Bill Text: IL HB1335 | 2013-2014 | 98th General Assembly | Engrossed
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Amends the Title Insurance Act to add an exception to the prohibition against a title insurance company, title insurance agent, or independent escrowee making disbursements in connection with any escrows, settlements, or closings out of a fiduciary trust account or accounts if the funds are good funds and the title insurance company, title insurance agent, or independent escrowee and the financial institution, as defined by the Act, are known to each other and agree to the use of these funds.
Spectrum: Bipartisan Bill
Status: (Passed) 2013-08-16 - Public Act . . . . . . . . . 98-0387 [HB1335 Detail]
Download: Illinois-2013-HB1335-Engrossed.html
Bill Title: Amends the Title Insurance Act to add an exception to the prohibition against a title insurance company, title insurance agent, or independent escrowee making disbursements in connection with any escrows, settlements, or closings out of a fiduciary trust account or accounts if the funds are good funds and the title insurance company, title insurance agent, or independent escrowee and the financial institution, as defined by the Act, are known to each other and agree to the use of these funds.
Spectrum: Bipartisan Bill
Status: (Passed) 2013-08-16 - Public Act . . . . . . . . . 98-0387 [HB1335 Detail]
Download: Illinois-2013-HB1335-Engrossed.html
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1 | AN ACT concerning insurance.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Title Insurance Act is amended by changing | ||||||
5 | Sections 3 and 26 as follows:
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6 | (215 ILCS 155/3) (from Ch. 73, par. 1403)
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7 | Sec. 3. As used in this Act, the words and phrases | ||||||
8 | following shall
have the following meanings unless the context | ||||||
9 | requires otherwise:
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10 | (1) "Title insurance business" or "business of title | ||||||
11 | insurance" means:
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12 | (A) Issuing as insurer or offering to issue as insurer | ||||||
13 | title insurance;
and
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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 | ||||||
17 | title insurance;
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18 | (i) soliciting or negotiating the issuance of | ||||||
19 | title insurance;
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20 | (ii) guaranteeing, warranting, or otherwise | ||||||
21 | insuring the correctness of
title
searches for all | ||||||
22 | instruments affecting titles to real property, any | ||||||
23 | interest in
real property, cooperative units and |
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1 | proprietary leases, and for all liens or
charges | ||||||
2 | affecting the same;
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3 | (iii) handling of escrows, settlements, or | ||||||
4 | closings;
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5 | (iv) executing title insurance policies;
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6 | (v) effecting contracts of reinsurance;
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7 | (vi) abstracting, searching, or examining titles; | ||||||
8 | or
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9 | (vii) issuing insured closing letters or closing | ||||||
10 | protection letters;
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11 | (C) Guaranteeing, warranting, or insuring searches or | ||||||
12 | examinations of
title to real property or any interest in | ||||||
13 | real property, with the exception of
preparing an | ||||||
14 | attorney's opinion of title; or
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15 | (D) Guaranteeing or warranting the status of title as | ||||||
16 | to ownership of or
liens on real property and personal | ||||||
17 | property by any person other than the
principals to the | ||||||
18 | transaction; or
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19 | (E) Doing or proposing to do any business substantially | ||||||
20 | equivalent to any
of the activities listed in this | ||||||
21 | subsection,
provided that the preparation of an attorney's | ||||||
22 | opinion
of title pursuant to paragraph (1)(C) is not | ||||||
23 | intended to be within the
definition of "title insurance | ||||||
24 | business" or "business of title insurance".
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25 | (1.5) "Title insurance" means insuring, guaranteeing, | ||||||
26 | warranting, or
indemnifying owners of real or personal property |
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1 | or the holders of liens or
encumbrances thereon or others | ||||||
2 | interested therein against loss or damage
suffered by reason of | ||||||
3 | liens, encumbrances upon, defects in, or the
unmarketability of | ||||||
4 | the title to the property; the invalidity or
unenforceability | ||||||
5 | of any liens or encumbrances thereon; or doing any business in
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6 | substance equivalent to any of the foregoing.
"Warranting" for | ||||||
7 | purpose of this provision shall not
include any warranty | ||||||
8 | contained in instruments of encumbrance or conveyance.
Title | ||||||
9 | insurance is a single line form of insurance, also known as | ||||||
10 | monoline. An attorney's opinion of title pursuant to paragraph | ||||||
11 | (1)(C) is not intended to
be within the definition of "title | ||||||
12 | insurance".
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13 | (2) "Title insurance company" means any domestic company | ||||||
14 | organized under
the laws of this State for the purpose of | ||||||
15 | conducting the business of
title insurance and any title | ||||||
16 | insurance
company organized under the laws of another State, | ||||||
17 | the District of Columbia
or foreign government and authorized | ||||||
18 | to transact the business of
title insurance in this State.
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19 | (3) "Title insurance agent" means a person, firm, | ||||||
20 | partnership,
association, corporation or other legal entity | ||||||
21 | registered by a title
insurance company and authorized by such | ||||||
22 | company to determine insurability
of title in accordance with | ||||||
23 | generally acceptable underwriting rules and
standards in | ||||||
24 | reliance on either the public records or a search package
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25 | prepared from a title plant, or both, and authorized by such | ||||||
26 | title insurance company in addition to do any
of the following: |
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1 | act as an escrow agent pursuant to subsections (f), (g), and | ||||||
2 | (h) of Section 16 of this Act, solicit title insurance, collect
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3 | premiums, or issue title insurance commitments,
policies, and | ||||||
4 | endorsements of the title insurance company; provided, | ||||||
5 | however, the term "title insurance agent"
shall not include | ||||||
6 | officers and salaried employees of any title insurance
company.
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7 | (4) "Producer of title business" is any person, firm, | ||||||
8 | partnership,
association, corporation or other legal entity | ||||||
9 | engaged in this State in the
trade, business, occupation or | ||||||
10 | profession of (i) buying or selling
interests in real property, | ||||||
11 | (ii) making loans secured by interests in real
property, or | ||||||
12 | (iii) acting as broker, agent, attorney, or representative of
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13 | natural persons or other legal entities that buy or sell | ||||||
14 | interests in real
property or that lend money with such | ||||||
15 | interests as security.
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16 | (5) "Associate" is any firm, association, partnership, | ||||||
17 | corporation or
other legal entity organized for profit in which | ||||||
18 | a producer of title
business is a director, officer, or partner | ||||||
19 | thereof, or owner of a
financial interest, as defined herein, | ||||||
20 | in such entity; any legal entity
that controls, is controlled | ||||||
21 | by, or is under common control with a producer
of title | ||||||
22 | business; and any natural person or legal entity with whom a
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23 | producer of title business has any agreement, arrangement, or | ||||||
24 | understanding
or pursues any course of conduct the purpose of | ||||||
25 | which is to evade the
provisions of this Act.
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26 | (6) "Financial interest" is any ownership interest, legal |
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1 | or beneficial,
except ownership of publicly traded stock.
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2 | (7) "Refer" means to place or cause to be placed, or to | ||||||
3 | exercise any
power or influence over the placing of title | ||||||
4 | business, whether or not the
consent or approval of any other | ||||||
5 | person is sought or obtained with respect
to the referral.
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6 | (8) "Escrow Agent" means any title insurance company or any | ||||||
7 | title
insurance agent, including independent contractors of | ||||||
8 | either, acting on behalf of a title insurance company, which
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9 | receives deposits, in trust, of funds or documents, or both, | ||||||
10 | for the purpose
of effecting the sale, transfer, encumbrance or | ||||||
11 | lease of real property to
be held by such escrow agent until | ||||||
12 | title to the real property that is the
subject of the escrow is | ||||||
13 | in a prescribed condition. An escrow agent conducting closings | ||||||
14 | shall be subject to the provisions of paragraphs (1) through | ||||||
15 | (4) of subsection (e) of Section 16 of this Act.
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16 | (9) "Independent Escrowee" means any firm, person, | ||||||
17 | partnership,
association, corporation or other
legal entity, | ||||||
18 | other than a title insurance company or a title insurance
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19 | agent, which receives deposits, in trust, of funds or | ||||||
20 | documents, or both, for
the purpose of effecting the sale, | ||||||
21 | transfer, encumbrance or lease of real
property to be held by | ||||||
22 | such escrowee until title to the real property that
is the | ||||||
23 | subject of the escrow is in a prescribed condition. Federal and
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24 | State chartered banks, savings and loan associations, credit | ||||||
25 | unions,
mortgage bankers, banks or trust companies authorized | ||||||
26 | to do business under
the Illinois Corporate Fiduciary Act, |
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1 | licensees under the Consumer
Installment Loan Act, real estate | ||||||
2 | brokers licensed pursuant to the Real
Estate License Act of | ||||||
3 | 2000, as such Acts are now or hereafter amended, and
licensed | ||||||
4 | attorneys when engaged in the attorney-client relationship are
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5 | exempt from the escrow provisions of this Act. "Independent | ||||||
6 | Escrowee" does not include employees or independent | ||||||
7 | contractors of a title insurance company or title insurance | ||||||
8 | agent authorized by a title insurance company to perform | ||||||
9 | closing, escrow, or settlement services.
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10 | (10) "Single risk" means the insured amount of any title | ||||||
11 | insurance
policy, except that where 2 or more title insurance | ||||||
12 | policies are issued
simultaneously covering different estates | ||||||
13 | in the same real property, "single
risk" means the sum of the | ||||||
14 | insured amounts of all such title insurance
policies. Any title | ||||||
15 | insurance policy insuring a mortgage interest, a claim
payment | ||||||
16 | under which reduces the insured amount of a fee or leasehold | ||||||
17 | title
insurance policy, shall be excluded in computing the | ||||||
18 | amount of a single
risk to the extent that the insured amount | ||||||
19 | of the mortgage title insurance
policy does not exceed the | ||||||
20 | insured amount of the fee or leasehold title
insurance policy.
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21 | (11) "Department" means the Department of Financial and | ||||||
22 | Professional Regulation.
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23 | (12) "Secretary" means the Secretary
of Financial and | ||||||
24 | Professional Regulation.
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25 | (13) "Insured closing letter" or "closing protection | ||||||
26 | letter" means
an indemnification or undertaking to a party to a |
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1 | real property transaction, from
a principal such as a title | ||||||
2 | insurance company, setting forth
in writing the extent of the | ||||||
3 | principal's responsibility for intentional
misconduct or | ||||||
4 | errors in closing the real property transaction on the part of | ||||||
5 | a
settlement agent, such as a title insurance agent or other | ||||||
6 | settlement service
provider, and includes protection afforded | ||||||
7 | pursuant to subsections (f), (g), and (h) of Section 16 and | ||||||
8 | Section 16.1 of this Act even if such protection is afforded by | ||||||
9 | contract.
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10 | (14) "Residential real property" means a building or | ||||||
11 | buildings consisting of one to 4 residential units or a | ||||||
12 | residential condominium unit where at least one of the | ||||||
13 | residential units or condominium units is occupied or intended | ||||||
14 | to be occupied as a residence by the purchaser or borrower, or | ||||||
15 | in the event that the purchaser or borrower is the trustee of a | ||||||
16 | trust, by a beneficiary of that trust.
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17 | (15) "Financial institution" means any bank subject to the | ||||||
18 | Illinois Banking Act, any savings and loan association subject | ||||||
19 | to the Illinois Savings and Loan Act of 1985, any savings bank | ||||||
20 | subject to the Savings Bank Act, any credit union subject to | ||||||
21 | the Illinois Credit Union Act, and any federally chartered | ||||||
22 | commercial bank, savings and loan association, savings bank, or | ||||||
23 | credit union organized and operated in this State pursuant to | ||||||
24 | the laws of the United States. | ||||||
25 | (Source: P.A. 95-570, eff. 8-31-07; 96-1454, eff. 1-1-11.)
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1 | (215 ILCS 155/26) | ||||||
2 | Sec. 26. Settlement funds. | ||||||
3 | (a) A title insurance company, title insurance agent, or | ||||||
4 | independent escrowee shall not make disbursements in | ||||||
5 | connection with any escrows, settlements, or closings out of a | ||||||
6 | fiduciary trust account or accounts unless the funds in the | ||||||
7 | aggregate amount of $50,000 or greater received from any single | ||||||
8 | party to the transaction are good funds as defined in | ||||||
9 | paragraphs (2), (6), or (7) of subsection (c) of this Section; | ||||||
10 | or are collected funds as defined in subsection (d) of this | ||||||
11 | Section. | ||||||
12 | For the purposes of this subsection (a), where funds in the | ||||||
13 | aggregate amount of $50,000 or greater are received from any | ||||||
14 | purchaser of residential real property, as defined in paragraph | ||||||
15 | (14) of Section 3 of this Act, the aggregate amount may consist | ||||||
16 | of good funds of less than $50,000 per paragraph, as defined in | ||||||
17 | paragraphs (3) and (5) of subsection (c) of this Section and of | ||||||
18 | up to $5,000 in good funds, as defined in paragraph (4) of | ||||||
19 | subsection (c) of this Section. | ||||||
20 | (a-5) In addition to the good funds disbursement | ||||||
21 | authorization set forth in subsection (a) of this Section, a | ||||||
22 | title insurance company, title insurance agent, or independent | ||||||
23 | escrowee is authorized to make disbursements in connection with | ||||||
24 | any escrows, settlements, or closings out of a fiduciary trust | ||||||
25 | account or accounts where the funds in the aggregate amount of | ||||||
26 | $50,000 or greater are received from any single party to the |
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1 | transaction if: | ||||||
2 | (1) the funds are transferred by a cashier's check, | ||||||
3 | teller's check, or certified check, as defined in the | ||||||
4 | Uniform Commercial Code, that is drawn on or issued by a | ||||||
5 | financial institution, as defined in this Act; and | ||||||
6 | (2) the title insurance company, title insurance | ||||||
7 | agent, or independent escrowee and the financial | ||||||
8 | institution, as defined in this Act, are known to each | ||||||
9 | other and agree to the use of cashier's checks, teller's | ||||||
10 | checks, or certified checks as good funds under item (3) of | ||||||
11 | subsection (c) of this Section. | ||||||
12 | (b) A title insurance company or title insurance agent | ||||||
13 | shall not make disbursements in connection with any escrows, | ||||||
14 | settlements, or closings out of a fiduciary trust account or | ||||||
15 | accounts unless the funds in the amount of less than $50,000 | ||||||
16 | received from any single party to the transaction are collected | ||||||
17 | funds or good funds as defined in subsection (c) of this | ||||||
18 | Section. | ||||||
19 | (c) "Good funds" means funds in one of the following forms: | ||||||
20 | (1) lawful money of the United States; | ||||||
21 | (2) wired funds unconditionally held by and credited to | ||||||
22 | the fiduciary trust account of the title insurance company, | ||||||
23 | the title insurance agent, or independent escrowee; | ||||||
24 | (3) cashier's checks, certified checks, bank money
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25 | orders, official bank checks, or teller's checks drawn on
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26 | or issued by a financial institution chartered under the
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1 | laws of any state or the United States and unconditionally
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2 | held by the title insurance company, title insurance agent,
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3 | or independent escrowee; | ||||||
4 | (4) a personal check or checks in an aggregate amount | ||||||
5 | not exceeding $5,000 per closing, provided that the title | ||||||
6 | insurance company, title insurance agent, or independent | ||||||
7 | escrowee has reasonable grounds to believe that sufficient | ||||||
8 | funds are available for withdrawal in the account upon | ||||||
9 | which the check is drawn at the time of disbursement; | ||||||
10 | (5) a check drawn on the trust account of any lawyer or | ||||||
11 | real estate broker licensed under the laws of any state, | ||||||
12 | provided that the title insurance company, title insurance | ||||||
13 | agent, or independent escrowee has reasonable grounds to | ||||||
14 | believe that sufficient funds are available for withdrawal | ||||||
15 | in the account upon which the check is drawn at the time of | ||||||
16 | disbursement; | ||||||
17 | (6) a check issued by this State, the United States, or | ||||||
18 | a political subdivision of this State or the United States; | ||||||
19 | or | ||||||
20 | (7) a check drawn on the fiduciary trust account of a | ||||||
21 | title insurance company or title insurance agent, provided | ||||||
22 | that the title insurance company, title insurance agent, or | ||||||
23 | independent escrowee has reasonable grounds to believe | ||||||
24 | that sufficient funds are available for withdrawal in the | ||||||
25 | account upon which the check is drawn at the time of | ||||||
26 | disbursement. |
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1 | (d) "Collected funds" means funds deposited, finally | ||||||
2 | settled, and credited to the title insurance company, title | ||||||
3 | insurance agent, or independent escrowee's fiduciary trust | ||||||
4 | account.
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5 | (e) A purchaser, a seller, or a lender is each considered a | ||||||
6 | single party to the transaction for the purposes of this | ||||||
7 | Section, regardless of the number of people or entities making | ||||||
8 | up the purchaser, seller, or lender. | ||||||
9 | (Source: P.A. 96-645, eff. 1-1-10; 96-1457, eff. 1-1-11.)
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