Illinois General Assembly - Full Text of HB1335
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Full Text of HB1335  98th General Assembly


Rep. Ron Sandack

Filed: 3/7/2013





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2    AMENDMENT NO. ______. Amend House Bill 1335 by replacing
3everything after the enacting clause with the following:
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



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1    title insurance;
2            (i) soliciting or negotiating the issuance of
3        title insurance;
4            (ii) guaranteeing, warranting, or otherwise
5        insuring the correctness of title searches for all
6        instruments affecting titles to real property, any
7        interest in real property, cooperative units and
8        proprietary leases, and for all liens or charges
9        affecting the same;
10            (iii) handling of escrows, settlements, or
11        closings;
12            (iv) executing title insurance policies;
13            (v) effecting contracts of reinsurance;
14            (vi) abstracting, searching, or examining titles;
15        or
16            (vii) issuing insured closing letters or closing
17        protection letters;
18        (C) Guaranteeing, warranting, or insuring searches or
19    examinations of title to real property or any interest in
20    real property, with the exception of preparing an
21    attorney's opinion of title; or
22        (D) Guaranteeing or warranting the status of title as
23    to ownership of or liens on real property and personal
24    property by any person other than the principals to the
25    transaction; or
26        (E) Doing or proposing to do any business substantially



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1    equivalent to any of the activities listed in this
2    subsection, provided that the preparation of an attorney's
3    opinion of title pursuant to paragraph (1)(C) is not
4    intended to be within the definition of "title insurance
5    business" or "business of title insurance".
6    (1.5) "Title insurance" means insuring, guaranteeing,
7warranting, or indemnifying owners of real or personal property
8or the holders of liens or encumbrances thereon or others
9interested therein against loss or damage suffered by reason of
10liens, encumbrances upon, defects in, or the unmarketability of
11the title to the property; the invalidity or unenforceability
12of any liens or encumbrances thereon; or doing any business in
13substance equivalent to any of the foregoing. "Warranting" for
14purpose of this provision shall not include any warranty
15contained in instruments of encumbrance or conveyance. Title
16insurance is a single line form of insurance, also known as
17monoline. An attorney's opinion of title pursuant to paragraph
18(1)(C) is not intended to be within the definition of "title
20    (2) "Title insurance company" means any domestic company
21organized under the laws of this State for the purpose of
22conducting the business of title insurance and any title
23insurance company organized under the laws of another State,
24the District of Columbia or foreign government and authorized
25to transact the business of title insurance in this State.
26    (3) "Title insurance agent" means a person, firm,



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1partnership, association, corporation or other legal entity
2registered by a title insurance company and authorized by such
3company to determine insurability of title in accordance with
4generally acceptable underwriting rules and standards in
5reliance on either the public records or a search package
6prepared from a title plant, or both, and authorized by such
7title insurance company in addition to do any of the following:
8act as an escrow agent pursuant to subsections (f), (g), and
9(h) of Section 16 of this Act, solicit title insurance, collect
10premiums, or issue title insurance commitments, policies, and
11endorsements of the title insurance company; provided,
12however, the term "title insurance agent" shall not include
13officers and salaried employees of any title insurance company.
14    (4) "Producer of title business" is any person, firm,
15partnership, association, corporation or other legal entity
16engaged in this State in the trade, business, occupation or
17profession of (i) buying or selling interests in real property,
18(ii) making loans secured by interests in real property, or
19(iii) acting as broker, agent, attorney, or representative of
20natural persons or other legal entities that buy or sell
21interests in real property or that lend money with such
22interests as security.
23    (5) "Associate" is any firm, association, partnership,
24corporation or other legal entity organized for profit in which
25a producer of title business is a director, officer, or partner
26thereof, or owner of a financial interest, as defined herein,



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1in such entity; any legal entity that controls, is controlled
2by, or is under common control with a producer of title
3business; and any natural person or legal entity with whom a
4producer of title business has any agreement, arrangement, or
5understanding or pursues any course of conduct the purpose of
6which is to evade the provisions of this Act.
7    (6) "Financial interest" is any ownership interest, legal
8or beneficial, except ownership of publicly traded stock.
9    (7) "Refer" means to place or cause to be placed, or to
10exercise any power or influence over the placing of title
11business, whether or not the consent or approval of any other
12person is sought or obtained with respect to the referral.
13    (8) "Escrow Agent" means any title insurance company or any
14title insurance agent, including independent contractors of
15either, acting on behalf of a title insurance company, which
16receives deposits, in trust, of funds or documents, or both,
17for the purpose of effecting the sale, transfer, encumbrance or
18lease of real property to be held by such escrow agent until
19title to the real property that is the subject of the escrow is
20in a prescribed condition. An escrow agent conducting closings
21shall be subject to the provisions of paragraphs (1) through
22(4) of subsection (e) of Section 16 of this Act.
23    (9) "Independent Escrowee" means any firm, person,
24partnership, association, corporation or other legal entity,
25other than a title insurance company or a title insurance
26agent, which receives deposits, in trust, of funds or



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1documents, or both, for the purpose of effecting the sale,
2transfer, encumbrance or lease of real property to be held by
3such escrowee until title to the real property that is the
4subject of the escrow is in a prescribed condition. Federal and
5State chartered banks, savings and loan associations, credit
6unions, mortgage bankers, banks or trust companies authorized
7to do business under the Illinois Corporate Fiduciary Act,
8licensees under the Consumer Installment Loan Act, real estate
9brokers licensed pursuant to the Real Estate License Act of
102000, as such Acts are now or hereafter amended, and licensed
11attorneys when engaged in the attorney-client relationship are
12exempt from the escrow provisions of this Act. "Independent
13Escrowee" does not include employees or independent
14contractors of a title insurance company or title insurance
15agent authorized by a title insurance company to perform
16closing, escrow, or settlement services.
17    (10) "Single risk" means the insured amount of any title
18insurance policy, except that where 2 or more title insurance
19policies are issued simultaneously covering different estates
20in the same real property, "single risk" means the sum of the
21insured amounts of all such title insurance policies. Any title
22insurance policy insuring a mortgage interest, a claim payment
23under which reduces the insured amount of a fee or leasehold
24title insurance policy, shall be excluded in computing the
25amount of a single risk to the extent that the insured amount
26of the mortgage title insurance policy does not exceed the



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1insured amount of the fee or leasehold title insurance policy.
2    (11) "Department" means the Department of Financial and
3Professional Regulation.
4    (12) "Secretary" means the Secretary of Financial and
5Professional Regulation.
6    (13) "Insured closing letter" or "closing protection
7letter" means an indemnification or undertaking to a party to a
8real property transaction, from a principal such as a title
9insurance company, setting forth in writing the extent of the
10principal's responsibility for intentional misconduct or
11errors in closing the real property transaction on the part of
12a settlement agent, such as a title insurance agent or other
13settlement service provider, and includes protection afforded
14pursuant to subsections (f), (g), and (h) of Section 16 and
15Section 16.1 of this Act even if such protection is afforded by
17    (14) "Residential real property" means a building or
18buildings consisting of one to 4 residential units or a
19residential condominium unit where at least one of the
20residential units or condominium units is occupied or intended
21to be occupied as a residence by the purchaser or borrower, or
22in the event that the purchaser or borrower is the trustee of a
23trust, by a beneficiary of that trust.
24    (15) "Financial institution" means any bank subject to the
25Illinois Banking Act, any savings and loan association subject
26to the Illinois Savings and Loan Act of 1985, any savings bank



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1subject to the Savings Bank Act, any credit union subject to
2the Illinois Credit Union Act, and any federally chartered
3commercial bank, savings and loan association, savings bank, or
4credit union organized and operated in this State pursuant to
5the laws of the United States.
6(Source: P.A. 95-570, eff. 8-31-07; 96-1454, eff. 1-1-11.)
7    (215 ILCS 155/26)
8    Sec. 26. Settlement funds.
9    (a) A title insurance company, title insurance agent, or
10independent escrowee shall not make disbursements in
11connection with any escrows, settlements, or closings out of a
12fiduciary trust account or accounts unless the funds in the
13aggregate amount of $50,000 or greater received from any single
14party to the transaction are good funds as defined in
15paragraphs (2), (6), or (7) of subsection (c) of this Section;
16or are collected funds as defined in subsection (d) of this
18    For the purposes of this subsection (a), where funds in the
19aggregate amount of $50,000 or greater are received from any
20purchaser of residential real property, as defined in paragraph
21(14) of Section 3 of this Act, the aggregate amount may consist
22of good funds of less than $50,000 per paragraph, as defined in
23paragraphs (3) and (5) of subsection (c) of this Section and of
24up to $5,000 in good funds, as defined in paragraph (4) of
25subsection (c) of this Section.



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1    (a-5) In addition to the good funds disbursement
2authorization set forth in subsection (a) of this Section, a
3title insurance company, title insurance agent, or independent
4escrowee is authorized to make disbursements in connection with
5any escrows, settlements, or closings out of a fiduciary trust
6account or accounts where the funds in the aggregate amount of
7$50,000 or greater are received from any single party to the
8transaction if:
9        (1) the funds are transferred by a cashier's check,
10    teller's check, or certified check, as defined in the
11    Uniform Commercial Code, that is drawn on or issued by a
12    financial institution, as defined in this Act; and
13        (2) the title insurance company, title insurance
14    agent, or independent escrowee and the financial
15    institution, as defined in this Act, are known to each
16    other and agree to the use of cashier's checks, teller's
17    checks, or certified checks as good funds under item (3) of
18    subsection (c) of this Section.
19    (b) A title insurance company or title insurance agent
20shall not make disbursements in connection with any escrows,
21settlements, or closings out of a fiduciary trust account or
22accounts unless the funds in the amount of less than $50,000
23received from any single party to the transaction are collected
24funds or good funds as defined in subsection (c) of this
26    (c) "Good funds" means funds in one of the following forms:



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



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