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: |
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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 | |
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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that a certificate of authority shall remain in effect unless revoked or suspended by the Secretary or voluntarily withdrawn by the holder, or when the holder of the certificate of authority is no longer authorized as a title insurance agent of a title insurance company.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.
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| | A BILL FOR |
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| 1 | | AN ACT concerning regulation.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 1. This Act may be referred to as the Title | 5 | | Insurance Reform Act of 2023. | 6 | | Section 5. The Title Insurance Act is amended by changing | 7 | | Sections 3 and 16 and by adding Sections 15.2, 16.2, and 17.2 | 8 | | as follows:
| 9 | | (215 ILCS 155/3) (from Ch. 73, par. 1403)
| 10 | | Sec. 3. As used in this Act, the words and phrases | 11 | | following shall
have the following meanings unless the context | 12 | | requires otherwise:
| 13 | | (1) "Title insurance business" or "business of title | 14 | | insurance" 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, | 4 | | warranting, or
indemnifying owners of real or personal | 5 | | property or the holders of liens or
encumbrances thereon or | 6 | | others interested therein against loss or damage
suffered by | 7 | | reason of liens, encumbrances upon, defects in, or the
| 8 | | unmarketability of the title to the property; the invalidity | 9 | | or
unenforceability of any liens or encumbrances thereon; or | 10 | | doing any business in
substance equivalent to any of the | 11 | | foregoing.
"Warranting" for purpose of this provision shall | 12 | | not
include any warranty contained in instruments of | 13 | | encumbrance or conveyance.
Title insurance is a single line | 14 | | form of insurance, also known as monoline. An attorney's | 15 | | opinion of title pursuant to paragraph (1)(C) is not intended | 16 | | to
be within the definition of "title insurance".
| 17 | | (2) "Title insurance company" means any domestic company | 18 | | organized under
the laws of this State for the purpose of | 19 | | conducting the business of
title insurance and any title | 20 | | insurance
company organized under the laws of another State, | 21 | | the District of Columbia
or foreign government and authorized | 22 | | to transact the business of
title insurance in this State.
| 23 | | (3) "Title insurance agent" means a person, firm, | 24 | | partnership,
association, corporation or other legal entity | 25 | | that is the holder of a certificate of authority provided | 26 | | pursuant to Section 16 and that is authorized registered by a |
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| 1 | | title
insurance company to solicit title insurance, collect | 2 | | title insurance premiums and endorsement charges, perform core | 3 | | title services, and, if authorized by a title insurance | 4 | | company, and authorized by such company to determine | 5 | | insurability
of title in accordance with generally acceptable | 6 | | underwriting rules and
standards in reliance on either the | 7 | | public records or a search package
prepared from a title | 8 | | plant, or both, and authorized by such title insurance company | 9 | | in addition to do any
of the following: act as an escrow agent | 10 | | pursuant to Sections subsections (f), (g), and (h) of Section | 11 | | 16 , 16.1, and 16.2 of this Act , solicit title insurance, | 12 | | collect
premiums, or issue title insurance commitments,
| 13 | | policies, and endorsements of the title insurance company ; | 14 | | provided, however, the term "title insurance agent"
shall not | 15 | | include officers and salaried employees of any title insurance
| 16 | | company.
| 17 | | (4) "Producer of title business" is any person, firm, | 18 | | partnership,
association, corporation or other legal entity | 19 | | engaged in this State in the
trade, business, occupation or | 20 | | profession of (i) buying or selling
interests in real | 21 | | property, (ii) making loans secured by interests in real
| 22 | | property, or (iii) acting as broker, agent, attorney, or | 23 | | representative of
natural persons or other legal entities that | 24 | | buy or sell interests in real
property or that lend money with | 25 | | such interests as security.
| 26 | | (5) "Associate" is any firm, association, partnership, |
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| 1 | | corporation or
other legal entity organized for profit in | 2 | | which a producer of title
business is a director, officer, or | 3 | | partner thereof, or owner of a
financial interest, as defined | 4 | | herein, in such entity; any legal entity
that controls, is | 5 | | controlled by, or is under common control with a producer
of | 6 | | title business; and any natural person or legal entity with | 7 | | whom a
producer of title business has any agreement, | 8 | | arrangement, or understanding
or pursues any course of conduct | 9 | | the purpose of which is to evade the
provisions of this Act.
| 10 | | (6) "Financial interest" is any ownership interest, legal | 11 | | or beneficial,
except ownership of publicly traded stock.
| 12 | | (7) "Refer" means to place or cause to be placed, or to | 13 | | exercise any
power or influence over the placing of title | 14 | | business, whether or not the
consent or approval of any other | 15 | | person is sought or obtained with respect
to the referral.
| 16 | | (8) "Escrow Agent" means any title insurance company or | 17 | | any title
insurance agent, including independent contractors | 18 | | of either, acting on behalf of a title insurance company, | 19 | | which
receives deposits, in trust, of funds or documents, or | 20 | | both, for the purpose
of effecting the sale, transfer, | 21 | | encumbrance or lease of real property to
be held by such escrow | 22 | | agent until title to the real property that is the
subject of | 23 | | the escrow is in a prescribed condition. An escrow agent | 24 | | conducting closings shall be subject to the provisions of | 25 | | Sections paragraphs (1) through (4) of subsection (e) of | 26 | | Section 16 , 16.1, and 16.2 of this Act.
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| 1 | | (9) "Independent Escrowee" means any firm, person, | 2 | | partnership,
association, corporation or other
legal entity, | 3 | | other than a title insurance company or a title insurance
| 4 | | agent, which receives deposits, in trust, of funds or | 5 | | documents, or both, for
the purpose of effecting the sale, | 6 | | transfer, encumbrance or lease of real
property to be held by | 7 | | such escrowee until title to the real property that
is the | 8 | | subject of the escrow is in a prescribed condition. Federal | 9 | | and
State chartered banks, savings and loan associations, | 10 | | credit unions,
mortgage bankers, banks or trust companies | 11 | | authorized to do business under
the Illinois Corporate | 12 | | Fiduciary Act, licensees under the Consumer
Installment Loan | 13 | | Act, real estate brokers licensed pursuant to the Real
Estate | 14 | | License Act of 2000, as such Acts are now or hereafter amended, | 15 | | and
licensed attorneys when engaged in the attorney-client | 16 | | relationship are
exempt from the escrow provisions of this | 17 | | Act. "Independent Escrowee" does not include employees or | 18 | | independent contractors of a title insurance company or title | 19 | | insurance agent authorized by a title insurance company to | 20 | | perform closing, escrow, or settlement services.
| 21 | | (10) "Single risk" means the insured amount of any title | 22 | | insurance
policy, except that where 2 or more title insurance | 23 | | policies are issued
simultaneously covering different estates | 24 | | in the same real property, "single
risk" means the sum of the | 25 | | insured amounts of all such title insurance
policies. Any | 26 | | title insurance policy insuring a mortgage interest, a claim
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| 1 | | payment under which reduces the insured amount of a fee or | 2 | | leasehold title
insurance policy, shall be excluded in | 3 | | computing the amount of a single
risk to the extent that the | 4 | | insured amount of the mortgage title insurance
policy does not | 5 | | exceed the insured amount of the fee or leasehold title
| 6 | | insurance policy.
| 7 | | (11) "Department" means the Department of Financial and | 8 | | Professional Regulation.
| 9 | | (12) "Secretary" means the Secretary
of Financial and | 10 | | Professional Regulation.
| 11 | | (13) "Insured closing letter" or "closing protection | 12 | | letter" means
an indemnification or undertaking to a party to | 13 | | a real property transaction, from
a principal such as a title | 14 | | insurance company, setting forth
in writing the extent of the | 15 | | principal's responsibility for intentional
misconduct or | 16 | | errors in closing the real property transaction on the part of | 17 | | a
settlement agent, such as a title insurance agent or other | 18 | | settlement service
provider, or an indemnification or | 19 | | undertaking given by a title insurance company or an | 20 | | independent escrowee setting forth in writing the extent of | 21 | | the title insurance company's or independent escrowee's | 22 | | responsibility to a party to a real property transaction which | 23 | | indemnifies the party against the intentional misconduct or | 24 | | errors in closing the real property transaction on the part of | 25 | | the title insurance company or independent escrowee and | 26 | | includes protection afforded pursuant to subsections (p), (q), |
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| 1 | | and (r) (f), (g), and (h) of Section 16, Section 16.1, | 2 | | subsection (h) of Section 17, and Section 17.1 of this Act even | 3 | | if such protection is afforded by contract.
| 4 | | (14) "Residential real property" means a building or | 5 | | buildings consisting of one to 4 residential units or a | 6 | | residential condominium unit where at least one of the | 7 | | residential units or condominium units is occupied or intended | 8 | | to be occupied as a residence by the purchaser or borrower, or | 9 | | in the event that the purchaser or borrower is the trustee of a | 10 | | trust, by a beneficiary of that trust.
| 11 | | (15) "Financial institution" means any bank subject to the | 12 | | Illinois Banking Act, any savings and loan association subject | 13 | | to the Illinois Savings and Loan Act of 1985, any savings bank | 14 | | subject to the Savings Bank Act, any credit union subject to | 15 | | the Illinois Credit Union Act, and any federally chartered | 16 | | commercial bank, savings and loan association, savings bank, | 17 | | or credit union organized and operated in this State pursuant | 18 | | to 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, | 15 | | tax, judgment, or lien searches, limited purpose searches, and | 16 | | any other searches and search products, private title plant | 17 | | records, records of grantor-grantee and other indices, public | 18 | | records and other records, property inspections, records | 19 | | related to the status of title to land, and any other | 20 | | information, materials, and transactions that are relevant to | 21 | | a 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 |
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| 1 | | residential real property. | 2 | | (b) In the conduct of its title insurance business, every | 3 | | title 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 |
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| 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 |
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| 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 | 14 | | a title insurance company acts as an escrow agent
pursuant to | 15 | | any 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 |
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| 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 | 14 | | or impair a title insurance company's right or ability to | 15 | | determine and promulgate its underwriting requirements, | 16 | | principles, and conditions for insuring any risk that would be | 17 | | covered in a policy of insurance or an endorsement to a policy, | 18 | | or to educate, instruct, or inform its title insurance agents | 19 | | as to its underwriting requirements generally or in a | 20 | | particular transaction or
otherwise. Nothing in this Section | 21 | | shall be construed to restrict or impair a title insurance | 22 | | company's right or ability to determine and charge special | 23 | | risk title insurance and endorsement premiums that are | 24 | | different from the posted or published rates and premiums, or | 25 | | to waive or vary from its title insurance underwriting | 26 | | requirements, principles, and conditions for insuring any risk |
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| 1 | | that would be covered in a policy of insurance or an | 2 | | endorsement to a policy in any given case as it, in its sole | 3 | | discretion, 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 | 7 | | or other
legal entity shall act as or hold itself out to be a | 8 | | title insurance agent without first procuring a certificate of | 9 | | authority from the Secretary. A certificate of authority shall | 10 | | remain in effect unless revoked or suspended by the Secretary, | 11 | | voluntarily withdrawn by the holder, or the holder of the | 12 | | certificate of authority is no longer authorized as a title | 13 | | insurance agent of a title insurance company
unless duly | 14 | | registered by a title insurance company with the Secretary .
| 15 | | (b) Each application for a certificate of authority | 16 | | registration shall be made on a form specified
by the | 17 | | Secretary and prepared by each title insurance company
which | 18 | | the agent represents. The title insurance company shall retain | 19 | | the
copy of the application and forward a copy to the | 20 | | Secretary .
| 21 | | (c) Every applicant for a certificate of authority | 22 | | registration , except a firm, partnership,
association, limited | 23 | | liability company, or corporation, must be 18 years or more of | 24 | | age. Included in every application for a certificate of | 25 | | authority registration of a title insurance agent, including a |
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| 1 | | firm, partnership,
association, limited liability company, or | 2 | | corporation, shall be an affidavit of the applicant title | 3 | | insurance agent, signed and notarized in front
of a notary | 4 | | public, affirming that the applicant and every owner, officer, | 5 | | director, principal, member, or
manager of the applicant has | 6 | | never been convicted or pled guilty to any felony or | 7 | | misdemeanor involving a crime of
theft or dishonesty or | 8 | | otherwise accurately disclosing any such felony or misdemeanor | 9 | | involving a crime of
theft or dishonesty. No person who has had | 10 | | a conviction or pled guilty to any felony or
misdemeanor | 11 | | involving theft or dishonesty may qualify for a certificate of | 12 | | authority be registered by a title insurance company without a | 13 | | written notification to the Secretary disclosing the | 14 | | conviction or plea, and no such
person may serve as an owner, | 15 | | officer, director, principal, or manager of any registered | 16 | | title insurance
agent without the written permission of the | 17 | | Secretary.
| 18 | | (d) Every applicant that is not duly registered as a title | 19 | | insurance agent on the effective date of this amendatory Act | 20 | | of the 103rd General Assembly shall: Registration shall be | 21 | | made annually by a filing with the Secretary;
supplemental | 22 | | registrations for new title insurance agents to be added
| 23 | | between annual filings shall be made from time to time in the | 24 | | manner
provided by the Secretary; registrations shall remain | 25 | | in effect unless
revoked or suspended by the Secretary or
| 26 | | voluntarily withdrawn by the
registrant or the title insurance |
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| 1 | | company. | 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; |
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| 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 | 8 | | applicants who are admitted to
practice law by the Supreme | 9 | | Court of Illinois and who are in active standing. | 10 | | (f) The Secretary shall issue a certificate of authority | 11 | | to conduct business as a title insurance agent upon
| 12 | | determination that an applicant has passed the required | 13 | | examination and is otherwise in compliance with this Act and | 14 | | all applicable laws. | 15 | | (g) Any title insurance agent who is registered on the | 16 | | effective date of this amendatory Act of the 103rd General | 17 | | Assembly may continue to conduct the business of title | 18 | | insurance as a title insurance agent for a period of 90 days | 19 | | after the effective date of this amendatory Act of the 103rd | 20 | | General Assembly and shall be issued a certificate of | 21 | | authority upon the filing by a title insurance company with | 22 | | the Secretary a written agency agreement that complies with | 23 | | this Act within 90 days after the effective date of this | 24 | | amendatory Act of the 103rd General Assembly. | 25 | | (h) A title insurance company shall annually file with the | 26 | | Secretary a list of all title insurance agents
authorized to |
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| 1 | | conduct the business of title insurance as an agent of the | 2 | | title insurance company. Supplemental
filings for new title | 3 | | insurance agents to be added between annual filings shall be | 4 | | made from time to time in the manner provided by the Secretary. | 5 | | A title insurance company shall immediately notify the | 6 | | Secretary of any title insurance agent whose agency has been | 7 | | terminated, and shall immediately file with the Secretary any | 8 | | new title insurance agency agreement that replaces an | 9 | | agreement already on file or which has been revised or amended | 10 | | in any way. | 11 | | (i) The Secretary shall maintain a database of title | 12 | | insurance agents in good standing on a publicly
accessible | 13 | | website that any person may use to verify the authority of a | 14 | | particular title insurance agent. | 15 | | (j) (e) Funds deposited in connection with any escrows, | 16 | | settlements, or closings shall be deposited in a separate | 17 | | fiduciary trust account or accounts in a bank or other | 18 | | financial institution insured by an agency of the federal | 19 | | government unless the instructions provide otherwise. The | 20 | | funds shall be the property of the person or persons entitled | 21 | | thereto under the provisions of the escrow, settlement, or | 22 | | closing and shall be segregated by escrow, settlement, or | 23 | | closing in the records of the escrow agent. The funds shall not | 24 | | be subject to any debts of the escrowee and shall be used only | 25 | | in accordance with the terms of the individual escrow, | 26 | | settlement, or closing under which the funds were accepted. |
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| 1 | | Interest received on funds deposited with the escrow agent | 2 | | in connection with any escrow, settlement, or closing shall be | 3 | | paid to the depositing party unless the instructions provide | 4 | | otherwise. | 5 | | The escrow agent shall maintain separate records of all | 6 | | receipts and disbursements of escrow, settlement, or closing | 7 | | funds. | 8 | | The escrow agent shall comply with any rules adopted by | 9 | | the Secretary pertaining to escrow, settlement, or closing | 10 | | transactions. | 11 | | (k) A title insurance agent shall not act as an escrow | 12 | | agent in a residential real property
transaction unless the | 13 | | title insurance agent files with the Secretary and the | 14 | | Secretary approves cash or bonds of the
United States, this | 15 | | State, or any body politic of this State in the amounts | 16 | | specified in subsection (l). The deposit is not to be | 17 | | otherwise pledged or subject to distribution among creditors | 18 | | or stockholders until all claims of escrow depositors have | 19 | | been paid in full or discharged, reinsured, or otherwise | 20 | | assumed by a title insurance company authorized to do business | 21 | | under this Act. The cash, bonds, and securities so deposited | 22 | | may be
exchanged for other such securities. No such cash, | 23 | | bond, or security shall be sold or transferred by the | 24 | | Secretary except on order of the circuit court or as provided | 25 | | in subsection (o). The company shall be permitted to receive | 26 | | from the Secretary the
interest on the deposit as long as the |
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| 1 | | company depositing such securities remains solvent. | 2 | | (l) The deposit required under subsection (k) must have a | 3 | | then current value of $500,000. All deposits shall be held for | 4 | | the benefit of any named party to a written escrow it accepted. | 5 | | The deposit is not to be otherwise pledged or subject to | 6 | | distribution among creditors or stockholders. | 7 | | (m) The Secretary may provide for custody of the deposits | 8 | | by any trust company or bank located in
this State and | 9 | | qualified to do business under the Corporate Fiduciary Act. | 10 | | The compensation, if any, of such custodian shall be paid by | 11 | | the depositing company. When the required deposits have been | 12 | | made by a title insurance agent that intends to act as an | 13 | | escrow agent in any residential real property
transaction, the | 14 | | Secretary shall certify that the title insurance agent has | 15 | | complied with the provisions of this Section
and is authorized | 16 | | to transact the business of a title insurance agent acting as | 17 | | an escrow agent in residential real property transactions. | 18 | | (n) Before doing business in the State of Illinois in a | 19 | | residential real property transaction, an
escrow agent must | 20 | | file with and have approved by the Secretary proof of a | 21 | | fidelity bond in the minimum amount
of $1,000,000 per | 22 | | occurrence, errors and omissions insurance in the minimum | 23 | | amount of $1,000,000 per
occurrence, and cybercrime insurance | 24 | | coverage in the minimum amount of $500,000 per occurrence. The | 25 | | insurance policies required shall be issued by insurers that | 26 | | are authorized to conduct such insurance business in the State |
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| 1 | | of Illinois. The title insurance agent may not conduct title | 2 | | insurance business as an escrow agent unless
the deposit, | 3 | | fidelity bond, errors and omissions insurance, and cybercrime | 4 | | insurance coverage required by this Section are continuously | 5 | | maintained. | 6 | | (o) The Secretary may revoke the certificate of authority | 7 | | of a title insurance agent acting as an escrow agent that fails | 8 | | to maintain the deposit, fidelity bond, errors and omissions | 9 | | insurance, or cybercrime insurance coverage required by this | 10 | | Section. The Secretary shall give notice of that revocation to | 11 | | such title insurance agent as provided by this Act, and during | 12 | | the time of the revocation the title insurance agent may not | 13 | | conduct any title insurance business as an escrow agent. A | 14 | | revocation shall not be set aside until the title insurance | 15 | | agent has filed with and has been approved by the Secretary in | 16 | | accordance with the requirements of this Section and
the title | 17 | | insurance agent is otherwise in compliance with this Act. | 18 | | (p) (f) A title insurance agent shall not act as an escrow | 19 | | agent in a nonresidential real property transaction where the | 20 | | amount of settlement funds on deposit with the escrow agent is | 21 | | less than $2,000,000 or in a residential real property | 22 | | transaction unless the title insurance agent, title insurance | 23 | | company, or another authorized title insurance agent has | 24 | | committed for the issuance of title insurance in that | 25 | | transaction and the title insurance agent is authorized to act | 26 | | as an escrow agent on behalf of the title insurance company for |
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| 1 | | which the commitment for title insurance has been issued. The | 2 | | authorization under the preceding sentence shall be given | 3 | | either (1) by an agency contract with the title insurance | 4 | | company which contract, in compliance with the requirements | 5 | | set forth in subsection (q) (g) of this Section, authorizes | 6 | | the title insurance agent to act as an escrow agent on behalf | 7 | | of the title insurance company or (2) by a closing protection | 8 | | letter in compliance with the requirements set forth in | 9 | | Section 16.1 of this Act, issued by the title insurance | 10 | | company to the seller, buyer, borrower, and lender. A closing | 11 | | protection letter shall not be issued by a title insurance | 12 | | agent. The provisions of this subsection (f) shall not apply | 13 | | to the authority of a title insurance agent to act as an escrow | 14 | | agent under subsection (g) of Section 17 of this Act. | 15 | | (q) (g) If an agency contract between the title insurance | 16 | | company and the title insurance agent is the source of the | 17 | | authority under subsection (p) (f) of this Section for a title | 18 | | insurance agent to act as escrow agent for a real property | 19 | | transaction, then the agency contract shall provide for no | 20 | | less protection from the title insurance company to all | 21 | | parties to the real property transaction than the title | 22 | | insurance company would have provided to those parties had the | 23 | | title insurance company issued a closing protection letter in | 24 | | conformity with Section 16.1 of this Act. | 25 | | (r) (h) A title insurance company shall be liable for the | 26 | | acts or omissions of its title insurance agent as an escrow |
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| 1 | | agent if the title insurance company has authorized the title | 2 | | insurance agent under subsections (p) through (q) (f) and (g) | 3 | | of this Section 16 and only to the extent of the liability | 4 | | undertaken by the title insurance company in the agency | 5 | | agreement or closing protection letter. The liability, if any, | 6 | | of the title insurance agent to the title insurance company | 7 | | for acts and omissions of the title insurance agent as an | 8 | | escrow agent shall not be limited or otherwise modified | 9 | | because the title insurance company has provided closing | 10 | | protection to a party or parties to a real property | 11 | | transaction escrow, settlement, or closing. The escrow agent | 12 | | shall not charge a fee for protection provided by a title | 13 | | insurance company to parties to real property transactions | 14 | | under subsections (p) through (q) (f) and (g) of this Section | 15 | | 16 and Section 16.1, but shall collect from the parties the fee | 16 | | charged by the title insurance company and shall promptly | 17 | | remit the fee to the title insurance company. The title | 18 | | insurance company may charge the parties a reasonable fee for | 19 | | protection provided pursuant to subsections (p) through (q) | 20 | | (f) and (g) of this Section 16 and Section 16.1 and shall not | 21 | | pay any portion of the fee to the escrow agent. The payment of | 22 | | any portion of the fee to the escrow agent by the title | 23 | | insurance company, shall be deemed a prohibited inducement or | 24 | | compensation in violation of Section 24 of this Act. | 25 | | (s) (i) The Secretary shall adopt and amend such rules as | 26 | | may be required for the proper administration and enforcement |
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| 1 | | of this Section 16 consistent with the federal Real Estate | 2 | | Settlement Procedures Act and Section 24 of this Act. | 3 | | (Source: P.A. 98-398, eff. 1-1-14; 98-832, eff. 1-1-15; | 4 | | 99-104, 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 | 8 | | involving residential real property. | 9 | | (b) In the conduct of its title insurance business, every | 10 | | title 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 | 24 | | acts as an escrow agent pursuant to Sections 16, 16.1, and 16.2 | 25 | | of 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 | 14 | | involving residential real property. | 15 | | (b) In the conduct of its escrow, settlement, or closing | 16 | | business, and its operation as an escrow,
settlement, or | 17 | | closing agent as provided in Section 17, every independent | 18 | | escrowee 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 |
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| 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 | 18 | | shared any of its compensation for its escrow and settlement | 19 | | services with any title insurance company or title insurance | 20 | | agent except as provided in this Section. Any
payment that is | 21 | | contrary to this subsection (c) is a prohibited inducement or | 22 | | compensation for a referral in violation of Section 24.
| 23 | | Section 99. Effective date. This Act takes effect upon | 24 | | becoming law.
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