HB1335 EnrolledLRB098 06252 RPM 39633 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 3 and 26 as follows:
 
6    (215 ILCS 155/3)  (from Ch. 73, par. 1403)
7    Sec. 3. As used in this Act, the words and phrases
8following shall have the following meanings unless the context
9requires otherwise:
10    (1) "Title insurance business" or "business of title
11insurance" means:
12        (A) Issuing as insurer or offering to issue as insurer
13    title insurance; and
14        (B) Transacting or proposing to transact one or more of
15    the following activities when conducted or performed in
16    contemplation of or in conjunction with the issuance of
17    title insurance;
18            (i) soliciting or negotiating the issuance of
19        title insurance;
20            (ii) guaranteeing, warranting, or otherwise
21        insuring the correctness of title searches for all
22        instruments affecting titles to real property, any
23        interest in real property, cooperative units and

 

 

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1        proprietary leases, and for all liens or charges
2        affecting the same;
3            (iii) handling of escrows, settlements, or
4        closings;
5            (iv) executing title insurance policies;
6            (v) effecting contracts of reinsurance;
7            (vi) abstracting, searching, or examining titles;
8        or
9            (vii) issuing insured closing letters or closing
10        protection letters;
11        (C) Guaranteeing, warranting, or insuring searches or
12    examinations of title to real property or any interest in
13    real property, with the exception of preparing an
14    attorney's opinion of title; or
15        (D) Guaranteeing or warranting the status of title as
16    to ownership of or liens on real property and personal
17    property by any person other than the principals to the
18    transaction; or
19        (E) Doing or proposing to do any business substantially
20    equivalent to any of the activities listed in this
21    subsection, provided that the preparation of an attorney's
22    opinion of title pursuant to paragraph (1)(C) is not
23    intended to be within the definition of "title insurance
24    business" or "business of title insurance".
25    (1.5) "Title insurance" means insuring, guaranteeing,
26warranting, or indemnifying owners of real or personal property

 

 

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1or the holders of liens or encumbrances thereon or others
2interested therein against loss or damage suffered by reason of
3liens, encumbrances upon, defects in, or the unmarketability of
4the title to the property; the invalidity or unenforceability
5of any liens or encumbrances thereon; or doing any business in
6substance equivalent to any of the foregoing. "Warranting" for
7purpose of this provision shall not include any warranty
8contained in instruments of encumbrance or conveyance. Title
9insurance is a single line form of insurance, also known as
10monoline. An attorney's opinion of title pursuant to paragraph
11(1)(C) is not intended to be within the definition of "title
12insurance".
13    (2) "Title insurance company" means any domestic company
14organized under the laws of this State for the purpose of
15conducting the business of title insurance and any title
16insurance company organized under the laws of another State,
17the District of Columbia or foreign government and authorized
18to transact the business of title insurance in this State.
19    (3) "Title insurance agent" means a person, firm,
20partnership, association, corporation or other legal entity
21registered by a title insurance company and authorized by such
22company to determine insurability of title in accordance with
23generally acceptable underwriting rules and standards in
24reliance on either the public records or a search package
25prepared from a title plant, or both, and authorized by such
26title insurance company in addition to do any of the following:

 

 

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1act as an escrow agent pursuant to subsections (f), (g), and
2(h) of Section 16 of this Act, solicit title insurance, collect
3premiums, or issue title insurance commitments, policies, and
4endorsements of the title insurance company; provided,
5however, the term "title insurance agent" shall not include
6officers and salaried employees of any title insurance company.
7    (4) "Producer of title business" is any person, firm,
8partnership, association, corporation or other legal entity
9engaged in this State in the trade, business, occupation or
10profession of (i) buying or selling interests in real property,
11(ii) making loans secured by interests in real property, or
12(iii) acting as broker, agent, attorney, or representative of
13natural persons or other legal entities that buy or sell
14interests in real property or that lend money with such
15interests as security.
16    (5) "Associate" is any firm, association, partnership,
17corporation or other legal entity organized for profit in which
18a producer of title business is a director, officer, or partner
19thereof, or owner of a financial interest, as defined herein,
20in such entity; any legal entity that controls, is controlled
21by, or is under common control with a producer of title
22business; and any natural person or legal entity with whom a
23producer of title business has any agreement, arrangement, or
24understanding or pursues any course of conduct the purpose of
25which is to evade the provisions of this Act.
26    (6) "Financial interest" is any ownership interest, legal

 

 

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1or beneficial, except ownership of publicly traded stock.
2    (7) "Refer" means to place or cause to be placed, or to
3exercise any power or influence over the placing of title
4business, whether or not the consent or approval of any other
5person is sought or obtained with respect to the referral.
6    (8) "Escrow Agent" means any title insurance company or any
7title insurance agent, including independent contractors of
8either, acting on behalf of a title insurance company, which
9receives deposits, in trust, of funds or documents, or both,
10for the purpose of effecting the sale, transfer, encumbrance or
11lease of real property to be held by such escrow agent until
12title to the real property that is the subject of the escrow is
13in a prescribed condition. An escrow agent conducting closings
14shall be subject to the provisions of paragraphs (1) through
15(4) of subsection (e) of Section 16 of this Act.
16    (9) "Independent Escrowee" means any firm, person,
17partnership, association, corporation or other legal entity,
18other than a title insurance company or a title insurance
19agent, which receives deposits, in trust, of funds or
20documents, or both, for the purpose of effecting the sale,
21transfer, encumbrance or lease of real property to be held by
22such escrowee until title to the real property that is the
23subject of the escrow is in a prescribed condition. Federal and
24State chartered banks, savings and loan associations, credit
25unions, mortgage bankers, banks or trust companies authorized
26to do business under the Illinois Corporate Fiduciary Act,

 

 

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1licensees under the Consumer Installment Loan Act, real estate
2brokers licensed pursuant to the Real Estate License Act of
32000, as such Acts are now or hereafter amended, and licensed
4attorneys when engaged in the attorney-client relationship are
5exempt from the escrow provisions of this Act. "Independent
6Escrowee" does not include employees or independent
7contractors of a title insurance company or title insurance
8agent authorized by a title insurance company to perform
9closing, escrow, or settlement services.
10    (10) "Single risk" means the insured amount of any title
11insurance policy, except that where 2 or more title insurance
12policies are issued simultaneously covering different estates
13in the same real property, "single risk" means the sum of the
14insured amounts of all such title insurance policies. Any title
15insurance policy insuring a mortgage interest, a claim payment
16under which reduces the insured amount of a fee or leasehold
17title insurance policy, shall be excluded in computing the
18amount of a single risk to the extent that the insured amount
19of the mortgage title insurance policy does not exceed the
20insured amount of the fee or leasehold title insurance policy.
21    (11) "Department" means the Department of Financial and
22Professional Regulation.
23    (12) "Secretary" means the Secretary of Financial and
24Professional Regulation.
25    (13) "Insured closing letter" or "closing protection
26letter" means an indemnification or undertaking to a party to a

 

 

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1real property transaction, from a principal such as a title
2insurance company, setting forth in writing the extent of the
3principal's responsibility for intentional misconduct or
4errors in closing the real property transaction on the part of
5a settlement agent, such as a title insurance agent or other
6settlement service provider, and includes protection afforded
7pursuant to subsections (f), (g), and (h) of Section 16 and
8Section 16.1 of this Act even if such protection is afforded by
9contract.
10    (14) "Residential real property" means a building or
11buildings consisting of one to 4 residential units or a
12residential condominium unit where at least one of the
13residential units or condominium units is occupied or intended
14to be occupied as a residence by the purchaser or borrower, or
15in the event that the purchaser or borrower is the trustee of a
16trust, by a beneficiary of that trust.
17    (15) "Financial institution" means any bank subject to the
18Illinois Banking Act, any savings and loan association subject
19to the Illinois Savings and Loan Act of 1985, any savings bank
20subject to the Savings Bank Act, any credit union subject to
21the Illinois Credit Union Act, and any federally chartered
22commercial bank, savings and loan association, savings bank, or
23credit union organized and operated in this State pursuant to
24the laws of the United States.
25(Source: P.A. 95-570, eff. 8-31-07; 96-1454, eff. 1-1-11.)
 

 

 

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1    (215 ILCS 155/26)
2    Sec. 26. Settlement funds.
3    (a) A title insurance company, title insurance agent, or
4independent escrowee shall not make disbursements in
5connection with any escrows, settlements, or closings out of a
6fiduciary trust account or accounts unless the funds in the
7aggregate amount of $50,000 or greater received from any single
8party to the transaction are good funds as defined in
9paragraphs (2), (6), or (7) of subsection (c) of this Section;
10or are collected funds as defined in subsection (d) of this
11Section.
12    For the purposes of this subsection (a), where funds in the
13aggregate amount of $50,000 or greater are received from any
14purchaser of residential real property, as defined in paragraph
15(14) of Section 3 of this Act, the aggregate amount may consist
16of good funds of less than $50,000 per paragraph, as defined in
17paragraphs (3) and (5) of subsection (c) of this Section and of
18up to $5,000 in good funds, as defined in paragraph (4) of
19subsection (c) of this Section.
20    (a-5) In addition to the good funds disbursement
21authorization set forth in subsection (a) of this Section, a
22title insurance company, title insurance agent, or independent
23escrowee is authorized to make disbursements in connection with
24any escrows, settlements, or closings out of a fiduciary trust
25account or accounts where the funds in the aggregate amount of
26$50,000 or greater are received from any single party to the

 

 

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1transaction if:
2        (1) the funds are transferred by a cashier's check,
3    teller's check, or certified check, as defined in the
4    Uniform Commercial Code, that is drawn on or issued by a
5    financial institution, as defined in this Act;
6        (2) the title insurance company, title insurance
7    agent, or independent escrowee and the financial
8    institution, as defined in this Act, are known to each
9    other and agree to the use of cashier's checks, teller's
10    checks, or certified checks as good funds under item (3) of
11    subsection (c) of this Section; and
12        (3) the cashier's check, teller's check, or certified
13    check is delivered to the title insurance company, title
14    insurance agent, or independent escrowee in sufficient
15    time for the check to be deposited into the title insurance
16    company's, title insurance agent's, or independent
17    escrowee's fiduciary trust account prior to disbursement
18    from the fiduciary trust account of the title insurance
19    company, title insurance agent, or independent escrowee.
20    The provisions of this subsection (a-5) are inoperative on
21and after January 1, 2015.
22    (b) A title insurance company or title insurance agent
23shall not make disbursements in connection with any escrows,
24settlements, or closings out of a fiduciary trust account or
25accounts unless the funds in the amount of less than $50,000
26received from any single party to the transaction are collected

 

 

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1funds or good funds as defined in subsection (c) of this
2Section.
3    (c) "Good funds" means funds in one of the following forms:
4        (1) lawful money of the United States;
5        (2) wired funds unconditionally held by and credited to
6    the fiduciary trust account of the title insurance company,
7    the title insurance agent, or independent escrowee;
8        (3) cashier's checks, certified checks, bank money
9    orders, official bank checks, or teller's checks drawn on
10    or issued by a financial institution chartered under the
11    laws of any state or the United States and unconditionally
12    held by the title insurance company, title insurance agent,
13    or independent escrowee;
14        (4) a personal check or checks in an aggregate amount
15    not exceeding $5,000 per closing, provided that the title
16    insurance company, title insurance agent, or independent
17    escrowee has reasonable grounds to believe that sufficient
18    funds are available for withdrawal in the account upon
19    which the check is drawn at the time of disbursement;
20        (5) a check drawn on the trust account of any lawyer or
21    real estate broker licensed under the laws of any state,
22    provided that the title insurance company, title insurance
23    agent, or independent escrowee has reasonable grounds to
24    believe that sufficient funds are available for withdrawal
25    in the account upon which the check is drawn at the time of
26    disbursement;

 

 

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1        (6) a check issued by this State, the United States, or
2    a political subdivision of this State or the United States;
3    or
4        (7) a check drawn on the fiduciary trust account of a
5    title insurance company or title insurance agent, provided
6    that the title insurance company, title insurance agent, or
7    independent escrowee has reasonable grounds to believe
8    that sufficient funds are available for withdrawal in the
9    account upon which the check is drawn at the time of
10    disbursement.
11    (d) "Collected funds" means funds deposited, finally
12settled, and credited to the title insurance company, title
13insurance agent, or independent escrowee's fiduciary trust
14account.
15    (e) A purchaser, a seller, or a lender is each considered a
16single party to the transaction for the purposes of this
17Section, regardless of the number of people or entities making
18up the purchaser, seller, or lender.
19(Source: P.A. 96-645, eff. 1-1-10; 96-1457, eff. 1-1-11.)
 
20    Section 99. Effective date. This Act takes effect upon
21becoming law.