HB4555 103RD GENERAL ASSEMBLY

LRB103 37017 RPS 67132 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB4555

Introduced 1/31/2024, by Rep. Ann M. Williams

SYNOPSIS AS INTRODUCED:

215 ILCS 155/3	from Ch. 73, par. 1403
215 ILCS 155/12	from Ch. 73, par. 1412
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

Amends the Title Insurance Act. 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 surrendered 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. Sets forth provisions concerning applications for a certificate of authority and makes changes concerning the powers of the Secretary. 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. Makes other changes. Effective immediately.

A BILL FOR

AN ACT concerning regulation.

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, 12, and 16 and by adding Sections 15.2, 16.2, and 17.2 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 insured closing letters or 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".

(1.5) "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. Title insurance is a single line form of insurance, also known as monoline. 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 title insurance 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 title insurance in this State.

(3) "Title insurance agent" means a person, firm, partnership, association, corporation, or other legal entity that is the holder of a certificate of authority provided pursuant to Section 16 and that is authorized registered by a title insurance company to solicit title insurance, collect title insurance premiums and endorsement charges, perform core title services, and, if authorized 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 by such title insurance company in addition to do any of the following: act as an escrow agent pursuant to Sections subsections (f), (g), and (h) of Section 16, 16.1, and 16.2 of this Act. "Title , solicit title insurance, collect premiums, or issue title insurance commitments, policies, and endorsements of the title insurance company; provided, however, the term "title insurance agent" does 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, including independent contractors of either, 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. An escrow agent conducting closings shall be subject to the provisions of Sections paragraphs (1) through (4) of subsection (e) of Section 16, 16.1, and 16.2 of this Act.

(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 2000, 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. "Independent Escrowee" does not include employees or independent contractors of a title insurance company or title insurance agent authorized by a title insurance company to perform closing, escrow, or settlement services.

(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 and Professional Regulation.

(12) "Secretary" means the Secretary of Financial and Professional Regulation.

(13) "Insured closing letter" or "closing protection letter" means an indemnification or undertaking to a party to a real property transaction, from a principal such as a title insurance company, setting forth in writing the extent of the principal's responsibility for intentional misconduct or errors in closing the real property transaction on the part of a settlement agent, such as a title insurance agent or other settlement service provider, or an indemnification or undertaking given by a title insurance company or an independent escrowee setting forth in writing the extent of the title insurance company's or independent escrowee's responsibility to a party to a real property transaction which indemnifies the party against the intentional misconduct or errors in closing the real property transaction on the part of the title insurance company or independent escrowee and includes protection afforded pursuant to subsections (p), (q), and (r) (f), (g), and (h) of Section 16, Section 16.1, subsection (h) of Section 17, and Section 17.1 of this Act even if such protection is afforded by contract.

(14) "Residential real property" means a building or buildings consisting of one to 4 residential units or a residential condominium unit where at least one of the residential units or condominium units is occupied or intended to be occupied as a residence by the purchaser or borrower, or in the event that the purchaser or borrower is the trustee of a trust, by a beneficiary of that trust.

(15) "Financial institution" means any bank subject to the Illinois Banking Act, any savings and loan association subject to the Illinois Savings and Loan Act of 1985, any savings bank subject to the Savings Bank Act, any credit union subject to the Illinois Credit Union Act, and any federally chartered commercial bank, savings and loan association, savings bank, or credit union organized and operated in this State pursuant to the laws of the United States.

(16) "Core title services" means the performance of the following services, for which liability shall arise, and that is separate from and is not duplicative of any other professional service, including, without limitation, the practice of law and the performance of services as a real estate licensee:

(A) review and evaluation of title, tax, judgment, lien, and other searches or search products, private title plant records, records of grantor-grantee and other indices, public records and other records, and any other information and materials which are relevant to a particular property and transaction to determine insurability of title to the property;

(B) issuing or causing to be issued the title commitments on behalf of a title insurance company, including the determination of the conditions under which the title insurance company will issue the title insurance policies required in a particular transaction;

(C) determination as to whether, in accordance with applicable law and the title insurance company's underwriting requirements, principles, or guidelines, underwriting objections stated on the title insurance commitments may be cleared and the circumstances under which the objections will be waived or insured before issuance of the title insurance policies; and

(D) issuing or causing to be issued the title insurance policies required in a particular transaction when all conditions for the issuance have been satisfied.

(17) "Title search" means any abstract of title, tract, tax, judgment, or lien searches, limited purpose searches, other searches and search products, private title plant records, records of grantor-grantee and other indices, public records and other records, property inspections, records related to the status of title to land, and other information and materials that are relevant to a particular residential real property and transactions relating to that residential real property.

(Source: P.A. 100-485, eff. 9-8-17.)

(215 ILCS 155/12) (from Ch. 73, par. 1412)

Sec. 12. Examinations; compliance.

(a) The Secretary or the Secretary's his authorized representative shall have the power and authority, and it shall be his duty, to cause to be visited and examined annually any title insurance company doing business under this Act, and to verify and compel compliance with the provisions of law governing it.

(b) The Secretary or the Secretary's his authorized representative agent shall have power and authority to visit and examine the records specifically pertaining to the services provided under this Act of any title insurance agent, but not including files pertaining to the title insurance agent's practice of law, if applicable, and to verify and compel compliance with the provisions of this Act compel compliance with the provisions of this Act and shall, only upon the showing of good cause, require any title insurance company to take all legal means to obtain the appropriate records of its registered agents and make them available for examination at a time and place designated by the Secretary. Expenses incurred in the course of such examinations will be the responsibility of the title insurance company. In the event that a present or former registered agent or its successor refuses or is unable to cooperate with a title insurance company in furnishing the records requested by the Secretary or his or her authorized agent, then the Secretary or his or her authorized agent shall have the power and authority to obtain those records directly from the registered agent.

(c) The Secretary or the Secretary's authorized representative shall have the power and authority to visit and examine the records specifically pertaining to the services provided under this Act of any independent escrowee and to verify and compel compliance with the provisions of this Act.

(Source: P.A. 94-893, eff. 6-20-06.)

(215 ILCS 155/15.2 new)

Sec. 15.2. Title insurance company duties.

(a) This Section applies only to transactions involving residential real property.

(b) In the conduct of its title insurance business, every title insurance company shall:

(1) Post and publish its current rates and charges associated with its title insurance business with a clear and complete description thereof, including, without limitation, title insurance premiums, endorsements to policies, fees for services as an escrow agent, and all other services and products it provides, conspicuously in its offices and on its websites, social media, and digital, electronic, online, and other platforms and places that are intended to be visited or viewed by the public. Title insurance companies must also provide their registered title insurance agents with the posted and published rates and charges. A title insurance company must not make a charge that exceeds its published rates and charges. This subsection (b) does not apply to special risk title insurance and endorsement premiums, general advertising, and marketing in media not controlled by the title insurance company, but any such advertising shall contain information, such as an Internet web address or a hyperlink, to a website where the published rates and charges can be viewed by the public.

(2) Require all of its title insurance agents to perform, at a minimum in each transaction, all core title services as a condition to that title insurance agent's compensation as set forth in the agency contract, and may not interfere with, assume in whole or in part, or prevent the title insurance agent's performance of any core title service.

(3) Agree upon the terms of the agency in writing with its title insurance agents; the terms shall include that the title insurance agent must perform, at a minimum, all core title services as a condition of the title insurance agent's compensation for each title insurance product and endorsement issued and the compensation that the title insurance agent shall receive for the performance of such core title services. Compensation to the title insurance agent for the performance of core title services shall be as stated in the written agency contract.

(4) Share title insurance premiums and endorsement charges only with its title insurance agent performing the core title services in a transaction.

(5) Agree in writing with any title insurance agent to which the title insurance company provides products or services that are not core title services but are related to the title insurance agent's performance of core title services and are included in the cost of the title insurance premiums and endorsements, such as, if applicable, title searches, underwriting research assistance, quality control, document recording, retention of title documentation, commitment and policy typing, or other products and services to the title insurance agent. The written agreement must set forth, at a minimum, a description of the products and services to be provided and the compensation to be paid for such products and services. Such compensation must be commensurate with the actual value of the products and services.

(6) Retain any remedy or right of action against its title insurance agent as provided in any law, rule, or regulation for the title insurance agent's failure to perform its obligations under the written agency contract, underwriting requirements, or otherwise as provided by law.

(c) In any residential real property transaction in which a title insurance company acts as an escrow agent pursuant to any provision in this Act:

(1) A title insurance company's current rates and charges for its products and services rendered as an escrow agent must be included in the posting and publication provided for in subsection (b).

(2) A title insurance company shall disburse all title insurance premiums and endorsement charges as directed by the title insurance agent performing core title services under Section 16.2 at the time of settlement or closing. The disbursements shall be in accordance with the written agency or other contracts between the title insurance agent and the title insurance company acting as the escrow agent in the transaction and the distributions shall be clearly and unambiguously disclosed on any applicable closing disclosure or settlement statement and delivered to the parties to the transaction at the time of closing or settlement.

(3) A title insurance company shall not share or allow to be shared, either directly or indirectly, any of its compensation for its service as an escrow agent or other products or services with any title insurance agent except as provided in this Section. Any payment that is contrary to this paragraph (3) is a prohibited inducement or compensation for a referral in violation of Section 24.

(d) Nothing in this Section shall be construed to restrict or impair a title insurance company's right or ability to determine and promulgate its underwriting requirements, principles, and conditions for insuring any risk that would be covered in a policy of insurance or an endorsement to a policy, or to educate, instruct, or inform its title insurance agents as to its underwriting requirements generally or in a particular transaction or otherwise. Nothing in this Section shall be construed to restrict or impair a title insurance company's right or ability to determine and charge special risk title insurance and endorsement premiums that are different from the posted or published rates and premiums, or to waive or vary from its title insurance underwriting requirements, principles, and conditions for insuring any risk that would be covered in a policy of insurance or an endorsement to a policy in any given case as it, in its sole discretion, may decide. Special risk title insurance and endorsement premiums shall not be shared with any other party.

(215 ILCS 155/16) (from Ch. 73, par. 1416)

Sec. 16. Title insurance agents.

(a) 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. A certificate of authority shall remain in effect unless revoked or suspended by the Secretary, voluntarily surrendered by the holder, or the holder of the certificate of authority is no longer authorized as a title insurance agent of a title insurance company unless duly registered by a title insurance company with the Secretary.

(b) Each application for a certificate of authority registration shall be made on a form specified by the Secretary and prepared by each title insurance company which the agent represents. The title insurance company shall retain the copy of the application and forward a copy to the Secretary.

(c) Every applicant for a certificate of authority registration, except a firm, partnership, association, limited liability company, or corporation, must be 18 years or more of age. Included in every application for a certificate of authority registration of a title insurance agent, including a firm, partnership, association, limited liability company, or corporation, shall be an affidavit of the applicant title insurance agent, signed and notarized in front of a notary public, affirming that the applicant and every owner, officer, director, principal, member, or manager of the applicant has never been convicted or pled guilty to any felony or misdemeanor involving a crime of theft or dishonesty or otherwise accurately disclosing any such felony or misdemeanor involving a crime of theft or dishonesty, and that the applicant and every owner, officer, director, principal, member, or manager of the applicant has never been adjudicated by any tribunal to be civilly liable to any party based on a finding involving theft or dishonesty. No person who has had a conviction or pled guilty to any felony or misdemeanor or who has been adjudicated by any tribunal to be civilly liable to any party based on a finding involving theft or dishonesty may qualify for a certificate of authority be registered by a title insurance company without a written notification to the Secretary disclosing the conviction or plea, and no such person may serve as an owner, officer, director, principal, or manager of any registered title insurance agent without the written permission of the Secretary.

(d) Every individual applicant that is not duly registered as a title insurance agent on the effective date of this amendatory Act of the 103rd General Assembly shall: Registration shall be made annually by a filing with the Secretary; supplemental registrations for new title insurance agents to be added between annual filings shall be made from time to time in the manner provided by the Secretary; registrations shall remain in effect unless revoked or suspended by the Secretary or voluntarily withdrawn by the registrant or the title insurance company.

(1) Successfully complete a 4-year course of study in a high school or secondary school approved by the state in which the school is located, or possess a State of Illinois High School Diploma, which shall be verified under oath by the applicant.

(2) Pass an examination that is designed to determine the competency of the applicant to conduct the business of a title agent and knowledge of basic real property law and title insurance procedures. The applicant shall file with its application satisfactory proof that the applicant has passed the competency examination. The Department shall have the authority to adopt administrative rules to approve testing providers, establish the testing procedures, including, but not limited to, the requirements for passing the examination, and the content of the examination that shall, at a minimum, determine the competency of an applicant in the following subject matters and any other subject matter which the Secretary may determine to be basic and essential to the competent conduct of the business of a title insurance agent, which must include, at a minimum:

(i) the Title Insurance Act and its requirements;

(ii) Illinois real property law, including, but not limited to, forms of ownership, conveyancing, testate or intestate succession of title, taxes, judgments, liens, surveys;

(iii) basic knowledge of the federal Real Estate Settlement Procedures Act;

(iv) core title services; and

(v) title examinations and methods, title objections, policy and endorsement forms, waivers of policy exceptions, and escrow procedures.

Any applicant that is a firm, partnership, association, corporation, or other legal entity shall fulfill the examination requirement of paragraph (2) of this subsection (d) by an officer of the entity that owns an equity interest in the entity and that has managerial authority in the entity.

(e) The requirements of subsection (d) do not apply to applicants who are admitted to practice law by the Supreme Court of Illinois and who are in active standing or to applicants that have earned the Illinois Land Title Association's "Illinois Title Professional" designation.

(f) The Secretary shall issue a certificate of authority to conduct business as a title insurance agent upon determination that an applicant has passed the required examination and is otherwise in compliance with this Act and all applicable laws. The certificate of authority provided for in this Section shall be renewed every 2 years upon the payment of a certificate of authority renewal fee in an amount determined by the Secretary pursuant to the rulemaking authority under subsection (s).

(g) Any title insurance agent who is registered on the effective date of this amendatory Act of the 103rd General Assembly may continue to conduct the business of title insurance as a title insurance agent for a period of one year after the effective date of this amendatory Act of the 103rd General Assembly and shall be issued a certificate of authority upon the filing by a title insurance company with the Secretary a written agency agreement that complies with this Act within 90 days after the effective date of this amendatory Act of the 103rd General Assembly.

(h) A title insurance company shall annually file with the Secretary a list of all title insurance agents authorized to conduct the business of title insurance as an agent of the title insurance company. Supplemental filings for new title insurance agents to be added between annual filings shall be made from time to time in the manner provided by the Secretary. A title insurance company shall immediately notify the Secretary of any title insurance agent whose agency has been terminated, and shall immediately file with the Secretary any new title insurance agency agreement that replaces an agreement already on file or that has been revised or amended in any way.

(i) 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.

(j) (e) Funds deposited in connection with any escrows, settlements, or closings shall be deposited into 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. The 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 escrow agent. The 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.

Interest received on funds deposited with the escrow agent in connection with any escrow, settlement, or closing shall be paid to the depositing party unless the instructions provide otherwise.

The escrow agent shall maintain separate records of all receipts and disbursements of escrow, settlement, or closing funds.

The escrow agent shall comply with any rules adopted by the Secretary pertaining to escrow, settlement, or closing transactions.

(k) A title insurance agent shall not act as an escrow agent in a residential real property transaction unless the title insurance agent files with the Secretary and the Secretary approves cash or bonds of the United States, this State, or any body politic of this State in the amounts specified in subsection (l). The deposit is not to be otherwise pledged or subject to distribution among creditors, owners of equity, or stockholders until all claims of escrow depositors have been paid in full or discharged, reinsured, or otherwise assumed by a title insurance company authorized to do business under this Act. The cash, bonds, and securities so deposited may be exchanged for other such securities. No such cash, bond, or security shall be sold or transferred by the Secretary except on order of the circuit court or as provided in subsection (o). The company shall be permitted to receive from the Secretary the interest on the deposit as long as the company depositing such securities remains solvent.

(l) The deposit required under subsection (k) must have a then-current value of $500,000. For title insurance agents that act as an escrow agent exclusively for transactions involving residential real property in counties having populations of fewer than 500,000, the deposit required under subsection (k) must have a then-current value of $250,000. All deposits shall be held for the benefit of any named party to a written escrow it accepted. The deposit is not to be otherwise pledged or subject to distribution among creditors or stockholders.

(m) The Secretary may provide for custody of the deposits by any trust company or bank located in this State and qualified to do business under the Corporate Fiduciary Act. The compensation, if any, of such custodian shall be paid by the depositing company. When the required deposits have been made by a title insurance agent that intends to act as an escrow agent in any residential real property transaction, the Secretary shall certify that the title insurance agent has complied with the provisions of this Section and is authorized to transact the business of a title insurance agent acting as an escrow agent in residential real property transactions.

(n) Before doing business in the State of Illinois in a residential real property transaction, an escrow agent must file with and have approved by the Secretary proof of a fidelity bond in the minimum amount of $1,000,000 per occurrence, errors and omissions insurance in the minimum amount of $1,000,000 per occurrence, and cybercrime insurance coverage in the minimum amount of $500,000 per occurrence. The insurance policies required shall be issued by insurers that are authorized to conduct such insurance business in the State of Illinois. The title insurance agent may not conduct title insurance business as an escrow agent unless the deposit, fidelity bond, errors and omissions insurance, and cybercrime insurance coverage required by this Section are continuously maintained.

(o) The Secretary may revoke the certificate of authority of a title insurance agent acting as an escrow agent that fails to maintain the deposit, fidelity bond, errors and omissions insurance, or cybercrime insurance coverage required by this Section. The Secretary shall give notice of that revocation to such title insurance agent as provided by this Act, and, during the time of the revocation, the title insurance agent may not conduct any title insurance business as an escrow agent. A revocation shall not be set aside until the title insurance agent has filed with and has been approved by the Secretary in accordance with the requirements of this Section and the title insurance agent is otherwise in compliance with this Act, or until the title insurance agent ceases to do business as an escrow agent.

(p) (f) A title insurance agent shall not act as an escrow agent in a nonresidential real property transaction where the amount of settlement funds on deposit with the escrow agent is less than $2,000,000 or in a residential real property transaction unless the title insurance agent, title insurance company, or another authorized title insurance agent has committed for the issuance of title insurance in that transaction and the title insurance agent is authorized to act as an escrow agent on behalf of the title insurance company for which the commitment for title insurance has been issued. The authorization under the preceding sentence shall be given either (1) by an agency contract with the title insurance company which contract, in compliance with the requirements set forth in subsection (q) (g) of this Section, authorizes the title insurance agent to act as an escrow agent on behalf of the title insurance company or (2) by a closing protection letter in compliance with the requirements set forth in Section 16.1 of this Act, issued by the title insurance company to the seller, buyer, borrower, and lender. A closing protection letter shall not be issued by a title insurance agent. The provisions of this subsection (f) shall not apply to the authority of a title insurance agent to act as an escrow agent under subsection (g) of Section 17 of this Act.

(q) (g) If an agency contract between the title insurance company and the title insurance agent is the source of the authority under subsection (p) (f) of this Section for a title insurance agent to act as escrow agent for a real property transaction, then the agency contract shall provide for no less protection from the title insurance company to all parties to the real property transaction than the title insurance company would have provided to those parties had the title insurance company issued a closing protection letter in conformity with Section 16.1 of this Act.

(r) (h) A title insurance company shall be liable for the acts or omissions of its title insurance agent as an escrow agent if the title insurance company has authorized the title insurance agent under subsections (p) and (q) (f) and (g) of this Section 16 and only to the extent of the liability undertaken by the title insurance company in the agency agreement or closing protection letter. The liability, if any, of the title insurance agent to the title insurance company for acts and omissions of the title insurance agent as an escrow agent shall not be limited or otherwise modified because the title insurance company has provided closing protection to a party or parties to a real property transaction escrow, settlement, or closing. The escrow agent shall not charge a fee for protection provided by a title insurance company to parties to real property transactions under subsections (p) and (q) (f) and (g) of this Section 16 and Section 16.1, but shall collect from the parties the fee charged by the title insurance company and shall promptly remit the fee to the title insurance company. The title insurance company may charge the parties a reasonable fee for protection provided pursuant to subsections (p) and (q) (f) and (g) of this Section 16 and Section 16.1 and shall not pay any portion of the fee to the escrow agent. The payment of any portion of the fee to the escrow agent by the title insurance company, shall be deemed a prohibited inducement or compensation in violation of Section 24 of this Act.

(s) (i) The Secretary shall adopt and amend such rules as may be required for the proper administration and enforcement of this Section 16 consistent with the federal Real Estate Settlement Procedures Act and Section 24 of this Act, including the proper administration of the licensing and examination of applicants, the retention of third-party licensing and competency examination entities if the Secretary deems such retention to be reasonable, necessary, and proper, and application, licensing, and renewal fees sufficient to offset the costs of the implementation, administration, and enforcement of the provisions of this Section. The Department shall adopt such rules as the Secretary deems necessary promptly after the effective date of this amendatory Act of the 103rd General Assembly.

(t) Notwithstanding any other provision of this amendatory Act of the 103rd General Assembly, the examination requirements of paragraph (2) of subsection (d) shall take effect on the date that final rules for implementation of provisions described in subsection (s) take effect.

(Source: P.A. 98-398, eff. 1-1-14; 98-832, eff. 1-1-15; 99-104, eff. 1-1-16.)

(215 ILCS 155/16.2 new)

Sec. 16.2. Title insurance agent duties.

(a) This Section shall apply only to transactions involving residential real property.

(b) In the conduct of its title insurance business, every title insurance agent shall:

(1) Post and publish the current rates and charges of each of its title insurance company principals, as provided by the title insurance company, conspicuously in its offices and on its websites, social media, and digital, electronic, online, and other platforms and places that are intended to be visited or viewed by the public. A title insurance agent shall not make a charge that exceeds the published rates and charges. This subsection (b) does not apply to special risk title insurance and endorsements premiums, general advertising, and marketing in media not controlled by the title insurance agent, but any such advertising shall contain information, such as an Internet web address or a hyperlink, to a website where such published rates and charges can be viewed by the public.

(2) Agree upon the terms of the agency in writing with each title insurance company for which it is a registered agent; the terms shall include that the title insurance agent must perform, at a minimum, all core title services as a condition of the title insurance agent's compensation for each title insurance product and endorsement issued, and the compensation that the title insurance agent shall receive for the performance of such core title services. Compensation received by the title insurance agent for the performance of core title services shall not exceed that which is stated in the written agency contract.

(3) Enter into an agreement in writing with any escrow agent or title insurance agent that provides products or services that are not core title services but that are related to the title insurance agent's performance of core title services and are included in the title insurance and endorsements premiums, such as, if applicable, title searches, underwriting research assistance, quality control, document recording, retention of title documentation, commitment and policy typing, or other products and services to the title insurance agent; the agreement shall set forth, at a minimum, a description of the product and services to be provided, the compensation to be paid for such products and services, and the conditions for which the products and services are necessary. Such compensation shall be commensurate with the actual value of such products and services.

(4) Perform, at a minimum, all core title services as a condition of its compensation as set forth in the agency agreement.

(5) Direct the escrow agent or independent escrowee as to the disbursement at the time of settlement or closing of title insurance premiums and endorsement charges to the title insurance company in accordance with its agency contract and to the escrow agent in accordance with its written agreement. All such disbursements shall be clearly and unambiguously disclosed on any applicable closing disclosure and settlement statement and delivered to the parties to the transaction at the time of closing or settlement.

(6) Not share or allow to be shared, either directly or indirectly, any of its compensation for any products or services charged directly to a party in the transaction with any other title insurance agent except as provided in this Section. Any payment that is contrary to this paragraph (6) is a prohibited inducement or compensation for a referral in violation of Section 24.

(c) In any transaction in which a title insurance agent acts as an escrow agent pursuant to Sections 16, 16.1, and 16.2 of this Act or any other provision in this Act:

(1) The title insurance agent's current rates and charges for its products and services rendered as an escrow agent shall be included in the posting and publication provided for in subsection (b). An escrow agent shall not make any charge that exceeds its published rates and charges.

(2) The escrow agent shall disburse all title insurance premiums and endorsement charges as directed by the title insurance agent performing core title services at the time of settlement or closing of the transaction. The disbursement shall include payment for any products or services that are not core title services but that are related to the title insurance agent's performance of core title services and are included in the cost of the title insurance premiums and endorsements, such as, if applicable, title searches, underwriting research assistance, quality control, document recording, retention of title documentation, commitment and policy typing, or other products and services to the title insurance agent that were supplied to the title insurance agent by an escrow agent or other title insurance agent. The disbursements shall be in accordance with the written agency or other agreement between the title insurance agent and escrow agent or other title insurance agent in the transaction and the distributions shall be clearly and unambiguously disclosed on any applicable closing disclosure or settlement statement and delivered to the parties to the transaction at the time of closing or settlement.

(3) The escrow agent shall not share or allow to be shared, either directly or indirectly, any of its compensation for its service as an escrow agent or other products or services charged directly to a party in the transaction with any other title insurance agent except as provided in this Section. Any payment that is contrary to this paragraph (3) is a prohibited inducement or compensation for a referral in violation of Section 24.

(215 ILCS 155/17.2 new)

Sec. 17.2. Independent escrowee duties.

(a) This Section shall apply only to transactions involving residential real property.

(b) In the conduct of its escrow, settlement, or closing business, and its operation as an escrow, settlement, or closing agent as provided in Section 17, every independent escrowee shall:

(1) Post and publish the current rates and charges associated with its performance of the services and obligations as an independent escrowee and all other services and products it provides with a clear and complete description thereof conspicuously in its offices and on its websites, social media, and digital, electronic, online, and other platforms and places that are intended to be visited or viewed by the public. An independent escrowee shall not make a charge that exceeds the published rates and charges. This paragraph (1) shall not apply to general advertising and marketing in media not controlled by the independent escrowee, but any such advertising shall contain information, such as an Internet web address or a hyperlink, to a website where such published rates and charges can be viewed by the public.

(2) Disburse all title insurance premiums and endorsement charges as directed by the title insurance agent performing core title services under subsection (c) of Section 16.2 at the time of settlement or closing. All such disbursements shall be clearly and unambiguously disclosed on any applicable closing disclosure or settlement statement and delivered to the parties to the transaction at the time of closing or settlement.

(c) An independent escrowee shall not share or allow to be shared any of its compensation for its escrow and settlement services with any title insurance company or title insurance agent except as provided in this Section. Any payment that is contrary to this subsection (c) is a prohibited inducement or compensation for a referral in violation of Section 24.

Section 99. Effective date. This Act takes effect upon becoming law.