State of Illinois
91st General Assembly
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[ Engrossed ][ Enrolled ][ Senate Amendment 001 ]

91_SB0795

 
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 1        AN ACT to amend  the  Title  Insurance  Act  by  changing
 2    Sections 3 and 17.

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

 5        Section  5.   The  Title  Insurance  Act  is  amended  by
 6    changing Sections 3 and 17 as follows:

 7        (215 ILCS 155/3) (from Ch. 73, par. 1403)
 8        Sec. 3.  As used in  this  Act,  the  words  and  phrases
 9    following  shall  have  the  following  meanings  unless  the
10    context requires otherwise:
11        (1)  "Title  insurance  business"  or  "business of title
12    insurance" means:
13             (A)  Issuing as insurer  or  offering  to  issue  as
14        insurer title insurance; and
15             (B)  Transacting  or  proposing  to  transact one or
16        more  of  the  following  activities  when  conducted  or
17        performed in contemplation of or in conjunction with  the
18        issuance of title insurance;
19                  (i)  soliciting  or negotiating the issuance of
20             title insurance;
21                  (ii)  guaranteeing,  warranting,  or  otherwise
22             insuring the correctness of title searches  for  all
23             instruments  affecting  titles to real property, any
24             interest in real  property,  cooperative  units  and
25             proprietary  leases,  and  for  all liens or charges
26             affecting the same;
27                  (iii)  handling  of  escrows,  settlements,  or
28             closings;
29                  (iv)  executing title insurance policies;
30                  (v)  effecting contracts of reinsurance;
31                  (vi)  abstracting,  searching,   or   examining
 
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 1             titles; or
 2                  (vii)  issuing closing protection letters;
 3             (C)  Guaranteeing,  warranting, or insuring searches
 4        or examinations of title to real property or any interest
 5        in real property, with  the  exception  of  preparing  an
 6        attorney's opinion of title; or
 7             (D)  Guaranteeing  or warranting the status of title
 8        as to ownership of or liens on real property and personal
 9        property by any person other than the principals  to  the
10        transaction; or
11             (E)  Doing   or   proposing   to   do  any  business
12        substantially equivalent to any of the activities  listed
13        in  this  subsection, provided that the preparation of an
14        attorney's opinion of title pursuant to paragraph  (1)(C)
15        is  not  intended  to  be within the definition of "title
16        insurance business" or "business of title insurance".
17        (1)  "Business of guaranteeing or insuring titles to real
18    estate"  means  the  making  as  insurer  or  guarantor,   or
19    proposing to make as insurer or guarantor, of any contract or
20    policy  of  title  insurance; the transacting or proposing to
21    transact, any phase of  title  insurance,  including,  as  an
22    insurer  or  guarantor,  examination  of title, solicitation,
23    negotiation preliminary to the execution  of  a  contract  of
24    title  insurance,  and  execution  of  a  contract  of  title
25    insurance, insuring and transacting matters subsequent to the
26    execution  of  the contract and arising out of it, other than
27    reinsurance; the performance of any  service  in  conjunction
28    with  the  issuance  of  any  contract  or  policy  of  title
29    insurance,  including  but not limited to the handling of any
30    escrow, settlement  or  closing,  if  conducted  by  a  title
31    insurance  company or title insurance agent; or the doing, or
32    proposing to do, any business in substance equivalent to  any
33    of the foregoing in a manner designed to evade the provisions
34    of this Act.
 
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 1        (1.5)  "Title  insurance"  means  insuring, guaranteeing,
 2    warranting,  or  indemnifying  owners  of  real  or  personal
 3    property or the holders of liens or encumbrances  thereon  or
 4    others  interested therein against loss or damage suffered by
 5    reason of  liens,  encumbrances  upon,  defects  in,  or  the
 6    unmarketability  of the title to the property; the invalidity
 7    or unenforceability of any liens or encumbrances thereon;  or
 8    doing  any  business  in  substance  equivalent to any of the
 9    foregoing. "Warranting" for purpose of this  provision  shall
10    not   include   any  warranty  contained  in  instruments  of
11    encumbrance or conveyance. An  attorney's  opinion  of  title
12    pursuant to paragraph (1)(C) is not intended to be within the
13    definition of "title insurance".
14        (2)  "Title insurance company" means any domestic company
15    organized  under  the  laws  of this State for the purpose of
16    conducting the business of guaranteeing or insuring titles to
17    real estate and any title insurance company  organized  under
18    the  laws  of  another  State,  the  District  of Columbia or
19    foreign government and authorized to transact the business of
20    guaranteeing or insuring titles to real estate in this State.
21        (3)  "Title  insurance  agent"  means  a  person,   firm,
22    partnership,  association,  corporation or other legal entity
23    registered by a title insurance  company  and  authorized  by
24    such company to determine insurability of title in accordance
25    with generally acceptable underwriting rules and standards in
26    reliance  on  either  the  public records or a search package
27    prepared from a title  plant,  or  both,  and  authorized  in
28    addition to do any of the following:  act as an escrow agent,
29    solicit   title  insurance,  collect  premiums,  issue  title
30    reports, binders or commitments to insure and policies in its
31    behalf, provided, however, the term "title  insurance  agent"
32    shall  not  include  officers  and  salaried employees of any
33    title insurance company.
34        (4)  "Producer of title business" is  any  person,  firm,
 
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 1    partnership,  association,  corporation or other legal entity
 2    engaged in this State in the trade, business,  occupation  or
 3    profession  of  (i)  buying  or  selling  interests  in  real
 4    property,  (ii)  making  loans  secured  by interests in real
 5    property, or (iii) acting  as  broker,  agent,  attorney,  or
 6    representative  of  natural  persons  or other legal entities
 7    that buy or sell interests in  real  property  or  that  lend
 8    money with such interests as security.
 9        (5)  "Associate"  is  any firm, association, partnership,
10    corporation or other legal entity  organized  for  profit  in
11    which a producer of title business is a director, officer, or
12    partner thereof, or owner of a financial interest, as defined
13    herein,  in  such  entity; any legal entity that controls, is
14    controlled by, or is under common control with a producer  of
15    title  business;  and any natural person or legal entity with
16    whom  a  producer  of  title  business  has  any   agreement,
17    arrangement,  or  understanding  or  pursues  any  course  of
18    conduct  the  purpose  of which is to evade the provisions of
19    this Act.
20        (6)  "Financial  interest"  is  any  ownership  interest,
21    legal or beneficial,  except  ownership  of  publicly  traded
22    stock.
23        (7)  "Refer"  means to place or cause to be placed, or to
24    exercise any power or influence over  the  placing  of  title
25    business, whether or not the consent or approval of any other
26    person is sought or obtained with respect to the referral.
27        (8)  "Escrow  Agent" means any title insurance company or
28    any title  insurance  agent  acting  on  behalf  of  a  title
29    insurance company which receives deposits, in trust, of funds
30    or documents, or both, for the purpose of effecting the sale,
31    transfer, encumbrance or lease of real property to be held by
32    such  escrow  agent  until title to the real property that is
33    the subject of the escrow is in a prescribed condition.
34        (9)  "Independent  Escrowee"  means  any  firm,   person,
 
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 1    partnership,  association, corporation or other legal entity,
 2    other than a title insurance company  or  a  title  insurance
 3    agent,  which  receives  deposits,  in  trust,  of  funds  or
 4    documents,  or  both,  for the purpose of effecting the sale,
 5    transfer, encumbrance or lease of real property to be held by
 6    such escrowee until title to the real property  that  is  the
 7    subject  of the escrow is in a prescribed condition.  Federal
 8    and State chartered banks,  savings  and  loan  associations,
 9    credit  unions,  mortgage  bankers,  banks or trust companies
10    authorized  to  do  business  under  the  Illinois  Corporate
11    Fiduciary Act, licensees under the Consumer Installment  Loan
12    Act, real estate brokers licensed pursuant to the Real Estate
13    License  Act  of  1983,  as  such  Acts  are now or hereafter
14    amended,  and  licensed  attorneys  when   engaged   in   the
15    attorney-client  relationship  are  exempt  from  the  escrow
16    provisions of this Act.
17        (10)  "Single risk" means the insured amount of any title
18    insurance policy, except that where 2 or more title insurance
19    policies are issued simultaneously covering different estates
20    in the same real property, "single risk" means the sum of the
21    insured  amounts  of  all such title insurance policies.  Any
22    title insurance policy insuring a mortgage interest, a  claim
23    payment  under  which  reduces the insured amount of a fee or
24    leasehold  title  insurance  policy,  shall  be  excluded  in
25    computing the amount of a single risk to the extent that  the
26    insured  amount  of  the mortgage title insurance policy does
27    not exceed the insured amount of the fee or  leasehold  title
28    insurance policy.
29        (11)  "Department"  means  the  Department  of  Financial
30    Institutions.
31        (12)  "Director"   means   the   Director   of  Financial
32    Institutions.
33        (13)  "Insured closing  letter"  or  "closing  protection
34    letter" means an indemnification or undertaking to a party to
 
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 1    a  real  estate transaction, from a principal such as a title
 2    insurance company or similar entity, setting forth in writing
 3    the extent of the principal's responsibility for  intentional
 4    misconduct  or  errors in closing the real estate transaction
 5    on the part of a settlement agent, such as a title  insurance
 6    agent or other settlement service provider.
 7    (Source: P.A. 86-239.)

 8        (215 ILCS 155/17) (from Ch. 73, par. 1417)
 9        Sec. 17.  Independent escrowees.
10        (a)  Every  independent  escrowee shall be subject to the
11    same certification and deposit requirements  to  which  title
12    insurance companies are subject under Section 4 of this Act.
13        (b)  No  person,  firm, corporation or other legal entity
14    shall hold itself out to be an independent escrowee unless it
15    has been issued a certificate of authority by the Director.
16        (c)  Every applicant  for  a  certificate  of  authority,
17    except  a firm, partnership, association or corporation, must
18    be 18 years or more of age.
19        (d)  Every  certificate  of  authority  shall  remain  in
20    effect one year unless revoked or suspended by  the  Director
21    or voluntarily surrendered by the holder.
22        (e)  An  independent  escrowee  may engage in the escrow,
23    settlement, or closing business, or any combination  of  such
24    business,  and  operate  as an escrow, settlement, or closing
25    agent, provided that:
26             (1)  Funds deposited in connection with any  escrow,
27        settlement,  or  closing shall be deposited in a separate
28        fiduciary trust account or accounts in a  bank  or  other
29        financial institution insured by an agency of the federal
30        government  unless  the  instructions  provide otherwise.
31        Such funds shall be the property of the person or persons
32        entitled thereto under  the  provisions  of  the  escrow,
33        settlement, or closing and shall be segregated by escrow,
 
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 1        settlement  or  closing in the records of the independent
 2        escrowee.  Such funds shall not be subject to  any  debts
 3        of the escrowee and shall be used only in accordance with
 4        the terms of the individual escrow, settlement or closing
 5        under which the funds were accepted.
 6             (2)  Interest  received  on funds deposited with the
 7        independent  escrowee  in  connection  with  any  escrow,
 8        settlement or closing shall be  paid  to  the  depositing
 9        party unless the instructions provide otherwise.
10             (3)  The   independent   escrowee   shall   maintain
11        separate  records  of  all  receipt  and  disbursement of
12        escrow, settlement or closing funds.
13             (4)  The independent escrowee shall comply with  any
14        rules   or   regulations   promulgated  by  the  Director
15        pertaining to escrow, settlement or closing transactions.
16        (f)  The Director or his authorized representative  shall
17    have the power and authority to visit and examine at any time
18    any  independent  escrowee  certified  under  this Act and to
19    compel compliance with the provisions of this Act.
20        (g)  A title insurance company or title  insurance  agent
21    may  act in the capacity of an escrow agent even if it is not
22    issuing a title insurance commitment or  policy  and  is  not
23    qualified  as  an  independent  escrowee.   A title insurance
24    agent may so act in  this  capacity  only  when  specifically
25    authorized  in  writing, on forms prescribed by the Director,
26    by its title insurance company that has duly  registered  the
27    agent  with  the  Director and only when the authorization is
28    filed with the Director.  The authority granted  to  a  title
29    insurance  agent may be limited or revoked at any time by the
30    title insurance company.
31    (Source: P.A. 86-239.)

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