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INDEX
SECTION I -- TEXAS INSURANCE CODE
SECTION II -- INSURING FORMS
SECTION III -- RATE RULES
SECTION IV -- PROCEDURAL RULES AND DEFINITIONS

SECTION V -- EXHIBITS AND FORMS
SECTION VI -- ADMINISTRATIVE RULES
SECTION VII -- CLAIMS
SECTION VIII -- PERSONAL PROPERTY TITLE INSURANCE
APPENDIX: BULLETINS

SECTION I -- TEXAS INSURANCE CODE

TITLE 11. TITLE INSURANCE (EFFECTIVE APRIL 1, 2005)

SUBTITLE A. GENERAL PROVISIONS

CHAPTER 2501. GENERAL PROVISIONS
Sec. 2501.001. SHORT TITLE
Sec. 2501.002. PURPOSE; LEGISLATIVE INTENT
Sec. 2501.003. DEFINITIONS
Sec. 2501.004. ABSTRACT PLANT; JOINT ABSTRACT PLANT OPERATION
Sec. 2501.005. BUSINESS OF TITLE INSURANCE.
Sec. 2501.006. CLOSING THE TRANSACTION
Sec. 2501.007. REFERENCES TO TITLE.

CHAPTER 2502. PROHIBITED CONDUCT
SUBCHAPTER A. PROHIBITED CONDUCT IN GENERAL
Sec. 2502.001. ENGAGING IN CERTAIN INSURANCE BUSINESS PROHIBITED
Sec. 2502.002. COVERAGE FOR UNMARKETABILITY OF TITLE PROHIBITED.
Sec. 2502.003. INSURING AROUND DEFINED; PROHIBITIONS AND EXCEPTIONS
Sec. 2502.004. GUARANTEE OF MORTGAGE PAYMENT PROHIBITED
Sec. 2502.005. CIVIL PENALTY

SUBCHAPTER B. REBATES AND DISCOUNTS
Sec. 2502.051. REBATES AND DISCOUNTS PROHIBITED
Sec. 2502.052. CERTAIN DIVISIONS OF REAL PROPERTY CHARGES PROHIBITED
Sec. 2502.053. CERTAIN COMPENSATORY PAYMENTS NOT PROHIBITED
Sec. 2502.054. CERTAIN DIVISIONS OF PREMIUMS NOT PROHIBITED
Sec. 2502.055. PROMOTIONAL AND EDUCATIONAL ACTIVITIES NOT REBATES
Sec. 2502.056. MONETARY FORFEITURE

SUBTITLE B. ORGANIZATION OF TITLE INSURANCE COMPANIES

CHAPTER 2551. TITLE INSURERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2551.001. APPLICABILITY OF TITLE AND OTHER LAW
Sec. 2551.002. APPLICABILITY OF LAW GOVERNING CORPORATIONS
Sec. 2551.003. RULEMAKING; AUTHORITY OF DEPARTMENT AND COMMISSIONER

SUBCHAPTER B. FORMATION
Sec. 2551.051. FORMATION; GENERAL PURPOSES AND POWERS
Sec. 2551.052. NAME
Sec. 2551.053. STOCK AND SURPLUS REQUIREMENTS
Sec. 2551.054. PURCHASE OF OWN STOCK
Sec. 2551.055. CHARTER OF CORPORATION ENGAGING IN BUSINESS OF TITLE INSURANCE
Sec. 2551.056. REGULATION OF CERTAIN CORPORATIONS

SUBCHAPTER C. AUTHORITY TO ENGAGE IN BUSINESS
Sec. 2551.101. CERTIFICATE OF AUTHORITY REQUIRED
Sec. 2551.102. ISSUANCE OF CERTIFICATE OF AUTHORITY

SUBCHAPTER D. GENERAL POWERS AND DUTIES
Sec. 2551.151. ADMISSIBLE INVESTMENTS
Sec. 2551.152. ANNUAL STATEMENT
Sec. 2551.153. FEES
Sec. 2551.154. TRANSFER OF CERTAIN BUSINESS TO STATE BANKS OR TRUST COMPANIES

SUBCHAPTER E. REQUIRED DEPOSIT
Sec. 2551.201. DEPOSIT REQUIRED; AMOUNT
Sec. 2551.202. EXCEPTION: FOREIGN TITLE INSURANCE COMPANY
Sec. 2551.203. WITHDRAWAL AND SUBSTITUTION OF DEPOSIT
Sec. 2551.204. USE OF DEPOSIT

SUBCHAPTER F. RESERVES
Sec. 2551.251. STATUTORY PREMIUM RESERVE REQUIRED
Sec. 2551.252. AMOUNTS ADDED TO RESERVE FOR CALENDAR YEAR 1997; REDUCTIONS
Sec. 2551.253. AMOUNTS ADDED TO RESERVE FOR CALENDAR YEARS AFTER 1997; REDUCTIONS
Sec. 2551.254. TRANSITIONAL RELEASE; TRANSITIONAL CHARGE
Sec. 2551.255. RUNOFF BALANCE
Sec. 2551.256. ACTUARIAL CERTIFICATION
Sec. 2551.257. SUPPLEMENTAL RESERVE
Sec. 2551.258. REEVALUATION OF CERTAIN RESERVE REQUIREMENTS
Sec. 2551.259. STATUTORY PREMIUM RESERVE AND SUPPLEMENTAL RESERVE FUND
Sec. 2551.260. EFFECT OF INSOLVENCY OR DISSOLUTION
Sec. 2551.261. RESERVE FOR UNPAID LOSSES AND LOSS EXPENSES

SUBCHAPTER G. LIABILITY AND REINSURANCE
Sec. 2551.301. MAXIMUM POLICY LIABILITY
Sec. 2551.302. REQUIREMENTS FOR REINSURING POLICIES
Sec. 2551.303. FORM OF REINSURANCE CONTRACT
Sec. 2551.304. ACCEPTANCE OF REINSURANCE
Sec. 2551.305. CERTAIN REINSURANCE ALLOWED

SUBCHAPTER H. ENFORCEMENT AND INTERVENTION
Sec. 2551.351. FORFEITURE OF RIGHT TO ENGAGE IN BUSINESS
Sec. 2551.352. REVOCATION OF PERMIT AND FORFEITURE OF CHARTER
Sec. 2551.353. PROCEDURE FOR REVOCATION OF CERTIFICATE
Sec. 2551.354. APPEAL OF COMMISSIONER ACTION

CHAPTER 2552. ATTORNEY'S TITLE INSURANCE COMPANIES AND TITLE ATTORNEYS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2552.001. PURPOSE; LEGISLATIVE INTENT
Sec. 2552.002. DEFINITIONS
Sec. 2552.003. APPLICABILITY OF TITLE 11
Sec. 2552.004. BUSINESS OF ATTORNEY'S TITLE INSURANCE
Sec. 2552.005. OTHER TITLE INSURANCE COMPANIES AND AGENTS PROHIBITED
Sec. 2552.006. RECORD OF TITLE ATTORNEYS
Sec. 2552.007. OTHER PREMIUM OR FEE PROHIBITED

SUBCHAPTER B. ORGANIZATION OF ATTORNEY'S TITLE INSURANCE COMPANY
Sec. 2552.051. ORGANIZING MEMBERS
Sec. 2552.052. CAPITAL SHARE AND SURPLUS REQUIREMENTS GENERALLY
Sec. 2552.053. CAPITAL SHARE AND SURPLUS REQUIREMENTS FOR STATE BAR ENTITY
Sec. 2552.054. REACQUISITION OF SHARES
Sec. 2552.055. REACQUISITION PLAN REQUIRED
Sec. 2552.056. INAPPLICABILITY OF LAWS REGULATING SECURITIES

SUBCHAPTER C. TITLE ATTORNEY'S LICENSE AND RENEWAL
Sec. 2552.101. LICENSE AND OTHER GENERAL REQUIREMENTS
Sec. 2552.102. LICENSE APPLICATION
Sec. 2552.103. LICENSE ISSUANCE AND DELIVERY
Sec. 2552.104. DUPLICATE LICENSE
Sec. 2552.105. LICENSE TERM
Sec. 2552.106. AUTOMATIC TERMINATION OF LICENSE
Sec. 2552.107. LICENSE SURRENDER OR FORFEITURE
Sec. 2552.108. CONTINUATION OF LICENSE

SUBCHAPTER D. TITLE ATTORNEY GENERAL REQUIREMENTS
Sec. 2552.151. CONTRACT REQUIRED FOR APPOINTMENT
Sec. 2552.152. ABSTRACT PLANT REQUIREMENTS
Sec. 2552.153. CONTRACT WITH LICENSED ABSTRACT PLANT
Sec. 2552.154. BOND OR DEPOSIT REQUIRED
Sec. 2552.155. EXAMINATION OF LOSS COVERED BY BOND
Sec. 2552.156. INVESTIGATION BY ATTORNEY GENERAL
Sec. 2552.157. AUTHORITY TO ISSUE POLICY
Sec. 2552.158. AUTHORITY TO DELIVER BUT NOT ISSUE POLICY

SUBCHAPTER E. POWERS AND DUTIES OF ATTORNEY'S TITLE INSURANCE COMPANIES
Sec. 2552.201. ACTING AS TITLE ATTORNEY
Sec. 2552.202. LIST OF TITLE ATTORNEYS
Sec. 2552.203. RENEWAL
Sec. 2552.204. NOTICE OF TERMINATION

SUBCHAPTER F. AUDIT AND EXAMINATION REQUIREMENTS RELATING TO TRUST FUND ACCOUNTS
Sec. 2552.251. ANNUAL AUDIT
Sec. 2552.252. ANALYSIS OF ANNUAL AUDIT
Sec. 2552.253. EXAMINATION OF TRUST FUND ACCOUNTS; TRANSACTION REPORTS
Sec. 2552.254. ENFORCEMENT; HEARING

SUBCHAPTER G. LICENSE DENIAL AND DISCIPLINARY ACTION
Sec. 2552.301. GROUNDS FOR LICENSE DENIAL OR DISCIPLINARY ACTION
Sec. 2552.302. LICENSE APPLICATION AFTER DENIAL, REFUSAL, OR REVOCATION

CHAPTER 2553. FOREIGN OR ALIEN CORPORATIONS
Sec. 2553.001. AUTHORITY TO ENGAGE IN BUSINESS OF TITLE INSURANCE.
Sec. 2553.002. CAPITAL AND SURPLUS REQUIREMENTS
Sec. 2553.003. TAXES AND FEES

SUBTITLE C. FINANCIAL SOLVENCY

CHAPTER 2601. SUPERVISION, LIQUIDATION, REHABILITATION, REORGANIZATION, OR
CONSERVATION OF TITLE INSURANCE COMPANIES AND AGENTS
Sec. 2601.001. SUPERVISION, LIQUIDATION, REHABILITATION, REORGANIZATION, OR
CONSERVATION OF TITLE INSURANCE COMPANIES AND AGENTS

CHAPTER 2602. TEXAS TITLE INSURANCE GUARANTY ASSOCIATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2602.001. SHORT TITLE
Sec. 2602.002. PURPOSES AND FINDINGS
Sec. 2602.003. DEFINITIONS
Sec. 2602.004. DESCRIPTION OF CONTROL
Sec. 2602.005. APPLICABILITY; CONFLICT WITH OTHER LAWS
Sec. 2602.006. CONSTRUCTION
Sec. 2602.007. PROHIBITED USE OF PROTECTION PROVIDED BY CHAPTER
Sec. 2602.008. IMMUNITY
Sec. 2602.009. ASSOCIATION AND TITLE INSURANCE COMPANIES AS INTERESTED PARTIES
Sec. 2602.010. RULES
Sec. 2602.011. INFORMATION PROVIDED BY AND TO COMMISSIONER
Sec. 2602.012. APPEALS

SUBCHAPTER B. GOVERNANCE OF TEXAS TITLE INSURANCE GUARANTY ASSOCIATION
Sec. 2602.051. ASSOCIATION AS LEGAL ENTITY; SUPERVISION; MEMBERSHIP
Sec. 2602.052. BOARD OF DIRECTORS
Sec. 2602.053. ELIGIBILITY TO SERVE AS PUBLIC REPRESENTATIVE
Sec. 2602.054. TERM; VACANCY
Sec. 2602.055. COMPENSATION OF BOARD MEMBERS
Sec. 2602.055. FINANCIAL STATEMENT OF BOARD MEMBER
Sec. 2602.057. RIGHTS OF TITLE INSURANCE COMPANY WITH REPRESENTATIVE ON BOARD

SUBCHAPTER C. GENERAL POWERS AND DUTIES OF ASSOCIATION
Sec. 2602.101. GENERAL POWERS AND DUTIES
Sec. 2602.102. PLAN OF OPERATION
Sec. 2602.103. EMPLOYEES AND EXPERTS
Sec. 2602.104. ASSOCIATION RECORDS
Sec. 2602.105. MEETING BY CONFERENCE CALL
Sec. 2602.106. ACCOUNTS
Sec. 2602.107. ADMINISTRATIVE EXPENSES
Sec. 2602.108. DEPOSIT OF FEES AND ASSESSMENTS
Sec. 2602.109. USE OF EXCESS MONEY IN ACCOUNTS
Sec. 2602.110. EXPENSES OF RECEIVERSHIP OR CONSERVATORSHIP
Sec. 2602.111. DELEGATION OF POWERS AND DUTIES
Sec. 2602.112. EXEMPTION FROM TAXATION
Sec. 2602.113. DETECTION AND PREVENTION OF IMPAIRMENT.
Sec. 2602.114. MEETING OF BOARD ON IMPAIRED TITLE INSURANCE COMPANY OR AGENT
Sec. 2602.115. ASSOCIATION AND BOARD ADVICE AND ASSISTANCE
Sec. 2602.116. BOARD ACCESS TO RECORDS
Sec. 2602.117. BOARD REPORT AT CONCLUSION OF IMPAIRMENT

SUBCHAPTER D. POLICY GUARANTY FEES
Sec. 2602.151. PAYMENT OF FEE
Sec. 2602.152. AMOUNT OF FEE
Sec. 2602.153. USE OF FEE
Sec. 2602.154. ENFORCEMENT OF FEE

SUBCHAPTER E. ASSESSMENTS
Sec. 2602.201. MAKING OF ASSESSMENT
Sec. 2602.202. AMOUNT OF ASSESSMENT; PRORATION OF PAYMENT
Sec. 2602.203. NOTICE AND PAYMENT
Sec. 2602.204. EXEMPTION FOR IMPAIRED TITLE INSURANCE COMPANY
Sec. 2602.205. DEFERMENT
Sec. 2602.206. PARTICIPATION RECEIPTS
Sec. 2602.207. ACCOUNTING; REPORTS; REFUND
Sec. 2602.208. USE OF ASSESSMENTS
Sec. 2602.209. FAILURE TO PAY; COLLECTION BY COMMISSIONER
Sec. 2602.210. RECOVERY OF ASSESSMENT IN RATES; TAX CREDIT

SUBCHAPTER F. COVERED CLAIMS
Sec. 2602.251. COVERED CLAIMS IN GENERAL
Sec. 2602.252. CLAIM AGAINST TRUST FUNDS OR ESCROW ACCOUNT
Sec. 2602.253. CLAIM IN CONNECTION WITH FIDELITY OF AGENT
Sec. 2602.254. CERTAIN CONSERVATOR AND RECEIVER EXPENSES COVERED
Sec. 2602.255. CLAIMS NOT COVERED
Sec. 2602.256. AMOUNT OF COVERED CLAIM; LIMIT
Sec. 2602.257. EXHAUSTION OF OTHER RIGHTS REQUIRED
Sec. 2602.258. CERTAIN MONEY AUTHORIZED FOR USE IN PAYING COVERED CLAIM; LIMIT
Sec. 2602.259. STAY OF PROCEEDINGS; CERTAIN DECISIONS NOT BINDING
Sec. 2602.260. ADMISSIBILITY OF PAYMENT

SUBCHAPTER G. ASSOCIATION POWERS AND DUTIES RELATING TO COVERED CLAIMS
Sec. 2602.301. GENERAL POWERS AND DUTIES OF ASSOCIATION IN CONNECTION WITH PAYMENT OF COVERED CLAIMS
Sec. 2602.302. PAYMENT OF COVERED CLAIMS
Sec. 2602.303. SERVICING FACILITY
Sec. 2602.304. ADVANCE AS LOAN
Sec. 2602.305. ASSOCIATION IN PLACE OF IMPAIRED TITLE INSURANCE COMPANY OR AGENT
Sec. 2602.306. ASSIGNMENT OF CLAIMANT'S RIGHTS
Sec. 2602.307. SETTLEMENT BY ASSOCIATION BINDING; PRIORITY OF CLAIM AND EXPENSES
Sec. 2602.308. REPORT TO RECEIVER

SUBCHAPTER H. CONSERVATOR OR RECEIVER POWERS AND DUTIES RELATING TO COVERED CLAIMS
Sec. 2602.351. DETERMINATION OF CONSERVATOR CONCERNING REINSURANCE, ASSUMPTION, OR SUBSTITUTION
Sec. 2602.352. NOTICE OF DETERMINATION CONCERNING ACTUAL PAYMENT
Sec. 2602.353. FILING OF COVERED CLAIM
Sec. 2602.354. CLAIM BY PERSON WITH CAUSE OF ACTION AGAINST INSURED
Sec. 2602.355. REPORT TO ASSOCIATION

SUBCHAPTER I. OPERATION OF IMPAIRED TITLE INSURANCE COMPANY OR AGENT
Sec. 2602.401. ISSUANCE OR RENEWAL OF POLICIES
Sec. 2602.402. DISTRIBUTIONS TO SHAREHOLDERS AND AFFILIATES
Sec. 2602.403. ASSETS ATTRIBUTABLE TO COVERED POLICIES

SUBTITLE D. TITLE INSURANCE PROFESSIONALS

CHAPTER 2651. TITLE INSURANCE AGENTS AND DIRECT OPERATIONS
SUBCHAPTER A. TITLE INSURANCE AGENT'S LICENSE
Sec. 2651.001. LICENSE AND BOND OR DEPOSIT REQUIRED
Sec. 2651.002. LICENSE APPLICATION
Sec. 2651.003. LICENSE AND RENEWAL FEES
Sec. 2651.004. LICENSE ISSUANCE
Sec. 2651.005. DUPLICATE LICENSE
Sec. 2651.006. LICENSE TERM
Sec. 2651.007. LICENSE RENEWAL
Sec. 2651.008. RECORDS OF AGENTS
Sec. 2651.009. MULTIPLE APPOINTMENTS
Sec. 2651.010. SUSPENSION OF LICENSE
Sec. 2651.011. PRIVILEGED COMMUNICATIONS
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SUBCHAPTER B. DIRECT OPERATION LICENSE
Sec. 2651.051. LICENSE REQUIRED
Sec. 2651.052. LICENSE APPLICATION
Sec. 2651.053. LICENSE AND RENEWAL FEES
Sec. 2651.054. LICENSE TERM
Sec. 2651.055. LICENSE RENEWAL
Sec. 2651.056. CEASING OPERATION OF ABSTRACT PLANT; REQUEST FOR LICENSE CANCELLATION
Sec. 2651.057. AUTOMATIC TERMINATION OF LICENSES
Sec. 2651.058. RECORDS OF DIRECT OPERATIONS
Sec. 2651.059. USE OF AGENTS NOT PROHIBITED

SUBCHAPTER C. BOND AND DEPOSIT REQUIREMENTS
Sec. 2651.101. BOND REQUIRED
Sec. 2651.102. ALTERNATIVE TO BOND
Sec. 2651.103. EXAMINATION OF LOSS COVERED BY BOND OR DEPOSIT
Sec. 2651.104. INVESTIGATION BY ATTORNEY GENERAL

SUBCHAPTER D. ANNUAL AUDIT
Sec. 2651.151. ANNUAL AUDIT OF TRUST FUND ACCOUNTS: TITLE INSURANCE AGENTS AND DIRECT OPERATIONS
Sec. 2651.152. ANNUAL AUDIT OF TRUST FUND ACCOUNTS: TITLE INSURANCE COMPANIES
Sec. 2651.153. RULES
Sec. 2651.154. PERFORMANCE OF AUDIT BY PUBLIC ACCOUNTANT
Sec. 2651.155. CONFIDENTIALITY OF AUDIT
Sec. 2651.156. FAILURE TO RECEIVE AUDIT REPORT FROM AGENTS OR DIRECT OPERATIONS
Sec. 2651.157. ENFORCEMENT; HEARING

SUBCHAPTER E. GENERAL REGULATION OF TITLE INSURANCE AGENTS AND DIRECT OPERATIONS
Sec. 2651.201. LICENSE SURRENDER OR FORFEITURE
Sec. 2651.202. TRUST FUND ACCOUNT DISBURSEMENTS
Sec. 2651.203. DISCLOSURE OF OWNERSHIP AND PREMIUM INFORMATION
Sec. 2651.204. CONTINUING EDUCATION

SUBCHAPTER F. TITLE INSURANCE COMPANY POWERS AND DUTIES REGARDING TITLE INSURANCE AGENTS
Sec. 2651.251. EXAMINATION OF TRUST FUND ACCOUNTS BY TITLE INSURANCE COMPANY
Sec. 2651.252. SPECIAL REPORTS
Sec. 2651.253. AUDIT OF UNUSED FORMS

SUBCHAPTER G. LICENSE DENIAL AND DISCIPLINARY ACTION
Sec. 2651.301. GROUNDS FOR LICENSE DENIAL OR DISCIPLINARY ACTION
Sec. 2651.302. LICENSE APPLICATION AFTER DENIAL, REFUSAL, OR REVOCATION

CHAPTER 2652. ESCROW OFFICERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2652.001. LICENSE AND BOND OR DEPOSIT REQUIRED
Sec. 2652.002. EMPLOYMENT OF ESCROW OFFICER
Sec. 2652.003. ATTORNEY ACTING AS ESCROW OFFICER
Sec. 2652.004. TRUST FUND ACCOUNT DISBURSEMENTS
Sec. 2652.005. ESCROW ACCOUNT AUDIT
Sec. 2652.006. RECORD OF ESCROW OFFICERS

SUBCHAPTER B. LICENSE APPLICATION AND RENEWAL
Sec. 2652.051. LICENSE APPLICATION
Sec. 2652.052. LICENSE AND RENEWAL FEES
Sec. 2652.053. LICENSE ISSUANCE
Sec. 2652.054. DUPLICATE LICENSE
Sec. 2652.055. LICENSE TERM
Sec. 2652.056. AUTOMATIC TERMINATION OF LICENSE
Sec. 2652.057. LICENSE SURRENDER OR FORFEITURE
Sec. 2652.058. CONTINUING EDUCATION

SUBCHAPTER C. BOND AND DEPOSIT REQUIREMENTS
Sec. 2652.101. BOND REQUIRED
Sec. 2652.102. ALTERNATIVE TO BOND
Sec. 2652.103. AMOUNT OF BOND OR DEPOSIT
Sec. 2652.104. EXAMINATION OF LOSS COVERED BY BOND OR DEPOSIT
Sec. 2652.105. INVESTIGATION BY ATTORNEY GENERAL

SUBCHAPTER D. DUTIES OF TITLE INSURANCE AGENTS AND DIRECT OPERATIONS REGARDING ESCROW OFFICERS
Sec. 2652.151. LIST OF ESCROW OFFICERS
Sec. 2652.152. RENEWAL
Sec. 2652.153. NOTICE OF TERMINATION

SUBCHAPTER E. LICENSE DENIAL AND DISCIPLINARY ACTION
Sec. 2652.201. GROUNDS FOR LICENSE DENIAL OR DISCIPLINARY ACTION
Sec. 2652.202. LICENSE APPLICATION AFTER DENIAL, REFUSAL, OR REVOCATION.

SUBTITLE E. THE BUSINESS OF TITLE INSURANCE

CHAPTER 2701. GENERAL PROVISIONS
Sec. 2701.001. ABSTRACT OF TITLE DISTINGUISHED; PROHIBITION ON REGULATION OF ABSTRACT OF TITLE
Sec. 2701.002. CONSTRUCTION OF CHAPTER 39, BUSINESS & COMMERCE CODE

CHAPTER 2702. CLOSING AND SETTLEMENT

SUBCHAPTER A. INSURED CLOSING AND SETTLEMENT LETTERS
Sec. 2702.001. INSURED CLOSING AND SETTLEMENT LETTER: LOANS
Sec. 2702.002. INSURED CLOSING AND SETTLEMENT LETTER: CERTAIN BUYERS OR SELLERS
Sec. 2702.003. EFFECT OF FAILURE TO ISSUE INSURED CLOSING AND SETTLEMENT LETTER

SUBCHAPTER B. UNIFORM CLOSING AND SETTLEMENT STATEMENTS
Sec. 2702.051. APPLICABILITY
Sec. 2702.052. DUTY TO PRESCRIBE UNIFORM CLOSING AND SETTLEMENT STATEMENT FORMS
Sec. 2702.053. CONTENT OF CLOSING AND SETTLEMENT STATEMENT
Sec. 2702.054. USE OF ALTERNATE SETTLEMENT STATEMENT FORM PERMITTED

SUBCHAPTER C. ADVANCE DISCLOSURE OF CLOSING AND SETTLEMENT COSTS
IN TRANSACTIONS INVOLVING RESIDENTIAL REAL PROPERTY
Sec. 2702.101. APPLICABILITY
Sec. 2702.102. DUTY TO PROVIDE ADVANCE DISCLOSURE OF CLOSING AND SETTLEMENT COSTS
Sec. 2702.103. TITLE INSURANCE COMPANY OR TITLE INSURANCE AGENT NOT SUBJECT TO REQUIREMENTS APPLICABLE TO LENDERS

CHAPTER 2703. POLICY FORMS AND PREMIUM RATES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2703.001. COMPLIANCE WITH TITLE AND RULES
Sec. 2703.002. USE OF FORMS IN GENERAL
Sec. 2703.003. PAYMENT OF PREMIUMS

SUBCHAPTER B. POLICY PROVISIONS
Sec. 2703.051. CERTAIN PROVISIONS REQUIRED
Sec. 2703.052. DUTY OF TITLE INSURANCE COMPANY
Sec. 2703.053. ESTABLISHMENT OF STANDARDS AND SCHEDULES
Sec. 2703.054. AUTHORITY OF COMMISSIONER IN IMPLEMENTING SUBCHAPTER

SUBCHAPTER C. POLICY FORMS FOR RESIDENTIAL REAL PROPERTY
Sec. 2703.101. POLICY FORMS FOR RESIDENTIAL REAL PROPERTY

SUBCHAPTER D. FIXING AND PROMULGATING PREMIUM RATES
Sec. 2703.151. FIXING AND PROMULGATING PREMIUM RATES
Sec. 2703.152. FACTORS CONSIDERED IN FIXING PREMIUM RATES
Sec. 2703.153. COLLECTION OF DATA FOR FIXING PREMIUM RATES

SUBCHAPTER E. PROCEDURES REGARDING PREMIUM RATES, POLICY FORMS, AND OTHER RELATED MATTERS
Sec. 2703.201. HEARING REQUIRED FOR FIXING PREMIUM RATE
Sec. 2703.202. HEARING REQUIRED FOR CHANGE IN PREMIUM RATE
Sec. 2703.203. BIENNIAL HEARING
Sec. 2703.204. ADMISSION AS PARTY TO BIENNIAL HEARING
Sec. 2703.205. PHASES OF BIENNIAL HEARING
Sec. 2703.206. COMMISSIONER AUTHORITY TO HOLD HEARINGS AS NECESSARY
Sec. 2703.207. NOTICE OF CERTAIN HEARINGS
Sec. 2703.208. ADDITIONS OR AMENDMENTS TO MANUAL

SUBTITLE E. THE BUSINESS OF TITLE INSURANCE

CHAPTER 2704. ISSUANCE OF POLICY OR CONTRACT; DETERMINATION OF INSURABILITY
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2704.001. ISSUANCE OF POLICY OR CONTRACT
Sec. 2704.002. DIRECT ISSUANCE OF POLICY OR CONTRACT
Sec. 2704.003. COPY OF POLICY OR CONTRACT TO AGENT OR DIRECT OPERATION
Sec. 2704.004. EXCEPTIONS TO APPLICABILITY OF CHAPTER

SUBCHAPTER B. ISSUANCE OF OWNER AND MORTGAGEE POLICIES FOR RESIDENTIAL REAL PROPERTY
Sec. 2704.051. ISSUANCE OF OWNER POLICY REQUIRED IN CONNECTION WITH ISSUANCE OF MORTGAGEE POLICY
Sec. 2704.052. REJECTION OF ISSUANCE OF OWNER POLICY

SUBCHAPTER C. TITLE INSURANCE COVERING AREAS AND BOUNDARIES
Sec. 2704.101. DEFINITION
Sec. 2704.102. RULES AUTHORIZING ACCEPTANCE OF EXISTING SURVEY
Sec. 2704.103. CERTAIN DISCRIMINATION PROHIBITED
Sec. 2704.104. INDEMNITY PROHIBITED

SUBTITLE F. TITLE INSURANCE FOR CERTAIN PERSONAL PROPERTY INTERESTS

CHAPTER 2751. TITLE INSURANCE FOR PERSONAL PROPERTY INTERESTS
SUBCHAPTER A
Sec. 2751.001.  GENERAL DEFINITIONS
Sec. 2751.002.  DEFINITIONS OF PERSONAL PROPERTY AND PERSONAL PROPERTY TITLE INSURANCE
Sec. 2751.003.  APPLICABILITY OF OTHER LAWS.
Sec. 2751.004.  GENERAL RULES

SUBCHAPTER B. RATES AND FORMS
Sec. 2751.051.  FIXING AND PROMULGATING PREMIUM RATES AND FORMS
Sec. 2751.052.  FACTORS CONSIDERED IN FIXING PREMIUM RATES
Sec. 2751.053.  HEARING REQUIRED
Sec. 2751.054.  COMMISSIONER ORDER
Sec. 2751.055.  REVISIONS TO RATES AND FORMS; HEARING

SUBCHAPTER C. POWERS AND DUTIES OF INSURERS AND AGENTS
Sec. 2751.101.  ISSUANCE OF POLICIES
Sec. 2751.102.  USE OF FORMS
Sec. 2751.103.  AGENTS
Sec. 2751.104.  AGENT COMPENSATION

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TITLE 11. TITLE INSURANCE (EFFECTIVE APRIL 1, 2005)

SUBTITLE A. GENERAL PROVISIONS

CHAPTER 2501. GENERAL PROVISIONS

Sec. 2501.001. SHORT TITLE.

This title may be cited as the Texas Title Insurance Act.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1, 2005.

Sec. 2501.002. PURPOSE; LEGISLATIVE INTENT.

(a) The purpose of this title is to completely regulate the business of title insurance on real property and, as described by Subtitle F, on personal property, including the direct issuance of policies and the reinsurance of any assumed risks, to:

(1) protect consumers and purchasers of title insurance policies; and

(2) provide adequate and reasonable rates of return for title insurance companies and title insurance agents.

(b) It is the express legislative intent that this title accomplish the purpose described by Subsection (a).

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1, 2005.

Sec. 2501.003. DEFINITIONS.

In this title:

(1) "Abstract plant" means an abstract plant as defined by the department under Section 2501.004.

(2) "Attorney" means:

(A) a person who is licensed to practice law and is a member of the State Bar of Texas; or

(B) a Texas professional corporation organized to provide professional legal services.

(3) "Direct operation" means the operations of a title insurance company under a license issued to the company under Subchapter B, Chapter 2651. A reference in this title to a title insurance agent shall be construed to include a direct operation unless the context indicates otherwise.

(4) "Escrow officer" means an attorney, a bona fide employee of an attorney licensed as an escrow officer, a bona fide employee of a direct operation, or a bona fide employee of a title insurance agent whose responsibilities include:

(A) countersigning title insurance forms;

(B) supervising the preparation and delivery of title insurance forms;

(D) closing the transaction, as described by Section 2501.006.

(5) "Foreign title insurance company" means a title insurance company organized under the laws of a jurisdiction other than this state.

(6) "Joint abstract plant operation" means a joint abstract plant operation as defined by the department under Section 2501.004.

(7) "Person" includes an individual, corporation, association, partnership, or trust.

(8) "Premium" means the premium rates promulgated by the commissioner under Subchapters D and E, Chapter 2703, and includes a charge for:

(A) title examination and closing the transaction, regardless of whether the examination or closing is performed by an attorney; and

(B) issuing the policy.

(9) "Residential real property" means real property that is improved and is designed principally for occupancy by one to four families. The term includes an individual unit of a condominium or cooperative.

(10) "Thing of value" includes any payment, advance, funds, loan, service, or other consideration.

(11) "Title examination" means the search and examination of a title to determine the conditions of the title to be insured and to evaluate the risk to be undertaken in the issuance of a title insurance policy or other title insurance form.

(12) "Title insurance" means:

(A) insurance that insures, guarantees, or indemnifies an owner of real property, or another interested in the real property, against loss or damage resulting from:

(i) a lien or encumbrance on or defect in the title to the real property; or

(ii) the invalidity or impairment of a lien on the real property; or

(B) personal property title insurance, as defined by Chapter 2751; or

(C) any business that is substantially equivalent to the insurance described by Paragraphs (A) and (B) and is conducted in a manner designed to evade the provisions of this title.

(13) "Title insurance agent" means a person owning or leasing and controlling an abstract plant or as a participant in a bona fide joint abstract plant operation and authorized in writing by a title insurance company to solicit insurance and collect premiums and to issue or countersign policies on the company's behalf.

(14) "Title insurance company" means:

(A) a domestic company organized under this title to engage in the business of title insurance, as described by Section 2501.005;

(B) a foreign title insurance company that:

(i) meets the requirements of this title; and

(ii) holds a certificate of authority to engage in business in this state; or

(i) meets the requirements of this title; and

(ii) holds a certificate of authority to insure a title to real property in this state.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1, 2005.

Sec. 2501.004. ABSTRACT PLANT; JOINT ABSTRACT PLANT OPERATION.

(a) For purposes of this title, the department shall define "abstract plant" and "joint abstract plant operation."

(b) To provide for the safety and protection of policyholders, the department shall require that an abstract plant be:

(1) geographically arranged;

(2) kept current; and

(3) adequate for use in insuring titles, as determined by the department.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1, 2005.

Sec. 2501.005. BUSINESS OF TITLE INSURANCE.

(a) For purposes of this title, a person engages in the business of title insurance if the person:

(1) as insurer, guarantor, or surety, makes or proposes to make a contract or policy of title insurance or its equivalent;

(2) transacts or proposes to transact any phase of title insurance, including:

(A) soliciting;

(B) title examination other than an examination conducted by an attorney;

(D) executing a contract of title insurance; and

(E) insuring and transacting matters arising out of the contract after the contract is executed, including reinsurance; or

(3) makes a guaranty or warranty of a title search or a title examination, or any component of a title search or title examination, if the person is not the person who performs the search or examination.

(b) A person engages in the business of title insurance if the person engages in or proposes to engage in any business that is substantially equivalent to the business of title insurance as described by this section, regardless of whether that conduct is performed in a manner designed to evade the provisions of this title.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1, 2005.

Sec. 2501.006. CLOSING THE TRANSACTION.

(a) For purposes of this title, "closing the transaction" describes the investigation that is made:

(1) on behalf of a title insurance company, title insurance agent, or direct operation before the title insurance policy is issued; and

(2) to determine proper execution, acknowledgment, and delivery of all conveyances, mortgage papers, and other title instruments necessary to consummate a transaction.

(b) Closing the transaction includes a determination that:

(1) all delinquent taxes have been paid;

(2) in the case of an owner title insurance policy, all current taxes, based on the latest available information, have been properly prorated between the purchaser and seller;

(3) the consideration has been passed;

(4) all proceeds have been properly disbursed;

(5) a final search of the title has been made; and

(6) all necessary papers have been filed for record.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1, 2005.

Sec. 2501.007. REFERENCES TO TITLE.

In this title, a reference to this title includes a reference to:

(1) Chapter 223;

(2) Chapter 271; and

(3) Subchapter U, Chapter 171, Tax Code.

Added by Acts 2005, 79th Leg., ch. ____, Sec. _, eff. Sept. 1, 2005.

CHAPTER 2502. PROHIBITED CONDUCT
SUBCHAPTER A. PROHIBITED CONDUCT IN GENERAL

Sec. 2502.001. ENGAGING IN CERTAIN INSURANCE BUSINESS PROHIBITED.

(a) A domestic or foreign corporation operating under this title may not engage in the business of any kind of insurance other than title insurance.

(b) A company may not engage in the business of title insurance if the company engages in the business of another kind of insurance.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1, 2005.

Sec. 2502.002. COVERAGE FOR UNMARKETABILITY OF TITLE PROHIBITED.

(a) An insurance company may not insure against loss or damage by reason of unmarketability of title.

(b) The commissioner may not adopt a rule or form providing for coverage prohibited by this section.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1, 2005.

Sec. 2502.003. INSURING AROUND DEFINED; PROHIBITIONS AND EXCEPTIONS.

(a) Except as provided by Subsection (c), a title insurance company may not wilfully issue a binder for title insurance or a title insurance policy showing no outstanding enforceable recorded liens on real property against which the company knows an outstanding enforceable recorded lien exists.

(b) A title insurance company knows that an outstanding enforceable recorded lien exists against real property if, based on an examination of the title under which the binder for title insurance or title insurance policy is issued, the company determines that the lien is valid and enforceable.

(c) The commissioner by rule may approve circumstances under which a title insurance company may issue a binder for title insurance or a title insurance policy otherwise prohibited by Subsection (a).

(d) Except as otherwise provided by this section, a title insurance company may determine the insurability of title to real property and any other matter that the company considers to be insurable under a binder for title insurance or a title insurance policy issued in connection with the property.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1, 2005.

Sec. 2502.004. GUARANTEE OF MORTGAGE PAYMENT PROHIBITED.

(a) A title insurance company may not guarantee the payment of a mortgage on real property.

(b) A title insurance company that violates this section forfeits its authority to engage in business in this state and shall immediately surrender its certificate of authority.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1, 2005.

Sec. 2502.005. CIVIL PENALTY.

(a) A person is liable to the state for a civil penalty of not more than $5,000 if the person:

(1) wilfully violates Section 2502.003 or 2502.004; or

(2) violates an order of the commissioner refusing to approve an application to issue a binder for title insurance or a title insurance policy prohibited by Section 2502.003(a).

(b) The department may bring an action in a Travis County district court to recover the penalty provided by this section.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1, 2005.

SUBCHAPTER B. REBATES AND DISCOUNTS

Sec. 2502.051. REBATES AND DISCOUNTS PROHIBITED.

A commission, rebate, discount, portion of a title insurance premium, or other thing of value may not be directly or indirectly paid, allowed, or permitted by a person engaged in the business of title insurance or received or accepted by a person for engaging in the business of title insurance or for soliciting or referring title insurance business.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1, 2005.

Sec. 2502.052. CERTAIN DIVISIONS OF REAL PROPERTY CHARGES PROHIBITED.

Other than for services actually performed, a person may not give or accept any portion, split, or percentage of a charge made or received for a settlement or closing performed in connection with a transaction involving the conveyance or mortgaging of real property located in this state.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1, 2005.

Sec. 2502.053. CERTAIN COMPENSATORY PAYMENTS NOT PROHIBITED.

This subchapter does not prohibit:

(1) payment for services actually performed by a title insurance company, title insurance agent, or direct operation in connection with title examination or with closing the transaction or furnishing title evidence if:

(A) the payment does not exceed the percentage of premium or other amount established by the commissioner for the payment; and

(B) the person receiving the payment is licensed as provided by this title;

(2) payment of bona fide compensation to a bona fide employee principally employed by a title insurance company, title insurance agent, or direct operation;

(3) reasonable payment for goods or facilities actually provided and received; or

(4) payment for services actually performed by an attorney in connection with title examination or with closing the transaction, if the payment does not exceed a reasonable charge for the services.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1, 2005.

Sec. 2502.054. CERTAIN DIVISIONS OF PREMIUMS NOT PROHIBITED.

(a) For purposes of this section, a subsidiary is a company at least 50 percent of the voting stock of which is owned by the title insurance company or by a wholly owned subsidiary of the title insurance company.

(b) This subchapter does not:

(1) prohibit a title insurance company from:

(A) appointing as its title insurance agent for a county a person who owns or leases and operates an abstract plant for that county; and

(B) arranging for a division of premiums with the agent as set by the commissioner; or

(2) affect the division of a premium between a title insurance company and its subsidiary title insurance agent when the company directly issues a title insurance policy or contract under Section 2704.002.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1, 2005.

Sec. 2502.055. PROMOTIONAL AND EDUCATIONAL ACTIVITIES NOT REBATES.

(a) The activities described in this section are not rebates. Nothing in this subchapter prohibits a title insurance company or a title insurance agent from:

(1) engaging in legal promotional and educational activities that are not conditioned on the referall of title insurance business;

(2) purchasing advertising promoting the title insurance company or the title insurance agent at market rates from any person in any publication, event, or media;

(3) delivering to the party in the transaction or the party�s representative legal documents or funds which are directly or indirectly related to a transaction closed by the title insurance company or title insurance agent; or

(4) participating in an association of attorneys, builders, developers, realtors, or other real estate practitioners provided that the level of such participation does not exceed normal participation of a volunteer member of the association and is not activity that would ordinarily be performed by paid staff of an association.

(b) �Market rate� means the price at which a seller, under no obligation or duress to sell, is willing to accept and a buyer, under no obligation or duress to buy, is willing to pay in an arms-length transaction. The market rate is determined by comparing the rights or items purchased or sold to similar rights or items that have been recently purchased by others or sold to others, including others not in the title insurance business.

Added by Acts 2005, 79th Leg., ch. ____, Sec. _, eff. Sept. 1, 2005.

Sec. 2502.056. MONETARY FORFEITURE.

(a) A person who pays or receives a commission, rebate, discount, or other thing of value for soliciting or referring title insurance business in violation of Section 2502.051 is engaging in the unauthorized business of insurance.

(b) After notice and opportunity for hearing, a person who makes or receives a payment described by Subsection (a) is liable for a monetary forfeiture in an amount not less than the value of or more than three times the value of the payment.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1, 2005.

SUBTITLE B. ORGANIZATION OF TITLE INSURANCE COMPANIES

CHAPTER 2551. TITLE INSURERS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 2551.001. APPLICABILITY OF TITLE AND OTHER LAW.

(a) Except as provided by Subsection (c) and unless the business of title insurance or title insurance companies are expressly mentioned, the provisions of this code other than this title do not apply to:

(1) a corporation incorporated or engaging in business exclusively under this title; or

(2) any title insurance business engaged in by a corporation created under:

(A) Subdivision 57, Article 1302, Revised Statutes;

(B) Chapter 861; or

(b) A law enacted after September 7, 1951, does not apply to a title insurance company or title insurance business described by Subsection (a) unless the law expressly states that it applies.

(1) Articles 1.01, 1.04A, 1.09-1, 1.12, 1.13, 1.15-1.19, 21.31, 21.47, and 21.49-8;