97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB3712

 

Introduced 2/10/2012, by Sen. Iris Y. Martinez

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 155/16  from Ch. 73, par. 1416
215 ILCS 155/21  from Ch. 73, par. 1421

    Amends the Title Insurance Act. Excludes a limited liability company from the requirement that every title insurance agent registration applicant must be 18 years or more of age. Provides that included in every application for registration by a title insurance company, including a firm, partnership, association, limited liability company, or corporation, shall be an affidavit, signed and notarized in front of a notary public, affirming that the applicant and any owner, officer, director, principal, member, or manager has never been convicted or pled guilty to any felony or misdemeanor involving a crime of theft or dishonesty. Provides that no person who has had a conviction or pled guilty to any felony or misdemeanor involving theft or dishonesty shall be registered by a title insurance company, and no such person may serve as an owner, officer, director, principal, or manager of any registered title insurance agent. Includes additional factors whereby the Secretary of Financial and Professional Regulation may refuse to grant or may suspend or revoke any certificate of authority, registration, or license issued pursuant to the Act or impose a fine for a violation of the Act. Effective January 1, 2013.


LRB097 15791 RPM 65709 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB3712LRB097 15791 RPM 65709 b

1    AN ACT concerning insurance.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Title Insurance Act is amended by changing
5Sections 16 and 21 as follows:
 
6    (215 ILCS 155/16)  (from Ch. 73, par. 1416)
7    Sec. 16. Title insurance agents.
8    (a) No person, firm, partnership, association, corporation
9or other legal entity shall act as or hold itself out to be a
10title insurance agent unless duly registered by a title
11insurance company with the Secretary.
12    (b) Each application for registration shall be made on a
13form specified by the Secretary and prepared in duplicate by
14each title insurance company which the agent represents. The
15title insurance company shall retain the copy of the
16application and forward the original to the Secretary with the
17appropriate fee.
18    (c) Every applicant for registration, except a firm,
19partnership, association, limited liability company, or
20corporation, must be 18 years or more of age. Included in every
21application for registration by a title insurance company,
22including a firm, partnership, association, limited liability
23company, or corporation, shall be an affidavit, signed and

 

 

SB3712- 2 -LRB097 15791 RPM 65709 b

1notarized in front of a notary public, affirming that the
2applicant and any owner, officer, director, principal, member,
3or manager has never been convicted or pled guilty to any
4felony or misdemeanor involving a crime of theft or dishonesty.
5No person who has had a conviction or pled guilty to any felony
6or misdemeanor involving theft or dishonesty shall be
7registered by a title insurance company, and no such person may
8serve as an owner, officer, director, principal, or manager of
9any registered title insurance agent.
10    (d) Registration shall be made annually by a filing with
11the Secretary; supplemental registrations for new title
12insurance agents to be added between annual filings shall be
13made from time to time in the manner provided by the Secretary;
14registrations shall remain in effect unless revoked or
15suspended by the Secretary or voluntarily withdrawn by the
16registrant or the title insurance company.
17    (e) Funds deposited in connection with any escrows,
18settlements, or closings shall be deposited in a separate
19fiduciary trust account or accounts in a bank or other
20financial institution insured by an agency of the federal
21government unless the instructions provide otherwise. The
22funds shall be the property of the person or persons entitled
23thereto under the provisions of the escrow, settlement, or
24closing and shall be segregated by escrow, settlement, or
25closing in the records of the escrow agent. The funds shall not
26be subject to any debts of the escrowee and shall be used only

 

 

SB3712- 3 -LRB097 15791 RPM 65709 b

1in accordance with the terms of the individual escrow,
2settlement, or closing under which the funds were accepted.
3    Interest received on funds deposited with the escrow agent
4in connection with any escrow, settlement, or closing shall be
5paid to the depositing party unless the instructions provide
6otherwise.
7    The escrow agent shall maintain separate records of all
8receipts and disbursements of escrow, settlement, or closing
9funds.
10    The escrow agent shall comply with any rules adopted by the
11Secretary pertaining to escrow, settlement, or closing
12transactions.
13    (f) A title insurance agent shall not act as an escrow
14agent in a nonresidential real property transaction where the
15amount of settlement funds on deposit with the escrow agent is
16less than $2,000,000 or in a residential real property
17transaction unless the title insurance agent, title insurance
18company, or another authorized title insurance agent has
19committed for the issuance of title insurance in that
20transaction and the title insurance agent is authorized to act
21as an escrow agent on behalf of the title insurance company for
22which the commitment for title insurance has been issued. The
23authorization under the preceding sentence shall be given
24either (1) by an agency contract with the title insurance
25company which contract, in compliance with the requirements set
26forth in subsection (g) of this Section, authorizes the title

 

 

SB3712- 4 -LRB097 15791 RPM 65709 b

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

 

 

SB3712- 5 -LRB097 15791 RPM 65709 b

1the title insurance company for acts and omissions of the title
2insurance agent as an escrow agent shall not be limited or
3otherwise modified because the title insurance company has
4provided closing protection to a party or parties to a real
5property transaction escrow, settlement, or closing. The
6escrow agent shall not charge a fee for protection provided by
7a title insurance company to parties to real property
8transactions under subsections (f) and (g) of this Section 16
9and Section 16.1, but shall collect from the parties the fee
10charged by the title insurance company and shall promptly remit
11the fee to the title insurance company. The title insurance
12company may charge the parties a reasonable fee for protection
13provided pursuant to subsections (f) and (g) of this Section 16
14and Section 16.1 and shall not pay any portion of the fee to
15the escrow agent. The payment of any portion of the fee to the
16escrow agent by the title insurance company, shall be deemed a
17prohibited inducement or compensation in violation of Section
1824 of this Act.
19    (i) The Secretary shall adopt and amend such rules as may
20be required for the proper administration and enforcement of
21this Section 16 consistent with the federal Real Estate
22Settlement Procedures Act and Section 24 of this Act.
23(Source: P.A. 96-1454, eff. 1-1-11.)
 
24    (215 ILCS 155/21)  (from Ch. 73, par. 1421)
25    Sec. 21. Regulatory action.

 

 

SB3712- 6 -LRB097 15791 RPM 65709 b

1    (a) The Secretary may refuse to grant, and may suspend or
2revoke, any certificate of authority, registration, or license
3issued pursuant to this Act or may impose a fine for a
4violation of this Act if he determines that the holder of or
5applicant for such certificate, registration or license:
6        (1) has intentionally made a material misstatement or
7    fraudulent misrepresentation in relation to a matter
8    covered by this Act;
9        (2) has misappropriated or tortiously converted to its
10    own use, or illegally withheld, monies held in a fiduciary
11    capacity;
12        (3) has demonstrated untrustworthiness or incompetency
13    in transacting the business of guaranteeing titles to real
14    estate in such a manner as to endanger the public;
15        (4) has materially misrepresented the terms or
16    conditions of contracts or agreements to which it is a
17    party;
18        (5) has paid any commissions, discounts or any part of
19    its premiums, fees or other charges to any person in
20    violation of any State or federal law or regulations or
21    opinion letters issued under the federal Real Estate
22    Settlement Procedures Act of 1974; or
23        (6) has failed to comply with the deposit and reserve
24    requirements of this Act or any other requirements of this
25    Act; .
26        (7) has committed fraud or misrepresentation in

 

 

SB3712- 7 -LRB097 15791 RPM 65709 b

1    applying for or procuring any certificate of authority,
2    registration, or license issued pursuant to this Act;
3        (8) has a conviction or plea of guilty or plea of nolo
4    contendere in this State or any other jurisdiction to (i)
5    any felony or (ii) a misdemeanor, an essential element of
6    which is dishonesty or fraud or larceny, embezzlement, or
7    obtaining money, property, or credit by false pretenses or
8    by means of a confidence game;
9        (9) has been disciplined by another state, the District
10    of Columbia, a territory, foreign nation, a governmental
11    agency, or any entity authorized to impose discipline if at
12    least one of the grounds for that discipline is the same as
13    or equivalent to one of the grounds for which a title
14    insurance company, title insurance agent, or independent
15    escrowee may be disciplined under this Act or if at least
16    one of the grounds for that discipline involves dishonesty;
17    a certified copy of the record of the action by the other
18    state or jurisdiction shall be prima facie evidence
19    thereof;
20        (10) has advertising that is inaccurate, misleading,
21    or contrary to the provisions of this Act;
22        (11) has knowingly and willfully made any substantial
23    misrepresentation or untruthful advertising;
24        (12) has made any false promises of a character likely
25    to influence, persuade, or induce;
26        (13) has failed to account for or remit any money or

 

 

SB3712- 8 -LRB097 15791 RPM 65709 b

1    documents coming into the possession of a title insurance
2    company, title insurance agent, or independent escrowee
3    that belong to others;
4        (14) has engaged in dishonorable, unethical, or
5    unprofessional conduct of a character likely to deceive,
6    defraud, or harm the public;
7        (15) has violated the terms of a disciplinary order
8    issued by the Department;
9        (16) has disregarded or violated any provision of this
10    Act or the published rules adopted by the Department to
11    enforce this Act or has aided or abetted any individual,
12    partnership, registered limited liability partnership,
13    limited liability company, or corporation in disregarding
14    any provision of this Act or the published rules; or
15        (17) has acted as a title insurance company, title
16    insurance agent, or independent escrowee without a
17    certificate of authority, registration, or license after
18    the title insurance company, title insurance agent, or
19    independent escrowee's certificate of authority,
20    registration, or license was inoperative.
21    (b) In every case where a registration or certificate is
22suspended or revoked, or an application for a registration or
23certificate or renewal thereof is refused, the Secretary shall
24serve notice of his action, including a statement of the
25reasons for his action, as provided by this Act. When a notice
26of suspension or revocation of a certificate of authority is

 

 

SB3712- 9 -LRB097 15791 RPM 65709 b

1given to a title insurance company, the Secretary shall also
2notify all the registered agents of that title insurance
3company of the Secretary's action.
4    (c) In the case of a refusal to issue or renew a
5certificate or accept a registration, the applicant or
6registrant may request in writing, within 30 days after the
7date of service, a hearing. In the case of a refusal to renew,
8the expiring registration or certificate shall be deemed to
9continue in force until 30 days after the service of the notice
10of refusal to renew, or if a hearing is requested during that
11period, until a final order is entered pursuant to such
12hearing.
13    (d) The suspension or revocation of a registration or
14certificate shall take effect upon service of notice thereof.
15The holder of any such suspended registration or certificate
16may request in writing, within 30 days of such service, a
17hearing.
18    (e) In cases of suspension or revocation of registration
19pursuant to subsection (a), the Secretary may, in the public
20interest, issue an order of suspension or revocation which
21shall take effect upon service of notification thereof. Such
22order shall become final 60 days from the date of service
23unless the registrant requests in writing, within such 60 days,
24a formal hearing thereon. In the event a hearing is requested,
25the order shall remain temporary until a final order is entered
26pursuant to such hearing.

 

 

SB3712- 10 -LRB097 15791 RPM 65709 b

1    (f) Hearing shall be held at such time and place as may be
2designated by the Secretary either in the City of Springfield,
3the City of Chicago, or in the county in which the principal
4business office of the affected registrant or certificate
5holder is located.
6    (g) The suspension or revocation of a registration or
7certificate or the refusal to issue or renew a registration or
8certificate shall not in any way limit or terminate the
9responsibilities of any registrant or certificate holder
10arising under any policy or contract of title insurance to
11which it is a party. No new contract or policy of title
12insurance may be issued, nor may any existing policy or
13contract to title insurance be renewed by any registrant or
14certificate holder during any period of suspension or
15revocation of a registration or certificate.
16    (h) The Secretary may issue a cease and desist order to a
17title insurance company, agent, or other entity doing business
18without the required license or registration, when in the
19opinion of the Secretary, the company, agent, or other entity
20is violating or is about to violate any provision of this Act
21or any law or of any rule or condition imposed in writing by
22the Department.
23    The Secretary may issue the cease and desist order without
24notice and before a hearing.
25    The Secretary shall have the authority to prescribe rules
26for the administration of this Section.

 

 

SB3712- 11 -LRB097 15791 RPM 65709 b

1    If it is determined that the Secretary had the authority to
2issue the cease and desist order, he may issue such orders as
3may be reasonably necessary to correct, eliminate or remedy
4such conduct.
5    Any person or company subject to an order pursuant to this
6Section is entitled to judicial review of the order in
7accordance with the provisions of the Administrative Review
8Law.
9    The powers vested in the Secretary by this Section are
10additional to any and all other powers and remedies vested in
11the Secretary by law, and nothing in this Section shall be
12construed as requiring that the Secretary shall employ the
13powers conferred in this Section instead of or as a condition
14precedent to the exercise of any other power or remedy vested
15in the Secretary.
16(Source: P.A. 94-893, eff. 6-20-06.)
 
17    Section 99. Effective date. This Act takes effect January
181, 2013.