97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB5824

 

Introduced 2/16/2012, by Rep. Linda Chapa LaVia

 

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 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. Provides that no person who has had a conviction or pled guilty to any felony or misdemeanor involving theft or dishonesty may 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.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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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 of a title insurance agent,
22including a firm, partnership, association, limited liability
23company, or corporation, shall be an affidavit of the applicant

 

 

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16suspended by the Secretary or voluntarily withdrawn by the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

 

 

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

 

 

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

 

 

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1letter. The liability, if any, of the title insurance agent to
2the title insurance company for acts and omissions of the title
3insurance agent as an escrow agent shall not be limited or
4otherwise modified because the title insurance company has
5provided closing protection to a party or parties to a real
6property transaction escrow, settlement, or closing. The
7escrow agent shall not charge a fee for protection provided by
8a title insurance company to parties to real property
9transactions under subsections (f) and (g) of this Section 16
10and Section 16.1, but shall collect from the parties the fee
11charged by the title insurance company and shall promptly remit
12the fee to the title insurance company. The title insurance
13company may charge the parties a reasonable fee for protection
14provided pursuant to subsections (f) and (g) of this Section 16
15and Section 16.1 and shall not pay any portion of the fee to
16the escrow agent. The payment of any portion of the fee to the
17escrow agent by the title insurance company, shall be deemed a
18prohibited inducement or compensation in violation of Section
1924 of this Act.
20    (i) The Secretary shall adopt and amend such rules as may
21be required for the proper administration and enforcement of
22this Section 16 consistent with the federal Real Estate
23Settlement Procedures Act and Section 24 of this Act.
24(Source: P.A. 96-1454, eff. 1-1-11.)
 
25    (215 ILCS 155/21)  (from Ch. 73, par. 1421)

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1for the administration of this Section.
2    If it is determined that the Secretary had the authority to
3issue the cease and desist order, he may issue such orders as
4may be reasonably necessary to correct, eliminate or remedy
5such conduct.
6    Any person or company subject to an order pursuant to this
7Section is entitled to judicial review of the order in
8accordance with the provisions of the Administrative Review
9Law.
10    The powers vested in the Secretary by this Section are
11additional to any and all other powers and remedies vested in
12the Secretary by law, and nothing in this Section shall be
13construed as requiring that the Secretary shall employ the
14powers conferred in this Section instead of or as a condition
15precedent to the exercise of any other power or remedy vested
16in the Secretary.
17(Source: P.A. 94-893, eff. 6-20-06.)
 
18    Section 99. Effective date. This Act takes effect January
191, 2013.