Bill Amendment: IL HB2702 | 2017-2018 | 100th General Assembly

NOTE: For additional amemendments please see the Bill Drafting List

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Bill Title: REGULATION-TECH

Status: 2017-09-08 - Public Act . . . . . . . . . 100-0485 [HB2702 Detail]

Download: Illinois-2017-HB2702-House_Amendment_001.html

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Rep. Jay Hoffman

Filed: 3/15/2017

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AMENDMENT TO HOUSE BILL 2702
AMENDMENT NO. ______. Amend House Bill 2702 by replacing
everything after the enacting clause with the following:
"Section 5. The Title Insurance Act is amended by changing
Sections 3 and by adding Section 17.1 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

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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

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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,

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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 by such
title insurance company in addition to do any of the following:
act as an escrow agent pursuant to subsections (f), (g), and
(h) of Section 16 of this Act, 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" 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,

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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 paragraphs (1) through
(4) of subsection (e) of Section 16 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

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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

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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 a similar undertaking given by
a title insurance company or an independent escrowee 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 (f), (g), and (h) of Section
16, and Section 16.1, 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

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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.
(Source: P.A. 98-387, eff. 8-16-13.)
(215 ILCS 155/17.1 new)
Sec. 17.1. Independent escrowee prohibitions;
indemnification under a closing protection letter.
(a) Notwithstanding the provisions of item (iii) of
paragraph (B) of subsection (1) and subsection (9) of Section 3
of this Act, an independent escrowee is not authorized to act
pursuant to subsection (9) of Section 3 of this Act 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, as part of the same transaction, closing protection
letters protecting the buyer's or borrower's, lender's, and
seller's interests have been issued by the independent
escrowee.

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(b) Unless otherwise agreed to between an independent
escrowee and a protected person or entity, a closing protection
letter under this Section shall indemnify all parties to a real
property transaction against actual loss, not to exceed the
amount of the settlement funds deposited with the independent
escrowee. The closing protection letter shall in any event
indemnify all parties to a real property transaction when such
losses arise out of:
(1) failure of the independent escrowee to comply with
written closing instructions to the extent that they relate
to (A) the status of the title to an interest in land or
the validity, enforceability, and priority of the lien of a
mortgage on an interest in land, including the obtaining of
documents and the disbursement of funds necessary to
establish the status of title or lien or (B) the obtaining
of any other document specifically required by a party to
the real property transaction, but only to the extent that
the failure to obtain such other document affects the
status of the title to an interest in land or the validity,
enforceability, and priority of the lien of a mortgage on
an interest in land; or
(2) fraud, dishonesty, or negligence of the
independent escrowee in handling funds or documents in
connection with closings to the extent that the fraud,
dishonesty, or negligence relates to the status of the
title to the interest in land or to the validity,

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enforceability, and priority of the lien of a mortgage on
an interest in land or, in the case of a seller, to the
extent that the fraud, dishonesty, or negligence relates to
funds paid to or on behalf of, or which should have been
paid to or on behalf of, the seller.
(c) The indemnification under a closing protection letter
may include limitations on the liability of the independent
escrowee for any of the following:
(1) Failure of the independent escrowee to comply with
closing instructions that require title insurance
protection inconsistent with that set forth in the title
insurance commitment for the real property transaction.
Instructions that require the removal of specific
exceptions to title or compliance with the requirements
contained in the title insurance commitment shall not be
deemed to be inconsistent.
(2) Loss or impairment of funds in the course of
collection or while on deposit with a bank due to bank
failure, insolvency, or suspension, except such as shall
result from failure of the independent escrowee closer to
comply with written closing instructions to deposit the
funds in a bank that is designated by name by a party to
the real property transaction.
(3) Mechanics' and materialmen's liens in connection
with sale, purchase, lease, or construction loan
transactions, except to the extent that protection against

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such liens is afforded by a title insurance commitment or
policy issued by the title insurance agent or title
insurance company.
(4) Failure of the independent escrowee to comply with
written closing instructions to the extent that such
instructions require a determination by the independent
escrowee of the validity, enforceability, or effectiveness
of any document described in item (B) of paragraph (1) of
subsection (b) of this Section.
(5) Fraud, dishonesty, or negligence of an employee,
agent, attorney, or broker, who is not also the independent
escrowee or an independent contract closer of the
independent escrowee, of the indemnified party to the real
property transaction.
(6) The settlement or release of any claim by the
indemnified party to the real property transaction without
the written consent of the independent escrowee.
(7) Any matters created, suffered, assumed, or agreed
to by, or known to, the indemnified party to the real
property transaction without the written consent of the
independent escrowee.
The closing protection letter may also include reasonable
additional provisions concerning the dollar amount of
protection, provided the limit is no less than the amount
deposited with the independent escrowee, arbitration,
subrogation, claim notices, and other conditions and

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limitations that do not materially impair the protection
required by this Section.
(d) The Secretary shall adopt and amend rules as may be
required for the proper administration and enforcement of this
Section consistent with the federal Real Estate Settlement
Procedures Act and Section 24 of this Act.
Section 99. Effective date. This Act takes effect upon
becoming law.".