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Public Act 91-0159
SB795 Enrolled LRB9101198LDmbB
AN ACT to amend the Title Insurance Act by changing
Sections 3 and 17.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Title Insurance Act is amended by
changing Sections 3 and 17 as follows:
(215 ILCS 155/3) (from Ch. 73, par. 1403)
Sec. 3. As used in this Act, the words and phrases
following shall have the following meanings unless the
context requires otherwise:
(1) "Title insurance business" or "business of title
insurance" means:
(A) Issuing as insurer or offering to issue as
insurer title insurance; and
(B) Transacting or proposing to transact one or
more of the following activities when conducted or
performed in contemplation of or in conjunction with the
issuance of title insurance;
(i) soliciting or negotiating the issuance of
title insurance;
(ii) guaranteeing, warranting, or otherwise
insuring the correctness of title searches for all
instruments affecting titles to real property, any
interest in real property, cooperative units and
proprietary leases, and for all liens or charges
affecting the same;
(iii) handling of escrows, settlements, or
closings;
(iv) executing title insurance policies;
(v) effecting contracts of reinsurance;
(vi) abstracting, searching, or examining
titles; or
(vii) issuing closing protection letters;
(C) Guaranteeing, warranting, or insuring searches
or examinations of title to real property or any interest
in real property, with the exception of preparing an
attorney's opinion of title; or
(D) Guaranteeing or warranting the status of title
as to ownership of or liens on real property and personal
property by any person other than the principals to the
transaction; or
(E) Doing or proposing to do any business
substantially equivalent to any of the activities listed
in this subsection, provided that the preparation of an
attorney's opinion of title pursuant to paragraph (1)(C)
is not intended to be within the definition of "title
insurance business" or "business of title insurance".
(1) "Business of guaranteeing or insuring titles to real
estate" means the making as insurer or guarantor, or
proposing to make as insurer or guarantor, of any contract or
policy of title insurance; the transacting or proposing to
transact, any phase of title insurance, including, as an
insurer or guarantor, examination of title, solicitation,
negotiation preliminary to the execution of a contract of
title insurance, and execution of a contract of title
insurance, insuring and transacting matters subsequent to the
execution of the contract and arising out of it, other than
reinsurance; the performance of any service in conjunction
with the issuance of any contract or policy of title
insurance, including but not limited to the handling of any
escrow, settlement or closing, if conducted by a title
insurance company or title insurance agent; or the doing, or
proposing to do, any business in substance equivalent to any
of the foregoing in a manner designed to evade the provisions
of this Act.
(1.5) "Title insurance" means insuring, guaranteeing,
warranting, or indemnifying owners of real or personal
property or the holders of liens or encumbrances thereon or
others interested therein against loss or damage suffered by
reason of liens, encumbrances upon, defects in, or the
unmarketability of the title to the property; the invalidity
or unenforceability of any liens or encumbrances thereon; or
doing any business in substance equivalent to any of the
foregoing. "Warranting" for purpose of this provision shall
not include any warranty contained in instruments of
encumbrance or conveyance. An attorney's opinion of title
pursuant to paragraph (1)(C) is not intended to be within the
definition of "title insurance".
(2) "Title insurance company" means any domestic company
organized under the laws of this State for the purpose of
conducting the business of guaranteeing or insuring titles to
real estate and any title insurance company organized under
the laws of another State, the District of Columbia or
foreign government and authorized to transact the business of
guaranteeing or insuring titles to real estate in this State.
(3) "Title insurance agent" means a person, firm,
partnership, association, corporation or other legal entity
registered by a title insurance company and authorized by
such company to determine insurability of title in accordance
with generally acceptable underwriting rules and standards in
reliance on either the public records or a search package
prepared from a title plant, or both, and authorized in
addition to do any of the following: act as an escrow agent,
solicit title insurance, collect premiums, issue title
reports, binders or commitments to insure and policies in its
behalf, provided, however, the term "title insurance agent"
shall not include officers and salaried employees of any
title insurance company.
(4) "Producer of title business" is any person, firm,
partnership, association, corporation or other legal entity
engaged in this State in the trade, business, occupation or
profession of (i) buying or selling interests in real
property, (ii) making loans secured by interests in real
property, or (iii) acting as broker, agent, attorney, or
representative of natural persons or other legal entities
that buy or sell interests in real property or that lend
money with such interests as security.
(5) "Associate" is any firm, association, partnership,
corporation or other legal entity organized for profit in
which a producer of title business is a director, officer, or
partner thereof, or owner of a financial interest, as defined
herein, in such entity; any legal entity that controls, is
controlled by, or is under common control with a producer of
title business; and any natural person or legal entity with
whom a producer of title business has any agreement,
arrangement, or understanding or pursues any course of
conduct the purpose of which is to evade the provisions of
this Act.
(6) "Financial interest" is any ownership interest,
legal or beneficial, except ownership of publicly traded
stock.
(7) "Refer" means to place or cause to be placed, or to
exercise any power or influence over the placing of title
business, whether or not the consent or approval of any other
person is sought or obtained with respect to the referral.
(8) "Escrow Agent" means any title insurance company or
any title insurance agent acting on behalf of a title
insurance company which receives deposits, in trust, of funds
or documents, or both, for the purpose of effecting the sale,
transfer, encumbrance or lease of real property to be held by
such escrow agent until title to the real property that is
the subject of the escrow is in a prescribed condition.
(9) "Independent Escrowee" means any firm, person,
partnership, association, corporation or other legal entity,
other than a title insurance company or a title insurance
agent, which receives deposits, in trust, of funds or
documents, or both, for the purpose of effecting the sale,
transfer, encumbrance or lease of real property to be held by
such escrowee until title to the real property that is the
subject of the escrow is in a prescribed condition. Federal
and State chartered banks, savings and loan associations,
credit unions, mortgage bankers, banks or trust companies
authorized to do business under the Illinois Corporate
Fiduciary Act, licensees under the Consumer Installment Loan
Act, real estate brokers licensed pursuant to the Real Estate
License Act of 1983, as such Acts are now or hereafter
amended, and licensed attorneys when engaged in the
attorney-client relationship are exempt from the escrow
provisions of this Act.
(10) "Single risk" means the insured amount of any title
insurance policy, except that where 2 or more title insurance
policies are issued simultaneously covering different estates
in the same real property, "single risk" means the sum of the
insured amounts of all such title insurance policies. Any
title insurance policy insuring a mortgage interest, a claim
payment under which reduces the insured amount of a fee or
leasehold title insurance policy, shall be excluded in
computing the amount of a single risk to the extent that the
insured amount of the mortgage title insurance policy does
not exceed the insured amount of the fee or leasehold title
insurance policy.
(11) "Department" means the Department of Financial
Institutions.
(12) "Director" means the Director of Financial
Institutions.
(13) "Insured closing letter" or "closing protection
letter" means an indemnification or undertaking to a party to
a real estate transaction, from a principal such as a title
insurance company or similar entity, setting forth in writing
the extent of the principal's responsibility for intentional
misconduct or errors in closing the real estate transaction
on the part of a settlement agent, such as a title insurance
agent or other settlement service provider.
(Source: P.A. 86-239.)
(215 ILCS 155/17) (from Ch. 73, par. 1417)
Sec. 17. Independent escrowees.
(a) Every independent escrowee shall be subject to the
same certification and deposit requirements to which title
insurance companies are subject under Section 4 of this Act.
(b) No person, firm, corporation or other legal entity
shall hold itself out to be an independent escrowee unless it
has been issued a certificate of authority by the Director.
(c) Every applicant for a certificate of authority,
except a firm, partnership, association or corporation, must
be 18 years or more of age.
(d) Every certificate of authority shall remain in
effect one year unless revoked or suspended by the Director
or voluntarily surrendered by the holder.
(e) An independent escrowee may engage in the escrow,
settlement, or closing business, or any combination of such
business, and operate as an escrow, settlement, or closing
agent, provided that:
(1) Funds deposited in connection with any escrow,
settlement, or closing shall be deposited in a separate
fiduciary trust account or accounts in a bank or other
financial institution insured by an agency of the federal
government unless the instructions provide otherwise.
Such funds shall be the property of the person or persons
entitled thereto under the provisions of the escrow,
settlement, or closing and shall be segregated by escrow,
settlement or closing in the records of the independent
escrowee. Such funds shall not be subject to any debts
of the escrowee and shall be used only in accordance with
the terms of the individual escrow, settlement or closing
under which the funds were accepted.
(2) Interest received on funds deposited with the
independent escrowee in connection with any escrow,
settlement or closing shall be paid to the depositing
party unless the instructions provide otherwise.
(3) The independent escrowee shall maintain
separate records of all receipt and disbursement of
escrow, settlement or closing funds.
(4) The independent escrowee shall comply with any
rules or regulations promulgated by the Director
pertaining to escrow, settlement or closing transactions.
(f) The Director or his authorized representative shall
have the power and authority to visit and examine at any time
any independent escrowee certified under this Act and to
compel compliance with the provisions of this Act.
(g) A title insurance company or title insurance agent,
not qualified as an independent escrowee, may act in the
capacity of an escrow agent when it is supplying an abstract
of title, grantor-grantee search, tract search, lien search,
tax assessment search, or other limited purpose search to the
parties to the transaction even if it is not issuing a title
insurance commitment or title insurance policy. A title
insurance agent may act as an escrow agent only when
specifically authorized in writing on forms prescribed by the
Director by a title insurance company that has duly
registered the agent with the Director and only when notice
of the authorization is provided to and receipt thereof is
acknowledged by the Director. The authority granted to a
title insurance agent may be limited or revoked at any time
by the title insurance company.
(Source: P.A. 86-239.)
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