsement charges to the
9    title insurance company in accordance with its agency
10    contract and to the escrow agent in accordance with its
11    written agreement. All such disbursements shall be clearly
12    and unambiguously disclosed on any applicable closing
13    disclosure and settlement statement and delivered to the
14    parties to the transaction at the time of closing or
15    settlement.
16        (6) Not share or allow to be shared, either directly
17    or indirectly, any of its compensation for any products or
18    services charged directly to a party in the transaction
19    with any other title insurance agent except as provided in
20    this Section. Any payment which is contrary to this
21    paragraph (6) is a prohibited inducement or compensation
22    for a referral in violation of Section 24.
23    (c) In any transaction in which a title insurance agent
24acts as an escrow agent pursuant to Sections 16, 16.1, and 16.2
25of this Act or any other provision in this Act:
26        (1) The title insurance agent's current rates and

 

 

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1    charges for its products and services rendered as an
2    escrow agent shall be included in the posting and
3    publication provided for in subsection (b). An escrow
4    agent shall not make any charge that exceeds its published
5    rates and charges.
6        (2) The escrow agent shall disburse all title
7    insurance premiums and endorsement charges as directed by
8    the title insurance agent performing core title services
9    at the time of settlement or closing of the transaction.
10    The disbursement shall include payment for any products or
11    services that are not core title services but that are
12    related to the title insurance agent's performance of core
13    title services and are included in the cost of the title
14    insurance premiums and endorsements, such as, if
15    applicable, title searches, underwriting research
16    assistance, quality control, document recording, retention
17    of title documentation, commitment and policy typing, or
18    other products and services to the title insurance agent
19    that were supplied to the title insurance agent by an
20    escrow agent or other title insurance agent. The
21    disbursements shall be in accordance with the written
22    agency or other agreement between the title insurance
23    agent and escrow agent or other title insurance agent in
24    the transaction and the distributions shall be clearly and
25    unambiguously disclosed on any applicable closing
26    disclosure or settlement statement and delivered to the

 

 

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1    parties to the transaction at the time of closing or
2    settlement.
3        (3) The escrow agent shall not share or allow to be
4    shared, either directly or indirectly, any of its
5    compensation for its service as an escrow agent or other
6    products or services charged directly to a party in the
7    transaction with any other title insurance agent except as
8    provided in this Section. Any payment that is contrary to
9    this paragraph (3) is a prohibited inducement or
10    compensation for a referral in violation of Section 24.
 
11    (215 ILCS 155/17.2 new)
12    Sec. 17.2. Independent escrowee duties.
13    (a) This Section shall apply only to transactions
14involving residential real property.
15    (b) In the conduct of its escrow, settlement, or closing
16business, and its operation as an escrow, settlement, or
17closing agent as provided in Section 17, every independent
18escrowee shall:
19        (1) Post and publish the current rates and charges
20    associated with its performance of the services and
21    obligations as an independent escrowee and all other
22    services and products it provides with a clear and
23    complete description thereof conspicuously in its offices
24    and on its websites, social media, and digital,
25    electronic, online, and any other platforms and places

 

 

HB2449- 29 -LRB103 25293 BMS 51638 b

1    that are intended to be visited or viewed by the public. An
2    independent escrowee shall not make a charge that exceeds
3    the published rates and charges. This paragraph (1) shall
4    not apply to general advertising and marketing in media
5    not controlled by the independent escrowee, but any such
6    advertising shall contain information, such as an Internet
7    web address or a hyperlink, to a website where such
8    published rates and charges can be viewed by the public.
9        (2) Disburse all title insurance premiums and
10    endorsement charges as directed by the title insurance
11    agent performing core title services under subsection (c)
12    of Section 16.2 at the time of settlement or closing. All
13    such disbursements shall be clearly and unambiguously
14    disclosed on any applicable closing disclosure or
15    settlement statement and delivered to the parties to the
16    transaction at the time of closing or settlement.
17    (c) An independent escrowee shall not share or allow to be
18shared any of its compensation for its escrow and settlement
19services with any title insurance company or title insurance
20agent except as provided in this Section. Any payment that is
21contrary to this subsection (c) is a prohibited inducement or
22compensation for a referral in violation of Section 24.
 
23    Section 99. Effective date. This Act takes effect upon
24becoming law.