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.
Sec. 2501.008. THIRD-PARTY CHARGES.
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 ADMINISTERING IMPAIRED INSURER OR IMPAIRED AGENT.
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
SUBCHAPTER J. ADDITIONAL DUTIES OF ASSOCIATION
Sec. 2602.451. APPLICABILITY
Sec. 2602.452. ACTIONS FOR CERTAIN AGENTS
Sec. 2602.453. AUTHORITY OF ASSOCIATION; COOPERATION OF OFFICERS, OWNERS, AND EMPLOYEES
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. 2651.0021. PROFESSIONAL TRAINING PROGRAM
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; FINANCIAL INFORMATION
Sec. 2651.012. UNENCUMBERED ASSESTS
Sec. 2651.013. DIVISION OF PREMIUM HELD IN TRUST; RULES
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
Sec. 2651.158. CERTIFICATION OF UNENCUMBERED ASSESTS
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
Sec. 2651.205. TITLE AGENT RECORDS
Sec. 2651.206. EXAMINATIONS REPORTS
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 601, 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).
Amended by: Acts 2007, 80th Leg., R.S., Ch. 543, Sec. 2,
eff. September 1, 2007.
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;
(C) signing escrow checks; or
(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
(C) any other domestic or foreign company that:
(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.
Amended by:
Acts 2007, 80th Leg., R.S., Ch. 543, Sec. 3, eff.
September 1, 2007.
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) be geographically arranged;
(2) cover a period beginning not later than January
1, 1979, and be kept current; and
(3) be 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.
Amended
by: Acts 2009, 81st Leg., R.S., Ch. ____, Sec. ___, eff.
September 1, 2009
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;
(C) closing the transaction other than a closing
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 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Amended by: Acts 2005, 79th Leg., Ch. 728, Sec. 11.077,
eff. Sept. 1, 2005.
Sec. 2501.008. THIRD-PARTY
CHARGES.
A title insurance company, title insurance agent, or
direct operation may charge, separate from the title
insurance premium, actual costs or a reasonable estimate
of costs incurred in connection with a closing and
settlement, including:
(1)
a charge by a third party for an electronic filing fee;
or
(2)
a fee of a third party for the provision of an ad
valorem tax report.
Added by Acts 2009, 81st Leg., ch.___, Sec. ___, eff.
September 1, 2009.
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 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1,
2005.
Amended by: Acts 2005, 79th Leg., Ch. 631, Sec. 7, eff.
September 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.
(c) A monetary forfeiture under Subsection (b) is in
addition to any other penalty provided by law.
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
(C) any other law.
(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.
(c) To the extent applicable, the following provisions of
this code apply to a title insurance company:
(1) Articles 1.09-1 and 21.47;
(2) Subsection (b), Article 1.04D;
(3) Chapters 33, 82, 83, 84, 86, 102, 261, 281, 401,
402, 493, 494, 541, 547, 555, 701, 801, 802, 824, 828,
1805, and 2204;
(4) Chapter 31, other than Section 31.005;
(5) Chapter 32, other than Section 32.022(b);
(6) Chapter 36, other than Sections 36.003, 36.004,
and 36.101-36.106;
(7) Subchapter A, Chapter 38;
(8) Subchapters A-G, Chapter 101;
(9) Chapter 982, other than Sections 982.003,
982.051, 982.101, 982.105, 982.106(b), 982.109, and
982.113; and
(10) Sections 37.052, 39.001, 39.002, 81.001,
81.002, 81.004, 201.004, 201.005, 201.051, 201.055,
403.001, 403.051, 403.101,521.002-521.004, 805.021,
822.001, 822.051, 822.052(1), (2), and (3), 822.053,
822.057, except Subsection (a)(4), 822.058, 822.059,
822.060, 822.155, 822.157, 822.158, except Subsection
(a)(5), 841.004, 841.251, 841.252(a)-(c), and 4001.103.
(d) This title governs in any conflict between a
provision listed by Subsection (c) and a provision of
this title.
(e) This title does not regulate the practice of law by
an attorney. The actions of an attorney in examining
title, in examining records regarding an interest
insured under Chapter 2751, or in closing a real
property or personal property transaction, regardless of
whether a title insurance policy is issued, does not
constitute the business of title insurance, unless the
attorney elects to be licensed as an escrow officer.
(f) Subsection (e) does not prohibit the commissioner
from promulgating a premium for title insurance.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Amended by: Acts 2007, 80th Leg., R.S., Ch. 543, Sec. 4,
eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch. 730, Sec. 2I.001, eff.
April 1, 2009.
Acts 2009, 81st Leg., R.S., Ch. ___, Sec. ___, eff.
September 1, 2009.
Sec. 2551.002. APPLICABILITY OF LAW GOVERNING
CORPORATIONS.
A title insurance company is subject to the Texas Business
Corporation Act, the Texas Miscellaneous Corporation Laws
Act (Article 1302-1.01 et seq., Vernon's Texas Civil
Statutes), and any other law of this state that governs
corporations in general, to the extent those laws are not
inconsistent with this title.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.003. RULEMAKING; AUTHORITY OF DEPARTMENT
AND COMMISSIONER.
(a) The commissioner may adopt and enforce rules:
(1) that prescribe underwriting standards and practices
on which a title insurance contract must be issued;
(2) that define risks that may not be assumed under a
title insurance contract, including risks that may not be
assumed because of the insolvency of the parties to the
transaction; and
(3) that the commissioner determines are necessary to
accomplish the purposes of this title.
(b) With respect to a company operating under this title
that engages in the kinds of business described by Section
2551.051(b)(1) or (2) in a manner that might subject the
company to another regulatory statute of this state, all
examination and regulation shall be exercised by the
department rather than any other state agency named in the
other regulatory statute, as long as the corporation
engages in the business of title insurance.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
SUBCHAPTER B. FORMATION
Sec. 2551.051. FORMATION; GENERAL PURPOSES AND
POWERS.
(a) A private corporation may be created and licensed
under this title for the following purposes:
(1) to compile and own or lease, or to acquire and own or
lease, records or abstracts of title to real property or
interests in real property in this state or other
jurisdictions, to insure titles to that real property or
interests in that real property, and to indemnify the
owners of that real property, or the holders of interests
in or liens on that real property, against loss or damage
resulting from an encumbrance on or defect in the title to
the real property or interests in the real property; and
(2) in transactions in which title insurance is to be or
is being issued, to supervise or approve the signing of
legal instruments affecting the interest to be insured,
disbursement of money, prorations, delivery of legal
instruments, closing of transactions, or issuance of
commitments for title insurance specifying the
requirements for title insurance and the defects in title
necessary to be cured or corrected.
(3) to issue personal property title insurance under
Chapter 2751.
(b) A corporation described by Subsection (a) may
exercise any of the following powers by including the
power in the corporation's charter:
(1) to make and sell abstracts of title in any county of
this state or another state;
(2) to accumulate and lend money and to purchase, sell or
deal in notes, bonds, and securities, but without banking
privileges;
(3) to act as trustee under a lawful trust committed to
the corporation by contract or will or by appointment by a
court as trustee, receiver, or guardian; and
(4) to act as executor or guardian under the terms of a
will or as an administrator of a decedent's estate under
the appointment of a court.
(c) Notwithstanding any other provision of this section,
a corporation described by Subsection (a) is not
authorized to practice law, as that term is defined by the
courts of this state. A corporation described by
Subsection (a) is not authorized to prepare a legal
instrument described by Subsection (a)(2).
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April
1, 2005.
Amended by: Acts 2007, 80th Leg., R.S., Ch. 543, Sec. 5,
eff. September 1, 2007.
Sec. 2551.052. NAME.
(a) The name of a corporation chartered or operating
under this title may contain the words "Title and Trust
Company."
(b) The name of a corporation chartered or operating
under this title may not contain the word "Trust" alone.
If the word "Trust" appears in the corporation's
letterhead or literature, the corporation shall include
the words "Without Banking Privileges."
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.053. STOCK AND SURPLUS REQUIREMENTS.
(a) Except as provided by Section 2552.053(b), a title
insurance company must have a paid-up capital of at least
$1 million and a surplus of at least $1 million.
(b) The capital stock and minimum surplus requirements of
a title insurance company must be maintained intact over
and above all outstanding liabilities, except contingent
liabilities on title insurance policies.
(c) If a title insurance company suffers the impairment
of its capital stock or minimum surplus requirements, the
company shall immediately report the impairment to the
department.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.054. PURCHASE OF OWN STOCK.
(a) Subject to Section 2551.053(a) and the Texas Business
Corporation Act, a title insurance company may purchase
its own shares of stock. A purchase of its own shares is
not considered an investment and does not constitute a
violation of a provision of this code relating to
admissible investments.
(b) A title insurance company that purchases its own
shares must, not later than the 10th day after the date of
purchase, file with the commissioner a statement listing:
(1) the name of each shareholder from whom the shares
have been purchased; and
(2) the amount paid for the shares.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.055. CHARTER OF CORPORATION ENGAGING IN
BUSINESS OF TITLE INSURANCE.
(a) The incorporators of a corporation engaging in the
business of title insurance and incorporated under this
title, Subdivision 57, Article 1302, Revised Statutes,
Chapter 40, Acts of the 41st Legislature, Regular Session,
1929 (Article 1302a, Vernon's Texas Civil Statutes), or
any other law shall file the corporation's original
charter only with the department and shall certify the
charter only to the department.
(b) Only the department may collect from a company
described by this section any filing fees required by law.
(c) A corporation described by this section is not
subject to another law to the extent that the law
conflicts with this section.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.056. REGULATION OF CERTAIN CORPORATIONS.
(a) A corporation incorporated under Subdivision 57,
Article 1302, Revised Statutes, before February 27, 1929,
and engaging in business in this state on February 27,
1929:
(1) may continue to engage in business;
(2) is subject to this title; and
(3) shall comply with the requirements of this title
regarding investments and deposits.
(b) A shareholder in a company acting under this title is
not liable in the event of default in the payment of any
debt or liability of the company beyond the shareholder's
subscription for stock.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
SUBCHAPTER C. AUTHORITY TO ENGAGE IN BUSINESS
Sec. 2551.101. CERTIFICATE OF AUTHORITY REQUIRED.
A title insurance company may not engage in the business
of title insurance in this state unless the company holds
a certificate of authority issued under this title.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.102. ISSUANCE OF CERTIFICATE OF AUTHORITY.
(a) Subject to Subsection (c), the department shall issue
a certificate of authority to engage in the business of
title insurance if, following any examination the
department considers proper, the department makes a
determination favorable to the title insurance company
with respect to:
(1) the payment of capital stock and surplus as required
by this title; and
(2) the value of the assets used to pay the capital stock
and surplus.
(b) The title insurance company shall pay the expense of
any examination conducted under Subsection (a).
(c) Issuance of a certificate of authority to a foreign
corporation is governed by Section 2553.001.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
SUBCHAPTER D. GENERAL POWERS AND DUTIES
Sec. 2551.151. ADMISSIBLE
INVESTMENTS.
(a) A title insurance company shall hold all investments
in cash or in the following:
(1) an abstract plant or plants, provided that:
(A) the corporation is organized under this title and has
the right to engage in the business of title insurance;
(B) except as provided by Subsection (b), the investment
is not more than 50 percent of the corporation's capital
stock; and
(C) the valuation of the plant or plants is approved by
the department;
(2) securities described by Subchapter D, Chapter
425, other than Sections 425.202 and 425.229-425.232, or
investments authorized for title insurance companies
under the laws of any other state in which the company
is authorized to engage in business;
(3) real property or any real property interest that is:
(A) required for the company's convenient accommodation
in the transaction of business with reasonable regard to
future needs;
(B) acquired in connection with a claim under a title
insurance policy;
(C) acquired in satisfaction or on account of loans,
mortgages, liens, judgments, or decrees previously owed to
the company in the course of business;
(D) acquired in partial payment of the consideration of
the sale of real property owned by the company if the
transaction results in a net reduction in the company's
investment in real property; or
(E) reasonably necessary to maintain or enhance the sale
value of real property previously acquired or held by the
company under this subdivision;
(4) a first mortgage note secured by any of the
following, provided that the amount of the note does not
exceed 80 percent of the appraised value of the security
for the note:
(A) an abstract plant and connected personal property in
or outside this state;
(B) stock of a title insurance agent in or outside this
state;
(C) a construction contract to build an abstract plant
and connected personal property; or
(D) any two or more of the items listed in this
subdivision;
(5) the shares of any federal home loan bank in an amount
necessary to qualify for membership and any additional
amounts approved by the commissioner;
(6) foreign securities that are substantially of the same
kinds, classes, and investment grade as securities
otherwise qualified for investment under this section,
provided that, unless the investment is also qualified
under Subdivision (2), the aggregate amount of foreign
investments made under this subdivision does not exceed:
(A) five percent of the insurer's admitted assets at the
end of the preceding year;
(B) two percent of the insurer's admitted assets at the
end of the preceding year invested in the securities of
all entities domiciled in any one foreign country; and
(C) one-half of one percent of the insurer's admitted
assets at the end of the preceding year invested in the
securities of any one individual entity domiciled in a
foreign country;
(7) securities lending, repurchase, reverse
repurchase, and dollar roll transactions, as described
by Section 425.121; or
(8) money market funds, as described by Section
425.123.
(b) If a corporation maintains with the department a
deposit described by Subchapter E in the amount of
$100,000, the corporation may invest more than 50 percent
of the corporation's capital stock under Subsection
(a)(1), as considered necessary by the corporation's board
of directors.
(c) A corporation created or operating under this title
may own or acquire more than one abstract plant in any one
county, but only one abstract plant in any one county is
admissible as an investment under Subsection (a)(1).
(d) A title insurance company may not hold real property
acquired under Subsection (a)(3)(B), (C), or (D) for more
than 10 years without written approval of the department.
(e) Any investment that does not qualify under this
section and was owned by the title insurance company on
October 1, 1967, continues to qualify.
(f) If any otherwise valid investment qualified under
this section exceeds in amount any of the limitations on
investment provided by this section, the investment is
inadmissible only to the extent that it exceeds the
limitation.
(g) A title insurance company may invest in a
certified capital company in the manner provided by
Chapter 228.
Added by
Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1,
2005.
Amended by: Acts 2005, 79th Leg., Ch. 99, Sec. 2, eff.
September 1, 2005.
Acts 2007, 80th Leg., R.S., Ch. 730, Sec. 2I.002, eff.
April 1, 2009.
Sec. 2551.152. ANNUAL
STATEMENT.
(a) Not later than March 1 of each year, each title
insurance company shall file with the commissioner a
verified statement.
(b) The statement must be in a form required by the
commissioner and must:
(1) provide a statement of the business engaged in by the
title insurance company during the preceding year; and
(2) describe the condition of the company's affairs on
December 31 of the preceding year.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.153. FEES.
The general laws applicable to payment of a filing fee by
a corporation having capital stock apply to a corporation
subject to this title.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.154. TRANSFER OF
CERTAIN BUSINESS TO STATE BANKS OR TRUST COMPANIES.
(a) This section applies to a corporation chartered under
Section 2551.051, or its antecedents, Article 9.01, Texas
Insurance Code, or Chapter 40, Acts of the 41st
Legislature, Regular Session, 1929 (Article 1302a,
Vernon's Texas Civil Statutes), and empowered to act as:
(1) trustee under a lawful trust committed to the
corporation by contract or will or by appointment by a
court as trustee, receiver, or guardian; and
(2) executor or guardian under the terms of a will or as
an administrator of a decedent's estate under the
appointment of the court.
(b) A corporation described by Subsection (a) may
transfer and assign to one of the following entities all
of the corporation's fiduciary business in which the
corporation is named or acts as guardian, trustee,
executor, or administrator or in any other fiduciary
capacity:
(1) a state bank created under Subtitle A, Title 3,
Finance Code, or a predecessor to that law; or
(2) a state trust company created under Chapter 181,
Finance Code, or a predecessor to that law.
(c) On a corporation's transfer or assignment to a state
bank or trust company under this section, the state bank
or trust company shall, without the necessity of any
action in a court of this state or any action by the
creator or beneficiary of the trust or estate:
(1) continue the guardianship, trust, executorship,
administration, or other fiduciary relationship related to
the trust or estate;
(2) perform all of the duties and obligations of the
corporation related to the trust or estate; and
(3) exercise any powers and authority:
(A) related to the trust or estate; and
(B) exercised by the corporation at the time of the
transfer or assignment.
(d) A transfer or assignment by a corporation under this
section is not a resignation or refusal by the corporation
to act on behalf of the guardianship, trust, executorship,
administration, or other fiduciary relationship.
(e) On a corporation's transfer or assignment to a state
bank or trust company under this section, the naming or
designation by a testator or the creator of a living trust
of the corporation to act as trustee, guardian, or
executor or in any other fiduciary capacity includes the
naming or designation of the state bank or trust company
and authorizes the state bank or trust company to act in
that capacity.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
SUBCHAPTER E. REQUIRED DEPOSIT
Sec. 2551.201. DEPOSIT REQUIRED; AMOUNT.
(a) Except as provided by Section 2551.202, a title
insurance company shall deposit and maintain in the state
treasury, or other depository in this state named by the
company and approved by the department, either:
(1) cash; or
(2) securities described by Section 2551.151.
(b) A title insurance company's deposit under this
section must be in an amount equal to the lesser of:
(1) one-fourth of the authorized capital of the company;
or
(2) $100,000.
(c) A deposit under this section is for the benefit of
all policyholders.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.202. EXCEPTION:
FOREIGN TITLE INSURANCE COMPANY.
(a) A foreign title insurance company is not required to
make a deposit under Section 2551.201 if the company has
on deposit with insurance regulatory bodies in the United
States an aggregate amount of deposit that:
(1) is equal to the amount required by Section 2551.201;
and
(2) secures all policyholders of the company, regardless
of their location.
(b) The foreign title insurance company must file with
the department a certificate of deposit under the hand and
seal of each insurance regulatory body holding a deposit
of the company.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.203. WITHDRAWAL
AND SUBSTITUTION OF DEPOSIT.
A title insurance company may withdraw the deposit of
securities made under Section 2551.201, or any portion of
the deposit, after substituting other securities of a
sufficient value to maintain the amount of deposit
required under that section.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.204. USE OF DEPOSIT.
(a) Except as otherwise provided by Subsection (e), a
deposit made under this subchapter may be used only to pay
an obligation connected with title insurance.
(b) On the insolvency or dissolution of a title insurance
company, the company's deposit shall be used to protect
title insurance policyholders even if no accrued title
insurance claims exist and other unpaid obligations do
exist, except as permitted by Subsection (e).
(c) A title insurance company's deposit must be applied
to:
(1) the complete payment of any obligations and
liabilities of the company connected with title insurance
business; and
(2) the establishment of adequate reserves or reinsurance
to protect any subsequently accruing or maturing title
insurance obligations and liabilities.
(d) The amount, handling, and distribution of any
reserves required under Subsection (c)(2) are subject to
the control and discretion of the department and are
reviewable in judicial proceedings governed by rules
applicable to review of rates under Subchapters D and E,
Chapter 2703.
(e) Any deposit amount remaining after payments under
Subsection (c) must be applied to:
(1) payment of other obligations and liabilities of the
title insurance company; or
(2) distribution to shareholders.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
SUBCHAPTER F. RESERVES
Sec. 2551.251. STATUTORY PREMIUM RESERVE REQUIRED.
(a) Each domestic title insurer shall establish and
maintain a statutory premium reserve. The reserve is
cumulative. The reserve must consist of the amounts
required under Sections 2551.252-2551.260 and must be
established and maintained during the period and for the
uses and purposes provided by those sections.
(b) The reserve required under this section:
(1) is considered to be unearned portions of the original
premium; and
(2) must be charged as a reserve liability of the title
insurer in determining the insurer's financial condition.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.252. AMOUNTS ADDED TO RESERVE FOR CALENDAR
YEAR 1997; REDUCTIONS.
(a) The total charges of a domestic title insurer for
title insurance policies written or assumed on or after
January 1, 1997, and before January 1, 1998, are computed
by adding the following, as described in the insurer's
annual statement:
(1) the direct premium written by the insurer;
(2) the escrow and settlement service fees paid directly
to and collected by the insurer;
(3) other title fees and service charges paid directly to
and collected by the insurer, including fees for closing
protection letters; and
(4) premiums for any reinsurance assumed by the insurer,
less premiums for reinsurance ceded by the insurer during
that year.
(b) The amount a domestic title insurer must set aside in
the statutory premium reserve for the 1997 calendar year
is computed by multiplying the total charges computed
under Subsection (a) by:
(1) 6-1/5 percent if the insurer had $250 million or more
in direct premium written for the year 1996; or
(2) 3-1/2 percent if the insurer had less than $250
million in direct premium written for the year 1996.
(c) A domestic title insurer shall reduce additions to
the statutory premium reserve set aside for title
insurance policies written or assumed during the year 1997
over a 20-year period beginning in the year after the year
in which the policies are written or assumed, as provided
by Subsection (d), by:
(1) 26 percent of the additions in the first year
following the year of addition;
(2) 20 percent of the additions in the second year
following the year of addition;
(3) 10 percent of the additions in the third year
following the year of addition;
(4) nine percent of the additions in the fourth year
following the year of addition;
(5) five percent of the additions in the fifth and sixth
years following the year of addition;
(6) three percent of the additions in the seventh,
eighth, and ninth years following the year of addition;
(7) two percent of the additions in the 10th through 14th
years following the year of addition; and
(8) one percent of the additions in the last six years of
the 20-year period.
(d) A domestic title insurer shall make the annual
reductions under Subsection (c) in increments of
one-fourth of the appropriate percentage of the additions
each on March 31, June 30, September 30, and December 31
of each year.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.253. AMOUNTS ADDED TO RESERVE FOR CALENDAR
YEARS AFTER 1997; REDUCTIONS.
(a) Out of total charges for title insurance policies
written or assumed on or after January 1, 1998, and before
January 1, 2005, a domestic title insurer shall add to and
set aside in the statutory premium reserve an amount equal
to the total of the following, as described in the
insurer's annual statement:
(1) 25 cents per $1,000 of net retained liability if the
insurer had $250 million or more in direct written
premiums written for the most recent calendar year; or
(2) 30 cents per $1,000 of net retained liability if the
insurer had less than $250 million in direct written
premiums written for the most recent calendar year.
(b) Out of total charges for title insurance policies
written or assumed on or after January 1, 2005, a domestic
title insurer shall add to and set aside in the statutory
premium reserve an amount equal to the total of 18.5 cents
per $1,000 of net retained liability for the most recent
calendar year, as described in the insurer’s annual
statement.
(c) A domestic title insurer shall reduce additions to
the statutory premium reserve set aside for title
insurance policies written or assumed after the year 1997
over a 20-year period beginning in the year after the year
in which the policies are written or assumed in the manner
and under the same percentages applied under Sections
2551.252(c) and (d).
Added
by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1,
2005.
Amended by: Acts 2005, 79th Leg., Ch. 56, Sec. 1, eff.
September 1, 2005.
Sec. 2551.254. TRANSITIONAL
RELEASE; TRANSITIONAL CHARGE.
(a) In addition to the requirements described by Sections
2551.252 and 2551.253, each domestic title insurer shall
compute a total statutory premium reserve balance for all
policy years combined as of December 31, 1996.
(b) A domestic title insurer shall compute the balance
under Subsection (a) as if Section 2551.252 were in effect
during the 20-year period ending December 31, 1996. That
balance, less the total actual statutory premium reserve
balance carried by the insurer on December 31, 1996, is
the insurer's transitional charge if the resulting amount
is more than zero or is the insurer's transitional release
if the resulting amount is zero or less.
(c) If a domestic title insurer has a transitional charge
under Subsection (b), in addition to any changes to the
statutory premium reserve otherwise required by this
subchapter, the insurer shall add to its statutory premium
reserve, on December 31 of each year for 10 consecutive
years beginning on December 31, 1997, an amount equal to
one-tenth of the transitional charge.
(d) If a domestic title insurer has a transitional
release under Subsection (b), in addition to any changes
to the statutory premium reserve otherwise required by
this subchapter, the insurer shall reduce its statutory
premium reserve, on December 31 of each year for 10
consecutive years beginning on December 31, 1997, by an
amount equal to one-tenth of the transitional release.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.255. RUNOFF
BALANCE.
(a) At the end of each calendar year beginning in 1997,
each domestic title insurer shall compute a total
statutory premium reserve balance for all policy years
before January 1, 1997, combined. The balance shall be
computed as of the year-end evaluation date and as if
Section 2551.252 were in effect during the 20-year period
ending December 31, 1996. The balance computed under this
subsection is the runoff balance.
(b) A domestic title insurer shall reduce its statutory
premium reserve by an amount equal to the difference
between:
(1) the runoff balance computed under Subsection (a);
and
(2) the runoff balance computed for the preceding
calendar year.
(c) The reduction of the statutory premium reserve under
Subsection (b) is in addition to any other changes to the
statutory premium reserve required by this subchapter.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.256. ACTUARIAL
CERTIFICATION.
(a) Each domestic or foreign title insurer shall file
annually with the insurer's annual statement required
under Section 2551.152 an actuarial certification made by
a member in good standing of the American Academy of
Actuaries.
(b) An actuarial certification must:
(1) conform to the annual statement instructions for a
title insurer adopted by the National Association of
Insurance Commissioners; and
(2) include the actuary's professional opinion of the
insurer's reserves as of the date of the annual statement.
(c) The reserves analyzed under this section must include
reserves for known claims, including adverse development
on known claims, and reserves for incurred but not
reported claims.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.257. SUPPLEMENTAL
RESERVE.
Each domestic or foreign title insurer shall establish a
supplemental reserve in an amount equal to the amount by
which the actuarially certified reserves exceed the total
of the known claim reserve and statutory premium reserve
as set forth in the insurer's annual statement required
under Section 2551.152.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.258.
REEVALUATION OF CERTAIN RESERVE REQUIREMENTS.
(a)
The commissioner may:
(1)
reevaluate the adequacy of the statutory premium reserves
required under Section 2551.253;
(2)
based on an actuarial review, change by order the amount
of the statutory premium reserve required of any domestic
title insurer or all domestic title insurers.
(b) Any change in the amount of the statutory premium
reserve under Subsection (a) (2) is considered a statutory
premium reserve and is not considered a supplemental
reserve.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Amended by: Acts 2005, 79th Leg., Ch. 56, Sec. 2, eff.
September 1, 2005.
Sec. 2551.259. STATUTORY
PREMIUM RESERVE AND SUPPLEMENTAL RESERVE FUND.
The statutory premium reserve and supplemental reserve
fund shall be:
(1) held in cash; or
(2) invested in first mortgage notes or other securities
admissible for investment by title insurers under Section
2551.151.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.260. EFFECT OF
INSOLVENCY OR DISSOLUTION.
On the insolvency or dissolution of a title insurer, the
statutory premium reserve and supplemental reserve fund
shall be used to protect title insurance policyholders,
even if no accrued title insurance claims exist and other
unpaid obligations do exist.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.261. RESERVE FOR
UNPAID LOSSES AND LOSS EXPENSES.
(a) A title insurance company shall establish and
maintain, in addition to any other reserves, a reserve
against:
(1) unpaid losses; and
(2) loss expense for costs of defense of an insured and
other costs expected to be paid to other parties in the
defense, settlement, or processing of a claim under the
terms of a title insurance policy.
(b) A title insurance company shall compute the amount of
the reserve required by this section by carefully
estimating any loss and loss expense likely to be incurred
on a proper disposition of each claim presented, under
notice from or on behalf of the insured, of a title defect
in or lien or adverse claim against a title insured by the
company.
(c) The total expenses of the title insurance company are
equal to the estimate under Subsection (b) for payment of
loss and costs of defense of the insured and other costs
expected to be paid to other parties in the defense,
settlement, or processing of the claim under the terms of
the title insurance policy. The title insurance company
shall revise the estimate at least annually and may
additionally revise the estimate as circumstances warrant.
(d) The amounts set aside in the reserve in any year
shall be deducted in determining the net profits for that
year of any title insurance company.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
SUBCHAPTER G. LIABILITY AND REINSURANCE
Sec. 2551.301. MAXIMUM
POLICY LIABILITY.
(a) Except as provided by Subsection (b), a title
insurance company may not issue a title insurance policy
on any real property located in this state involving a
potential policy liability of more than 50 percent of the
company's capital stock and surplus as stated in the most
recent annual statement of the company.
(b) A title insurance company may exceed the limit
described by Subsection (a) if the excess liability is
reinsured in due course in an authorized title insurance
company.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.302. REQUIREMENTS
FOR REINSURING POLICIES.
A title insurance company may reinsure any of its policies
and contracts issued on real property located in this
state or on policies and contracts issued in this state
under Chapter 2751, if:
(1) the reinsuring title insurance company is authorized
to engage in business in this state under this title; and
(2) the department first approves the form of the
reinsurance contract.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Amended by: Acts 2007, 80th Leg., R.S., Ch. 543, Sec. 6,
eff. September 1, 2007.
Sec. 2551.303. FORM OF
REINSURANCE CONTRACT.
(a) If the department approves a form of reinsurance
contract for a title insurance company, the company may
continue using the form without submitting individual
reinsurance contracts to the department for approval.
(b) The department may alter the required form of a
reinsurance contract previously approved by the department
after first giving written notice to each title insurance
company affected by the alteration.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.304. ACCEPTANCE OF
REINSURANCE.
A title insurance company may accept a reinsurance risk on
real property located in this state or on interests
described by Section 2751.002(2) only from an
authorized title insurance company.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Amended
by: Acts 2007, 80th Leg., R.S., Ch. 543, Sec. 7, eff.
September 1, 2007.
Sec. 2551.305. CERTAIN
REINSURANCE ALLOWED.
(a) Notwithstanding any other provision of this
subchapter, the department may, on application and
hearing, permit a title insurance company to acquire
reinsurance on an individual policy or facultative basis
from a title insurance company not authorized to engage in
the business of title insurance in this state, if:
(1) the company has exhausted the opportunity to acquire
reinsurance from all other authorized title insurance
companies; and
(2) the title insurance company from which the
reinsurance is acquired has a combined capital and surplus
of at least $1.4 million as stated in its annual statement
preceding the acceptance of reinsurance.
(b) Notwithstanding any other provision of this
subchapter, the department may, on application and
hearing, permit a title insurance company, including an
authorized reinsuring title insurance company, to retain
an additional potential liability of not more than 40
percent of the company's capital stock and surplus as
stated in the most recent annual statement of the company,
if:
(1) the company has exhausted the opportunity to acquire
reinsurance under Subsection (a); and
(2) the additional potential liability of the company is
incurred only if the loss suffered by the insured under
the policy exceeds the amount of insurance and reinsurance
accepted by the company and its reinsuring title insurance
companies under the other provisions of this subchapter.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
SUBCHAPTER H. ENFORCEMENT AND INTERVENTION
Sec. 2551.351. FORFEITURE OF
RIGHT TO ENGAGE IN BUSINESS.
(a) A foreign or domestic corporation forfeits any right
to engage in business in this state if the corporation:
(1) issues any form of title insurance policy, or any
other adopted or approved form, on real property in this
state other than a form prescribed by the department;
(2) charges any premium rate on an owner, mortgagee, or
other title insurance policy, or on any other adopted or
approved form, on real property in this state other than a
premium rate prescribed by the commissioner; or
(3) otherwise engages in the business of title insurance
in relation to real property in this state on a form or
for a premium rate not prescribed by the department or
commissioner.
(b) This section does not apply to a premium rate charged
in connection with a reinsurance transaction between two
or more title insurance companies, provided that the
reinsurance contract complies with Subchapter G.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.352. REVOCATION OF
PERMIT AND FORFEITURE OF CHARTER.
(a) A domestic corporation engaged in the business of
title insurance that violates this title is subject to:
(1) revocation by the commissioner of the corporation's
permit; and
(2) forfeiture of the corporation's charter.
(b) A foreign corporation engaged in the business of
title insurance that violates this title is subject to
revocation by the commissioner of the corporation's
permit.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.353. PROCEDURE FOR
REVOCATION OF CERTIFICATE.
(a) If the commissioner determines that a domestic or
foreign corporation that holds a certificate of authority
to engage in business in this state has violated this
title, the commissioner shall notify the company that the
commissioner intends to revoke the company's certificate
of authority on the expiration of the 30-day period
following the date actual notice is delivered or mailed
under this section.
(b) Notice under this section must:
(1) be in writing; and
(2) be delivered to an executive officer of the company
by personal service or by registered mail.
(c) If a company receiving notice under this section does
not fully comply before the expiration of the period
described by Subsection (a), the commissioner shall revoke
the company's certificate of authority.
(d) A company whose certificate of authority is revoked
under this section is ineligible for another certificate
of authority until the later of:
(1) the date on which the company fully and in good faith
complies; or
(2) the first anniversary of the date of the revocation.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2551.354. APPEAL OF
COMMISSIONER ACTION.
(a) A company qualified or seeking to qualify under this
title and aggrieved by an action of the commissioner,
including any action against the company, may file an
appeal of the commissioner's action in a district court in
Travis County.
(b) The appeal must be filed not later than the 30th day
after the date the commissioner issues the order or
ruling, except that if the order or ruling is directed
against the company, whether or not directed against any
other party, the company has 30 days after the date of
receipt of official notice of the commissioner's action to
review the action.
(c) An appeal under this section is subject to the same
standard of review as an appeal under this code in
accordance with Section 36.203.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
CHAPTER 2552. ATTORNEY'S TITLE
INSURANCE COMPANIES AND TITLE ATTORNEYS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2552.001. PURPOSE; LEGISLATIVE INTENT.
(a) Except as otherwise expressly provided by this
chapter, the purpose of this chapter is to regulate an
attorney's title insurance company in the same manner as a
title insurance company engaged in the business of title
insurance under this title.
(b) It is the express intent of the legislature to
achieve the purpose described by Subsection (a).
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.002. DEFINITIONS.
In this chapter:
(1) "Attorney's title insurance" means:
(A) insurance that:
(i) insures, guarantees, or indemnifies an owner of real
property in this state, or another interested in the real
property, against loss or damage resulting from:
(a) a lien or encumbrance on or defect in the title to
the real property; or
(b) the invalidity of a lien on the real property; and
(ii) is issued only in connection with and as part of a
real property transaction and a title opinion of a title
attorney; or
(B) any business that is substantially equivalent to the
insurance business described by Paragraph (A) and is
conducted in a manner designed to evade the provisions of
this title.
(2) "Attorney's title insurance company" means a domestic
company organized and operated in accordance with this
chapter for the business of attorney's title insurance.
(3) "Title attorney" means an attorney who satisfies the
requirements of this chapter to act as a title attorney in
this state for an attorney's title insurance company.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.003. APPLICABILITY OF TITLE 11.
Except as otherwise expressly provided by this chapter:
(1) this title applies to an attorney's title insurance
company;
(2) the provisions of this title that apply to a title
insurance company also apply to an attorney's title
insurance company;
(3) the provisions of this title that apply to a title
insurance agent also apply to a title attorney; and
(4) any rule adopted or premium promulgated by the
commissioner under this title applies to an attorney's
title insurance company and to a title attorney.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.004. BUSINESS OF ATTORNEY'S TITLE
INSURANCE.
(a) The business of attorney's title insurance may be
engaged in only by an attorney's title insurance company
through a title attorney appointed by an attorney's title
insurance company.
(b) For purposes of this chapter, a person engages in the
business of attorney's title insurance if the person:
(1) as insurer, guarantor, or surety, makes or proposes
to make a contract or policy of title insurance; or
(2) transacts or proposes to transact any phase of title
insurance, including:
(A) soliciting;
(B) negotiating before executing a title insurance
contract;
(C) executing a contract of title insurance; and
(D) insuring and transacting matters arising out of the
contract after the contract is executed, including
reinsurance.
(c) A person engages in the business of attorney's title
insurance if the person engages in or proposes to engage
in any business that is substantially equivalent to the
business of attorney's title insurance as part of a real
property transaction and title opinion of a title attorney
in a manner designed to evade the applicable provisions of
this title.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.005. OTHER TITLE INSURANCE COMPANIES AND
AGENTS PROHIBITED.
A title insurance company, title insurance agent, or
escrow officer of a title insurance agent licensed under
this title to engage in the business of title insurance in
this state may not operate as an attorney's title
insurance company or act as a title attorney under this
chapter.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.006. RECORD OF TITLE ATTORNEYS.
The department shall maintain a record of the name and
address of each title attorney in a manner that allows a
person on request to conveniently ascertain and inspect
the title attorneys appointed by an attorney's title
insurance company authorized to engage in the business of
attorney's title insurance in this state.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.007. OTHER PREMIUM OR FEE PROHIBITED.
Attorney's title insurance may not be issued for any
premium or fee other than the applicable prescribed
premium as provided by Subchapters D and E, Chapter 2703.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
SUBCHAPTER B. ORGANIZATION OF ATTORNEY'S TITLE
INSURANCE COMPANY
Sec. 2552.051. ORGANIZING MEMBERS.
Fifteen or more members of the State Bar of Texas who are
residents of this state may organize a private corporation
to act as an attorney's title insurance company.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.052. CAPITAL SHARE AND SURPLUS REQUIREMENTS
GENERALLY.
(a) At the time of organization, an attorney's title
insurance company must have the capital and surplus
required of a title insurance company under Section
2551.053(a).
(b) The capital shares of an attorney's title insurance
company may be issued for a par value of $100 or more per
share and in one or more classes.
(c) The capital shares, regardless of class, must be
subscribed and paid for and owned by and issued to
licensed members of the State Bar of Texas, each of whom
is a resident of this state and is qualified to be
appointed a title attorney under this chapter, subject to
the right of reacquisition under Section 2552.054.
(d) Each certificate evidencing any share must have
endorsed on the certificate provisions relating to
limitation on the alienation of the shares indicating that
the shares may be owned only by qualifying attorneys or
the attorney's title insurance company issuing the shares.
(e) The requirements prescribed by Subsections (a), (c),
and (d) do not apply to an attorney's title insurance
company described by Section 2552.053 or to capital shares
of an attorney's title insurance company owned under that
section.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.053. CAPITAL SHARE AND SURPLUS REQUIREMENTS
FOR STATE BAR ENTITY.
(a) An association of the organized State Bar of Texas,
the State Bar of Texas, or any foundation created by or
through the State Bar of Texas, the purposes of which
include the continuing legal education of the bench and
bar of this state, may own any class of capital shares of
an attorney's title insurance company if, at all times, at
least 15 members of the State Bar of Texas who are
residents of this state own capital shares, whether or not
of the same class, in the attorney's title insurance
company.
(b) An attorney's title insurance company created as an
affiliate or subsidiary of the organized State Bar of
Texas, the State Bar of Texas, or any foundation created
by or through the State Bar of Texas must have a paid-up
capital of at least $250,000 and a surplus of at least
$150,000.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.054. REACQUISITION OF SHARES.
(a) The capital shares of an attorney's title insurance
company are subject to the right of reacquisition of the
shares by the attorney's title insurance company in the
event of:
(1) the death of the attorney shareholder;
(2) the failure of the attorney shareholder to remain a
licensed member of the State Bar of Texas; or
(3) the failure of the attorney shareholder to remain
appointed and qualified to be appointed a title attorney
under this chapter.
(b) An attorney's title insurance company must reacquire
a deceased attorney shareholder's shares within nine
months of the attorney shareholder's death.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.055. REACQUISITION PLAN REQUIRED.
(a) As part of the application for the approval of the
charter of an attorney's title insurance company, the
applicants must file with the department an acceptable
plan providing for the reacquisition of all shares of
stock of the attorney's title insurance company issued to
a qualified attorney when the attorney is no longer
qualified to own the shares or on the death of the
attorney.
(b) The plan must be approved by the department.
(c) In addition to other provisions, the plan must
include an express provision that the attorney's title
insurance company may not reacquire under any circumstance
outstanding shares of its stock as treasury stock if the
reacquisition will result in reducing its capital and
surplus below the minimum capital and surplus required for
the initial organization of the attorney's title insurance
company.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.056. INAPPLICABILITY OF LAWS REGULATING
SECURITIES.
(a) All state laws, other than this title, that provide
for supervision, registration, or regulation in connection
with the sale, issuance, or offering of securities do not
apply to the sale, issuance, or offering of any capital
stock to a person authorized under this chapter to own the
capital stock.
(b) The sale, issuance, or offering of any stock
described by this section is legal without any action or
approval by any official or state regulatory agency
authorized to license, regulate, or supervise the sale,
issuance, or offering of securities.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
SUBCHAPTER C. TITLE ATTORNEY'S LICENSE AND RENEWAL
Sec. 2552.101. LICENSE AND OTHER GENERAL
REQUIREMENTS.
To act as a title attorney in this state for an attorney's
title insurance company, an attorney must:
(1) be a member in good standing of the State Bar of
Texas;
(2) own one or more shares of stock in the attorney's
title insurance company by which the attorney is
appointed;
(3) be actively engaged in the practice of law;
(4) meet the requirements prescribed by this chapter
regarding an abstract plant;
(5) be appointed by an attorney's title insurance company
as its title attorney authorized by the attorney's title
insurance company to solicit insurance, collect premiums,
and issue or countersign policies on behalf of the
attorney's title insurance company;
(6) be certified as a title attorney to the department;
(7) hold a license issued by the department under this
subchapter; and
(8) maintain a surety bond or deposit as required by
Section 2552.154.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.102. LICENSE APPLICATION.
(a) Before an initial license is issued to an attorney to
act as a title attorney in this state for an attorney's
title insurance company, the attorney's title insurance
company must file an application for a title attorney's
license with the department on forms provided by the
department.
(b) The application must be:
(1) accompanied by a nonrefundable fee in an amount not
to exceed $50 as prescribed by the department; and
(2) signed and sworn to by the attorney's title insurance
company and the proposed title attorney.
(c) The completed application must state that:
(1) the proposed title attorney:
(A) is a licensed attorney in this state and a resident
of this state;
(B) is actively engaged in the practice of law;
(C) is known to the attorney's title insurance company:
(i) to have a good business reputation;
(ii) to be a current member, in good standing, of the
State Bar of Texas; and
(iii) to be worthy of the public trust; and
(D) meets the qualifications for a title attorney as
prescribed by this chapter; and
(2) the attorney's title insurance company does not know
of any fact or condition that would disqualify the
proposed title attorney from receiving a license.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.103. LICENSE ISSUANCE AND DELIVERY.
(a) The department shall issue a title attorney's license
if the department determines, based on the application and
the department's investigation, that the requirements of
Section 2552.102 are satisfied.
(b) The department shall deliver the license to the
attorney's title insurance company for transmittal to the
title attorney.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.104. DUPLICATE LICENSE.
(a) The department shall collect in advance a fee from a
license holder who requests a duplicate title attorney's
license.
(b) The department shall prescribe the fee in an amount
not to exceed $20.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.105. LICENSE TERM.
Unless a system of staggered renewal is adopted under
Section 4003.002, a title attorney's license expires on
June 1 following the date of issuance.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.106. AUTOMATIC TERMINATION OF LICENSE.
The license of each title attorney appointed by an
attorney's title insurance company that surrenders its
certificate of authority or has its certificate revoked by
the department is automatically terminated without notice.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.107. LICENSE SURRENDER OR FORFEITURE.
(a) A title attorney may voluntarily surrender the title
attorney's license at any time by giving notice to the
department and to the attorney's title insurance company.
(b) A title attorney automatically forfeits the title
attorney's license under the attorney's title insurance
company if the title attorney terminates the title
attorney's relationship with the attorney's title
insurance company.
(c) A surrender or forfeiture of a title attorney's
license under this section does not affect the culpability
of the license holder for conduct committed before the
effective date of the surrender or forfeiture. The
department may institute a disciplinary proceeding against
the former license holder for conduct committed before the
effective date of the surrender or forfeiture.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.108. CONTINUATION OF LICENSE.
(a) Not later than the 30th day after the date an
attorney's title insurance company terminates its contract
with a title attorney or gives notice of termination to
the title attorney, the title attorney may apply to the
department for continuation of the title attorney's
license.
(b) The application must include an amendment to the
license stating the name of another attorney's title
insurance company for which the title attorney is or will
be authorized to act.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
SUBCHAPTER D. TITLE ATTORNEY GENERAL REQUIREMENTS
Sec. 2552.151. CONTRACT REQUIRED FOR APPOINTMENT.
(a) A title attorney must be appointed by an attorney's
title insurance company by contract.
(b) The contract must make arrangements for division of
premium as may be approved by the department under this
title.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.152. ABSTRACT PLANT REQUIREMENTS.
(a) A title attorney must:
(1) own or lease and control a licensed abstract plant;
(2) participate in a bona fide joint abstract plant
operation;
(3) contract in accordance with this subchapter to obtain
title evidence from a licensed abstract plant; or
(4) use title evidence provided by an approved abstract
plant owned or leased and controlled by the attorney's
title insurance company.
(b) If at the time of applying for a license under
Section 2552.102 an attorney does not own or lease and
control a licensed abstract plant, is not a participant in
a bona fide joint abstract plant operation, and is unable
to contract to obtain title evidence from a licensed
abstract plant located in the county in which the attorney
resides, the attorney, as part of the license application,
may satisfy the requirements of this section by filing
with the department on a form prescribed by the department
a disclosure of the inability to obtain the contract.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.153. CONTRACT WITH LICENSED ABSTRACT
PLANT.
(a) A title attorney may enter into a contract with a
licensed abstract plant under which the abstract plant
provides title evidence to the title attorney. The
contract must:
(1) be on a form prescribed by the commissioner; and
(2) state the standards for the evidence to be provided.
(b) The commissioner may change the form of the contract.
(c) The parties to the contract shall determine the
portion of the premium to be paid by the title attorney to
the licensed abstract plant, subject to approval by the
department.
(d) The department may disapprove any division of the
premium that the department determines to be excessive or
inadequate. The contract is considered to be approved as
to the division of the premium until the parties are
notified of disapproval by the department.
(e) The portion of the premium to be paid to the licensed
abstract plant is considered to be in compliance with
Section 2502.053(1).
(f) The parties to the contract shall file with the
department a copy of the contract not later than the 10th
day after the date of execution of the contract.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.154. BOND OR DEPOSIT REQUIRED.
(a) A title attorney shall make, file, and pay for a
surety bond payable to the department in the amount of $7,
500 and issued by a corporate surety company authorized to
write surety bonds in this state. The bond shall obligate
the principal and surety to pay any pecuniary loss that is
incurred by:
(1) a participant in a real property settlement or
closing in which an attorney's title insurance policy is
issued by the title attorney and that is sustained through
an act of fraud, dishonesty, theft, embezzlement, or
wilful misapplication by a title attorney; and
(2) any party to an escrow agreement in which the title
attorney is escrowee and that is sustained through an act
of fraud, dishonesty, forgery, theft, embezzlement, or
wilful misapplication by the title attorney, either
directly and alone or in conspiracy with another person.
(b) Instead of a surety bond, a title attorney may
deposit with the department cash or securities approved by
the department in the amount of $7,500, subject to the
same conditions required for the bond.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.155. EXAMINATION OF LOSS COVERED BY BOND.
(a) At any time it appears that the terms of a title
attorney's bond may have been violated, the department may
require the title attorney to appear in Travis County,
with records the department determines to be proper, for
an examination.
(b) The department shall specify a date for the
examination that is not earlier than the 10th day or later
than the 15th day after the date of service of notice of
the requirement to appear.
(c) If after the examination the department determines
that the terms of the bond have been violated, the
department shall immediately notify the surety and prepare
a written statement of the facts of the loss and deliver
the statement to the attorney general.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.156. INVESTIGATION BY ATTORNEY GENERAL.
(a) On receipt of a written statement under Section
2552.155, the attorney general shall investigate the
charges and, on determining that the terms of the bond
have been violated, shall enforce the liability against
cash or securities or by filing suit on the bond.
(b) A suit brought under this section shall be filed in
the name of the department in Travis County for the
benefit of all parties who have suffered any loss because
of the violation.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.157. AUTHORITY TO ISSUE POLICY.
A title attorney may issue a title insurance policy for an
attorney's title insurance company only if the title
attorney:
(1) is appointed by the attorney's title insurance
company as its title attorney;
(2) bases each title opinion on separate and current
title evidence, provided by a licensed abstract plant, of
the records of the county in which the real property, the
title to which is to be insured, is located; and
(3) pays to the licensed abstract plant the portion of
the premium agreed to by the title attorney and the
abstract plant and approved by the department, if the
title attorney contracts to obtain the title evidence from
the abstract plant as provided by Section 2552.153.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.158. AUTHORITY TO DELIVER BUT NOT ISSUE
POLICY.
A title attorney may deliver, but not issue, a title
insurance policy in conformity with Subchapter A, Chapter
2704, if:
(1) the title attorney does not own or lease and control
a licensed abstract plant, is not a participant in a bona
fide joint abstract plant operation, and is unable to
contract with a licensed abstract plant to obtain the
required title evidence in the county in which the real
property, the title to which is to be insured, is
located; or
(2) the title insurance policy is based on a certified
abstract of title prepared by a licensed abstract plant
covering the particular real property from the sovereignty
of the soil to the date of the transaction.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
SUBCHAPTER E. POWERS AND DUTIES
OF ATTORNEY'S TITLE INSURANCE COMPANIES
Sec. 2552.201. ACTING AS TITLE ATTORNEY.
An attorney's title insurance company may not permit an
attorney to act as its title attorney in this state,
including by writing, signing, or delivering title
insurance policies, unless the attorney holds a license
issued under Subchapter C and maintains a surety bond or
deposit as required by Section 2552.154.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.202. LIST OF TITLE ATTORNEYS.
(a) An attorney's title insurance company shall certify
to the department the name and address of each title
attorney appointed by the attorney's title insurance
company.
(b) The certification required by this section must:
(1) be on a form provided by the department; and
(2) be made on or before June 1 of each year unless a
system of staggered renewal is adopted under Section
4003.002.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.203. RENEWAL.
An attorney's title insurance company shall apply for
license renewal and pay a fee prescribed by the department
in an amount not to exceed $50 for each title attorney
listed under Section 2552.202.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.204. NOTICE OF TERMINATION.
An attorney's title insurance company that terminates the
appointment of a title attorney shall:
(1) immediately notify the department in writing of the
termination and request cancellation of the title
attorney's license; and
(2) notify the title attorney of the action by the
attorney's title insurance company.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
SUBCHAPTER F. AUDIT AND
EXAMINATION REQUIREMENTS RELATING TO TRUST FUND ACCOUNTS
Sec. 2552.251. ANNUAL AUDIT.
(a) A title attorney shall have an annual audit made of
trust fund accounts. The title attorney shall pay for the
audit.
(b) The audit must be performed by an independent
certified public accountant or licensed public accountant,
or a firm composed of either, recommended by the title
attorney and approved by the attorney's title insurance
company represented by the title attorney.
(c) The audit must include disclosure of payments made
for title evidence under a contract under Section 2552.153
and to whom the payments were made.
(d) Not later than the 90th day after January 1 of each
year, the title attorney shall send by certified mail,
postage prepaid, to the department one copy of the audit
report with a transmittal letter. The title attorney
shall also send a copy of the audit report and transmittal
letter to the attorney's title insurance company
represented by the title attorney.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.252. ANALYSIS OF ANNUAL AUDIT.
(a) An attorney's title insurance company shall examine
and analyze the annual audit report received from each of
its title attorneys under Section 2552.251.
(b) Not later than three months after the date the audit
report is received, the attorney's title insurance company
shall file with the department, on a form prescribed by
the department, a report of the findings and results of
the examination and analysis of the audit report.
(c) If an attorney's title insurance company fails to
receive an audit report from a title attorney within the
time required by Section 2552.251, the attorney's title
insurance company shall promptly report that fact to the
department.
(d) After the report of the examination and analysis is
filed with the department by an attorney's title insurance
company, the department may classify the report as
confidential and privileged.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.253. EXAMINATION OF TRUST FUND ACCOUNTS;
TRANSACTION REPORTS.
(a) An attorney's title insurance company, through its
examiners or auditors or through independent certified
public accountants commissioned by the attorney' s title
insurance company, may examine at any time the trust fund
accounts and records relating to the accounts of any of
its title attorneys.
(b) The attorney's title insurance company shall pay for
the examination of the accounts and records.
(c) An attorney's title insurance company may require
from any of its title attorneys special reports regarding
any of their transactions.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.254. ENFORCEMENT; HEARING.
(a) After notice and hearing, the department may revoke
the license of a title attorney who:
(1) fails to furnish an annual audit report within the
time required by Section 2552.251; or
(2) furnishes an audit report that reveals any
irregularity, including a shortage, or any practice not in
keeping with sound, honest business practices.
(b) The notice must be provided to the title attorney and
the attorney's title insurance company represented by the
title attorney.
(c) At a hearing under this section, the title attorney
and the attorney's title insurance company may offer
evidence explaining or excusing a failure or irregularity.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
SUBCHAPTER G. LICENSE DENIAL AND DISCIPLINARY ACTION
Sec. 2552.301. GROUNDS FOR LICENSE DENIAL OR
DISCIPLINARY ACTION.
The department may deny an application for a title
attorney's license or discipline a title attorney under
Sections 4005.102, 4005.103, and 4005.104 if the
department determines that the applicant or license
holder:
(1) has wilfully violated this title;
(2) has intentionally made a material misstatement in the
license application;
(3) has obtained or attempted to obtain the license by
fraud or misrepresentation;
(4) has misappropriated or converted to the applicant's
or license holder's own use or illegally withheld money
belonging to an attorney's title insurance company, an
insured, or another person;
(5) has been guilty of fraudulent or dishonest practices;
(6) has materially misrepresented the terms and
conditions of a title insurance policy or contract;
(7) has failed to maintain:
(A) a separate and distinct accounting of escrow funds;
and
(B) an escrow bank account or accounts separate and apart
from all other accounts;
(8) is no longer a member of the State Bar of Texas; or
(9) is no longer actively engaged in the practice of law.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2552.302. LICENSE APPLICATION AFTER DENIAL,
REFUSAL, OR REVOCATION.
(a) An applicant whose license application has been
denied or refused or a license holder whose license has
been revoked under this subchapter may not file another
application for a title attorney's license before the
first anniversary of:
(1) the effective date of the denial, refusal, or
revocation; or
(2) the date of a final court order affirming the denial,
refusal, or revocation if judicial review is sought.
(b) A license application filed after the time required
by this section may be denied by the department unless the
applicant shows good cause why the denial, refusal, or
revocation should not be a bar to the issuance of a
license.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
CHAPTER 2553. FOREIGN OR ALIEN CORPORATIONS
Sec. 2553.001. AUTHORITY TO ENGAGE IN BUSINESS OF
TITLE INSURANCE.
(a) A corporation organized under the laws of another
state may engage in the business of title insurance in
this state on exactly the same basis and is subject to the
same rules, prices, and supervision as provided for a
corporation that is organized under the laws of this state
and engaged in the business of title insurance under this
title.
(b) To engage in the business of title insurance in this
state, a foreign corporation must file with the
department:
(1) an application for a permit or certificate of
authority; and
(2) a financial statement demonstrating the condition of
the corporation.
(c) The department shall prescribe the form of the
application and financial statement.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2553.002. CAPITAL AND SURPLUS REQUIREMENTS.
(a) A foreign corporation may not engage in the business
of title insurance in this state unless the corporation
has unimpaired capital in an amount of at least $1 million
and a surplus in an amount of at least $1 million.
(b) The foreign corporation must demonstrate the required
capital and surplus from its financial statement and any
other examination the department may want to conduct.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2553.003. TAXES AND FEES.
(a) A corporation organized and incorporated under the
laws of another state, territory, or country for the
purpose of engaging in the business of title insurance
shall pay the same filing fees and occupation tax as a
foreign casualty company is required to pay to obtain a
permit to engage in the business of insurance in this
state.
(b) A foreign title insurance company described by
Subsection (a) is not required to pay a franchise tax.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
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.
Each
title insurance agent and title insurance company is
subject to Chapters 441 and 443.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Amended
by: Acts 2007, 80th Leg., R.S., Ch. 730, Sec. 2I.003,
eff. April 1, 2009.
CHAPTER 2602. TEXAS TITLE INSURANCE GUARANTY
ASSOCIATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2602.001. SHORT TITLE.
This chapter may be cited as the Texas Title Insurance
Guaranty Act.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.002. PURPOSES AND FINDINGS.
(a) This chapter is for:
(1)
the purposes and findings stated in Sections 441.001,
441.003, 441.005, and 441.006;
(2)
the protection of holders of covered claims; and
(3)
the protection of consumers served by impaired agents.
(b) This chapter and the powers granted and functions
authorized by this chapter shall be exercised to
accomplish the purposes of this chapter.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Amended
by: Acts 2007, 80th Leg., R.S., Ch. 730, Sec. 2I.004,
eff. April 1, 2009.
Acts 2009, 81st Leg., R.S., Ch. ___, Sec. ___, eff.
September 1, 2009.
Sec. 2602.003. DEFINITIONS.
In this chapter:
(1) "Affiliate" means a person who, directly or
indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with an
impaired title insurance company on December 31 of the
year preceding the date the company becomes impaired.
(2) "Agent" includes:
(A) a title insurance agent, as defined by Section
2501.003;
(B) a title attorney, as defined by Section 2552.002;
and
(C) a direct operation or a title insurance company's
wholly owned subsidiary or affiliate that performs the
services usually and customarily performed by a title
insurance agent.
(3) "Association" means the Texas Title Insurance
Guaranty Association.
(4) "Board" means the board of directors of the
association.
(5)
"Impaired agent" means a title agent or direct operation
that is designated by the commissioner as an impaired
agent and is:
(A) placed by a court in this state or another state
under an order of supervision,
conservatorship, rehabilitation, or liquidation;
(B) placed under an order of supervision or
conservatorship under Chapter 441;
(C) placed under an order of rehabilitation or
liquidation under Chapter 443; or
(D) otherwise found by a court of competent
jurisdiction to be insolvent or otherwise unable to pay
obligations
as they come due.
(6)
"Impaired title insurance company" means a title
insurance company that is designated by the commissioner
as an impaired title insurance company and is:
(A) placed by a court in this state or another state
under an order of supervision,
conservatorship, rehabilitation, or liquidation;
(B) placed under an order of supervision or
conservatorship under Chapter 441;
(C) placed under an order of rehabilitation or
liquidation under Chapter 443; or
(D) otherwise found by a court of competent
jurisdiction to be insolvent or otherwise unable to pay
obligations
as they come due.
(6)
"Impaired title insurance company" means a title
insurance company that is designated by the commissioner
as an impaired title insurance company and is:
(A) placed by a court in this state or another state
under an order of supervision,
conservatorship, rehabilitation, or
liquidation;
(B) placed under an order of supervision or
conservatorship under Chapter 441;
(C) placed under an order of rehabilitation or
liquidation under Chapter 443; or
(D) otherwise found by a court of competent
jurisdiction to be insolvent or otherwise unable to pay
obligations
as they come due.
(7) "Net direct written premiums" means the gross amount
of premiums paid by policyholders for issuance of title
insurance policies insuring risks located in this state
and to which this chapter applies, without deduction for
premiums for reinsurance ceded to other title insurance
companies and not including premiums for reinsurance
accepted from other authorized title insurance companies.
(8) "Payment of covered claims" means:
(A) the actual payment of claims; or
(B) the use of money of the impaired title insurance
company and money derived from assessments or guaranty
fees for consummation of contracts of reinsurance or
assumption of liabilities or contracts of substitution to
provide for liabilities arising from covered claims.
(9) "Trust funds or escrow accounts" includes accounts
subject to annual audit under Subchapter D, Chapter 2651.
(10) "Unauthorized insurer" means a person, firm,
association, or corporation that has engaged in activities
prohibited by Subchapter C, Chapter 101, while engaging in
the business of title insurance.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Amended
by: Acts 2009, 81st Leg., R.S., Ch. ___, Sec. ___, eff.
September 1, 2009.
Sec. 2602.004. DESCRIPTION OF CONTROL.
(a) For purposes of this chapter, control is the power to
direct, or cause the direction of, the management and
policies of a person, other than power that results from
an official position with or corporate office held by the
person. The power may be possessed directly or indirectly
by any means, including through the ownership of voting
securities or by contract, other than a commercial
contract for goods or nonmanagement services.
(b) A person is presumed to control another person if the
person directly or indirectly owns, controls, holds with
the power to vote, or holds proxies representing 10
percent or more of the voting securities of the other
person. This presumption may be rebutted by a showing
that the person does not in fact control the other person.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.005. APPLICABILITY; CONFLICT WITH OTHER
LAWS.
(a) This chapter applies to:
(1) a title insurance company engaging in business under
this title;
(2) all title insurance, direct or reinsurance, written
by a title insurance company engaging in business under
this title; and
(3) trust funds or escrow accounts of:
(A) title insurance companies engaging in business under
this title; or
(B) agents authorized to engage in business in this state
and engaging in business under and governed by this title.
(b) If this chapter conflicts with another law
relating to the subject matter of this chapter or its
application, other than Chapter 441 or 443, this chapter
controls. If this chapter conflicts with Chapter 441 or
443, that chapter controls.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Amended by: Acts 2007, 80th Leg., R.S., Ch. 730, Sec.
2I.005, eff. April 1, 2009.
Sec. 2602.006. CONSTRUCTION.
(a) This chapter shall be liberally construed to
implement the purposes of this chapter described by
Section 2602.002, which shall be used to aid and guide
interpretation of this chapter.
(b) This chapter does not:
(1) expand or diminish a right or obligation between or
among policyholders, title insurance companies, or
agents; or
(2) require a person to assign, waive, or relinquish a
claim, right, or cause of action arising under Chapter 541
of this code or Subchapter E, Chapter 17, Business &
Commerce Code.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.007. PROHIBITED USE OF PROTECTION PROVIDED
BY CHAPTER.
(a) A title insurance company or agent may not advertise
or refer to this chapter as an inducement to the purchase
of title insurance.
(b) The use by a person of the protection provided by
this chapter in the sale of insurance is unfair
competition and an unfair practice under Chapter 541.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.008. IMMUNITY.
(a) Liability does not exist and a cause of action does
not arise against any of the following persons for a good
faith action or omission of the person in exercising the
person's powers and performing the person's duties under
this chapter:
(1) the commissioner or the commissioner's
representative;
(2) the association or the association's agent or
employee;
(3) a title insurance company or the company's agent or
employee;
(4) a board member; and
(5) a special deputy receiver or the special deputy
receiver's agent or employee.
(b) The attorney general shall defend any action to which
Subsection (a) applies that is brought against a person
listed in that subsection, including an action instituted
after the defendant's service with the association,
commissioner, or department has terminated. This
subsection does not require the attorney general to defend
a person or entity with respect to an issue other than the
applicability or effect of the immunity created by
Subsection (a). The attorney general is not required to
defend a person listed in Subsection (a)(2), (3), (4), or
(5) against an action regarding the disposition of a claim
filed with the association under this chapter or any issue
other than the applicability or effect of the immunity
created by Subsection (a). The association may contract
with the attorney general under Chapter 771, Government
Code, for legal services not covered by this subsection.
(c) A title insurance company that reinsures or assumes
the policies of an impaired title insurance company is not
liable, and a cause of action does not arise against that
company:
(1) for an action or omission by the impaired title
insurance company or an officer, director, employee,
attorney, or agent of the impaired title insurance
company;
(2) by subrogation; or
(3) under any type of indemnity agreement.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.009. ASSOCIATION AND TITLE INSURANCE
COMPANIES AS INTERESTED PARTIES.
The association and each title insurance company assessed
under this chapter are interested parties under Sections
3(h) and 12(b), Article 21.28.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.010. RULES.
The commissioner shall adopt reasonable rules as necessary
to implement and supplement this chapter and its purposes.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.011. INFORMATION PROVIDED BY AND TO
COMMISSIONER.
(a) The
commissioner shall notify the association of the
existence of an impaired title insurance company or
impaired agent not later than the third day after the
date on which the commissioner gives notice of the
designation of impairment to the impaired agent or
impaired title insurance company. The association is
entitled to a copy of any complaint seeking an order of
receivership with a finding of insolvency against a
title insurance company at the time the complaint is
filed with a court.
(b) The commissioner shall notify the board when the
commissioner receives a report from the commissioner of
insurance or other analogous officer of another state that
indicates that a title insurance company has been
designated impaired in another state. The report to the
board must contain all significant details of the action
taken or the report received.
(c) The commissioner shall report to the board when the
commissioner has reasonable cause to believe from a
completed or continuing examination of any title insurance
company that the company may be an impaired title
insurance company. The board may use this information in
performing its duties under this chapter. The board shall
keep the report and the information contained in the
report confidential until it is made public by the
commissioner or other lawful authority.
(d) On the board's request, the commissioner shall
provide the association with a statement of the net direct
written premiums of each title insurance company.
(e) The commissioner may require that the association
notify the insureds of the impaired title insurance
company and any other interested party of the designation
of impairment and of the person's rights under this
chapter. Notification by publication in a newspaper of
general circulation is sufficient notice under this
section.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Amended
by: Acts 2009, 81st Leg., R.S., Ch. ___, Sec. ___, eff.
September 1, 2009.
Sec. 2602.012. APPEALS.
(a) A title insurance company may appeal to the
commissioner an action or ruling of the association
relating to an assessment.
(b) An action or ruling of the commissioner under this
chapter may be appealed as provided by Subchapter D,
Chapter 36.
(c) A title insurance company appealing an assessment
shall pay the assessment. The association may use the
money to meet its obligations while the appeal is
pending. If the appeal on the assessment is upheld, the
association shall return to the company the amount paid in
error or excess.
(d) Venue in a suit relating to an action or ruling under
this chapter is in Travis County. Each party to the
action may appeal, and the appeal is at once returnable to
the appellate court and has precedence over all cases of a
different character pending before the court. The
commissioner or association is not required to give an
appeal bond in an appeal of a cause of action arising
under this chapter.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
SUBCHAPTER B. GOVERNANCE OF TEXAS TITLE INSURANCE
GUARANTY ASSOCIATION
Sec. 2602.051. ASSOCIATION AS LEGAL ENTITY;
SUPERVISION; MEMBERSHIP.
(a) The Texas Title Insurance Guaranty Association is a
nonprofit legal entity.
(b) The association is subject to the applicable
insurance laws of this state and the immediate supervision
of the commissioner.
(c) A title insurance company may not engage in the
business of title insurance in this state unless the
company is a member of the association.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.052. BOARD OF DIRECTORS.
(a) The association's powers are exercised through a
board of directors consisting of nine individuals
appointed by the commissioner.
(b) Three board members must be officers or employees of
title insurance companies. Two board members must be
officers or employees of agents. Four board members must
be public representatives.
(c) Board members other than public representatives shall
be chosen to give fair representation to all title
insurance companies and agents, considering the following
categories:
(1) premium income;
(2) geographical location; and
(3) segments of the industry represented in this state.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.053. ELIGIBILITY TO SERVE AS PUBLIC
REPRESENTATIVE.
(a) In this section, "immediate family" includes parents,
a spouse, children, brothers, and sisters residing in the
same household.
(b) To be eligible to serve as a public representative on
the board, an individual must have resided in this state
during the five years preceding appointment and may not
be:
(1) licensed by or subject to the regulation of the
department;
(2) financially involved in an organization subject to
the regulation of the department other than by ownership
of an insurance policy or contract;
(3) a member of the immediate family of an individual who
is financially involved in an organization subject to the
regulation of the department;
(4) engaged in or employed by an entity having a contract
with an organization subject to the regulation of the
department;
(5) employed by, on the board of directors of, or a
holder of an elective office by or under the authority of
a unit of federal, state, or local government or an
organization that receives a significant part of its
funding from a unit of federal, state, or local
government;
(6) employed by or associated with an organization formed
to represent license holders of the department or
organizations or individuals subject to the regulation of
the department; or
(7) required to register as a lobbyist under Chapter 305,
Government Code, because of activities on behalf of an
organization representing the regulated industry.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.054. TERM; VACANCY.
(a) Board members serve staggered six-year terms, with
the terms of three members expiring each odd-numbered
year. A member may serve more than one term.
(b) A member shall serve until a successor is appointed.
(c) If a member other than a public representative ceases
to be an officer or employee of a title insurance company
or agent, the member's office becomes vacant.
(d) The commissioner shall appoint an individual to fill
a vacancy on the board for the unexpired term.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.055. COMPENSATION OF BOARD MEMBERS.
A board member may not receive compensation for the
member's services but is entitled to reimbursement for
actual expenses incurred in performing the member's
duties.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.056. FINANCIAL STATEMENT OF BOARD MEMBER. Each
board member shall file with the Texas Ethics Commission a
financial statement as provided by Subchapter B, Chapter
572, Government Code.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.057. RIGHTS OF TITLE INSURANCE COMPANY WITH
REPRESENTATIVE ON BOARD.
(a) A title insurance company is not prohibited, because
the company has an officer, director, or employee serving
as a board member, from negotiating for or entering into a
contract of reinsurance or assumption of liability or a
contract of substitution to provide for liabilities for
covered claims with the receiver or conservator of an
impaired title insurance company or agent.
(b) A conflict of interest does not arise from entering
into a contract described by this section.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
SUBCHAPTER C. GENERAL POWERS AND DUTIES OF ASSOCIATION
Sec. 2602.101. GENERAL POWERS AND DUTIES.
(a) In addition to the other powers and duties provided
by this chapter, the association may:
(1) borrow money as necessary to implement this chapter
according to the plan of operation;
(2) lend money to an impaired title insurance company;
(3) sue and be sued, including taking any legal action
necessary or proper to recover an unpaid assessment;
(4) enter into contracts as necessary or proper to
implement this chapter;
(5) ensure payment of the policy obligations of an
impaired title insurance company;
(6) negotiate and contract with a rehabilitator,
conservator, receiver, or ancillary receiver to exercise
the powers and perform the duties of the association;
(7) guarantee, assume, or reinsure, or cause to be
guaranteed, assumed, or reinsured, a policy or contract of
an impaired title insurance company;
(8) take legal action necessary to avoid the payment of
improper claims or to settle claims or potential claims
against an impaired title insurance company or the
association; and
(9) perform any other acts as necessary or proper to
implement this chapter.
(b) The association has standing to appear before a court
in this state with jurisdiction over an impaired title
insurance company or agent concerning which the
association is or may become obligated under this chapter.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.102. PLAN OF OPERATION.
(a) The association shall perform its functions under a
plan of operation. The plan of operation must contain
provisions necessary or proper for the execution of the
association's powers and duties. The plan of operation
must, in addition to the other requirements of this
chapter:
(1) establish:
(A) procedures for handling the assets of the
association;
(B) the amount and method of reimbursing board members;
(C) regular places and times for board meetings;
(D) procedures for maintaining records of all financial
transactions of the association, its agents, and the
board; and
(E) procedures for determining the amount of guaranty
fees, for collecting those fees, and for assessments; and
(2) contain additional provisions necessary or proper for
the execution of the association's powers and duties.
(b) The association shall submit to the commissioner any
amendment to the plan of operation necessary or suitable
to ensure the fair, reasonable, and equitable
administration of the association. The amendment takes
effect on the commissioner's written approval.
(c) If the association does not submit a suitable
amendment to the plan of operation, the commissioner after
notice and hearing may adopt reasonable rules as necessary
or advisable to implement this chapter. A rule continues
in effect until modified by the commissioner or superseded
by an amendment submitted by the association and approved
by the commissioner.
(d) Each title insurance company shall comply with the
plan of operation.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.103. EMPLOYEES AND EXPERTS.
(a) The association may employ or retain persons to
perform the functions necessary or proper under this
chapter, including persons necessary to handle the
association's financial transactions.
(b) On the commissioner's request, the association shall
retain one or more persons to:
(1) audit and review agent escrow and trust accounts,
financial condition, and compliance with applicable
statutes and rules; and
(2) report to the commissioner on the accounts,
condition, and compliance.
(c) A person retained under Subsection (b) acts solely
under the direction of and as assigned by the
commissioner.
(d) From the guaranty fee account, the association shall
compensate a person retained under Subsection (b) and
reimburse the person for the person's reasonable and
necessary expenses.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.104. ASSOCIATION RECORDS.
(a) The association shall maintain a record of each
negotiation or meeting in which the association or the
association's representative discusses the association's
activities in exercising its powers and performing its
duties under this chapter.
(b) A record under Subsection (a) may be made public only
on:
(1) termination of a liquidation, rehabilitation, or
conservation proceeding involving the impaired or
insolvent title insurance company;
(2) termination of the impairment or insolvency of the
title insurance company; or
(3) order of a court.
(c) This section does not limit the association's duty to
report on its activities under this chapter.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.105. MEETING BY CONFERENCE CALL.
Notwithstanding Chapter 551, Government Code, the board
may hold an open meeting by telephone conference call if
immediate action is required and convening of a quorum of
the board at a single location is not reasonable or
practical. The meeting is subject to the notice
requirements that apply to other meetings. The notice of
the meeting must specify as the location of the meeting
the location at which meetings of the board are usually
held, and each part of the meeting that is required to be
open to the public must be audible to the public at that
location and must be tape-recorded. The tape recording
shall be made available to the public for 30 days after
the meeting date.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.106. ACCOUNTS.
For purposes of administration and assessment, the board
shall establish:
(1) an administrative account;
(2) a title account; and
(3) a guaranty fee account.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.107. ADMINISTRATIVE EXPENSES.
(a) The association may use money in the administrative
account to pay administrative costs and other general
expenses of the association.
(b) The association may transfer income from investment
of the association's money to the administrative account.
(c) The association shall assess title insurance
companies as provided by Subchapter E for any additional
money needed for the administrative account.
(d) The association shall pay from the guaranty fee
account fees and reasonable and necessary expenses that
the department incurs in an examination or audit of
title agent or direct operation under this chapter and
Chapter 2651.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Amended by: Acts 2009, 81st Leg., R.S., Ch. ___, Sec.
___, eff. September 1, 2009.
Sec. 2602.108. DEPOSIT OF FEES AND ASSESSMENTS.
The association may deposit fees and assessments it
collects into the Texas Treasury Safekeeping Trust Company
in accordance with procedures established by the
comptroller. The comptroller shall account to the
association for the deposited money separately from all
other money.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.109. USE OF EXCESS MONEY IN ACCOUNTS.
(a) If the association determines that money in the title
account exceeds the amount reasonably necessary for
efficient future operation under this chapter, the
association shall return the excess money pro rata to the
holders of participation receipts on which an outstanding
balance exists after deducting any credits against premium
taxes taken under Section 2602.210. The amount deducted
for those credits shall be deposited with the comptroller
for credit to the general revenue fund. The association
shall transfer to the guaranty fee account any excess
money remaining in the title account after the
distribution.
(b) If the association determines that money in the
administrative account exceeds the amount reasonably
necessary for efficient future operation under this
chapter, the association shall transfer the excess money
to the guaranty fee account.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.110. EXPENSES OF
ADMINISTERING IMPAIRED INSURER OR IMPAIRED AGENT.
The association may advance money necessary to pay the
expenses of administering the supervision,
rehabilitation, receivership, conservatorship, or, as
determined by a court of competent jurisdiction, other
insolvency of an impaired title insurance company or
impaired agent, on terms the association negotiates, if
the company's or agent's assets are insufficient to pay
those expenses.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Amended by: Acts 2009, 81st Leg., R.S., Ch. ___, Sec.
___, eff. September 1, 2009.
Sec. 2602.111. DELEGATION OF POWERS AND DUTIES.
(a) The plan of operation may provide that, on approval
of the board and the commissioner, a power or duty of the
association may be delegated to a corporation or other
organization that:
(1) performs or will perform in two or more states
functions similar to those of the association or its
equivalent; and
(2) provides protection not substantially less favorable
and effective than that provided by this chapter.
(b) A power or duty under Section 2602.101(a)(1) or (4),
2602.107, 2602.201, 2602.202, 2602.203, or 2602.205 may
not be delegated under this section.
(c) The corporation or other organization shall be:
(1) reimbursed as a servicing facility would be
reimbursed; and
(2) paid for its performance of any other functions of
the association.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.112. EXEMPTION FROM TAXATION.
The association is exempt from payment of all fees and all
taxes levied by this state or a subdivision of this state,
except taxes levied on real or personal property.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.113. DETECTION AND PREVENTION OF
IMPAIRMENT.
(a) The board may make recommendations to the
commissioner for detecting and preventing title insurance
company or agent impairments. The board shall advise and
counsel with the commissioner on matters relating to the
solvency of title insurance companies and agents.
(b) The board may report and make recommendations to the
commissioner relating to any matter germane to the
solvency, liquidation, rehabilitation, or conservation of
a title insurance company or agent. A report or
recommendation under this subsection is not a public
document until a title insurance company is designated
impaired.
(c) The board shall notify the commissioner of any
information indicating that a title insurance company or
agent may be unable or potentially unable to fulfill its
contractual obligations and shall request a meeting with
the commissioner. The board may request appropriate
investigation and action by the commissioner. The
commissioner may investigate and act as the commissioner
considers appropriate.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.114. MEETING OF BOARD ON IMPAIRED TITLE
INSURANCE COMPANY OR AGENT.
(a) The commissioner:
(1) shall call a meeting of the board when the
commissioner determines that a title insurance company or
agent is insolvent or impaired; and
(2) may call a meeting of the board when the commissioner
determines that a title insurance company or agent is in
danger of becoming insolvent or impaired.
(b) The meeting is not open to the public. Only board
members, the commissioner, and persons the commissioner
authorizes may attend the meeting.
(c) The commissioner may require an officer, director, or
employee of the title insurance company or agent to appear
before the board for conference or to give testimony.
(d) At the meeting the commissioner may disclose to the
board information that the commissioner possesses and may
disclose department records, including an examination
report or a preliminary report from an examiner that
relates to the title insurance company or agent.
(e) A board member may not disclose information
received in the meeting unless authorized by the
commissioner or required as witness in court. A board
member and the meeting are subject to the
confidentiality standard imposed on an examiner under
Sections 401.105 and 401.106, except that a bond is not
required of a board member.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Amended by: Acts 2007, 80th Leg., R.S., Ch. 730, Sec.
2I.006, eff. April 1, 2009.
Sec. 2602.115. ASSOCIATION AND BOARD ADVICE AND
ASSISTANCE.
(a) On the commissioner's request, the board shall attend
hearings before the commissioner and meet with and advise
the commissioner or the receiver or the conservator
appointed by the commissioner on matters relating to:
(1) the affairs of an impaired title insurance company or
agent;
(2) action that the commissioner, receiver, or
conservator may take to best protect the interest of
holders of covered claims against the company or agent;
and
(3) the marshalling of assets.
(b) On the commissioner's request, the association may
assist and advise the commissioner concerning
rehabilitation, payment of claims, continuation of
coverage, or the performance of other contractual
obligations of an impaired title insurance company or
agent.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.116. BOARD ACCESS TO RECORDS.
The receiver or statutory successor of an impaired title
insurance company shall give the board or its
representative:
(1) access to the company's records as necessary for the
board to perform its functions under this chapter relating
to covered claims; and
(2) copies of those records on the board's request and at
the board's expense.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.117. BOARD REPORT AT CONCLUSION OF
IMPAIRMENT.
At the conclusion of a title insurance company or agent
impairment in which the association exercised its powers
or performed its duties under this chapter, the board
shall prepare, from information available to the
association, and submit to the commissioner a report on
the history and causes of the impairment.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
SUBCHAPTER D. POLICY GUARANTY FEES
Sec. 2602.151. PAYMENT OF FEE.
(a) An agent or, if there is no agent, the title
insurance company shall pay the association a quarterly
guaranty fee for each owner or mortgagee title insurance
policy that the agent or company is required to report on
its statistical report to the department.
(b) The fee is due:
(1) May 1, for the quarter ending March 31;
(2) August 1, for the quarter ending June 30;
(3) November 1, for the quarter ending September 30; and
(4) February 1, for the quarter ending December 31.
(c) The association shall deposit the fee in the guaranty
fee account.
(d) Except as provided by Section 2602.109, money in the
guaranty fee account shall be derived only from guaranty
fees as provided by this subchapter.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.152. AMOUNT OF FEE.
Annually or more frequently, the board shall determine
the amount of the guaranty fee, considering the amount
of money to be maintained in the guaranty fee account
that is reasonably necessary for efficient future
operation under this chapter.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Amended by: Acts 2009, 81st Leg., R.S., Ch. ___, Sec.
___, eff. September 1, 2009.
Sec. 2602.153. USE OF FEE.
(a) The association shall collect, receive, retain, and
disburse the guaranty fees only as specifically provided
by this chapter.
(b) The following claims shall be paid from guaranty
fees only and may not be paid from assessments:
(1) covered claims against trust funds or an escrow
account of an impaired agent under Section 2602.252;
(2) expenses incurred in complying with Subchapter J;
(3) conservator and receiver expenses under Section
2602.254; and
(4) administrative expenses with respect to the estate
of an impaired agent under Section 2602.110.
(d)
Guaranty fees may be used only for payment of:
(1) claims described by Subsection (b); and
(2) expenses related to:
(A) an audit or an examination conducted by the
department or the association under this chapter;
(B) the supervision and coordination of such an
audit or examination; and
(C) an action under Section 2602.452.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Amended by: Acts 2009, 81st Leg., R.S., Ch. ___, Sec.
___, eff. September 1, 2009.
Sec. 2602.154. ENFORCEMENT OF FEE.
(a) After notice and opportunity for hearing, the
commissioner may suspend or revoke the certificate of
authority or license to engage in business in this state
of a title insurance company or agent that does not comply
with this subchapter.
(b) The commissioner shall adopt rules that implement the
program created under this subchapter.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
SUBCHAPTER E. ASSESSMENTS
Sec. 2602.201. MAKING OF ASSESSMENT.
(a) If the commissioner determines that a title insurance
company or agent has become impaired, the association
shall promptly estimate the amount of additional money
needed to supplement the assets of the impaired title
insurance company or agent to pay all covered claims and
administrative expenses.
(b) The association shall assess title insurance
companies in writing an amount as determined under Section
2602.202. A title insurance company does not incur real
or contingent liability under this chapter until the
association actually makes the written assessment.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.202. AMOUNT OF ASSESSMENT; PRORATION OF
PAYMENT.
(a) The association shall assess title insurance
companies the amount necessary to pay:
(1) the association's obligations under this chapter and
the expenses of handling covered claims subsequent to an
impairment; and
(2) other expenses authorized by this chapter.
(b) The assessment of each title insurance company must
be in the proportion that the net direct written premiums
of that company for the calendar year preceding the
assessment bear to the net direct written premiums of all
title insurance companies for that year.
(c) The total assessment of a title insurance company in
a year may not exceed an amount equal to two percent of
the company's net direct written premiums for the calendar
year preceding the assessment. If the maximum assessment
and the association's other assets are insufficient in any
one year to make all necessary payments, the money
available shall be prorated and the unpaid portion shall
be paid as soon as money becomes available.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.203. NOTICE AND PAYMENT.
(a) Not later than the 30th day before the date an
assessment is due, the association shall notify the title
insurance company.
(b) Not later than the 30th day after the date an
assessment is made, the title insurance company shall pay
the association the amount of the assessment.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.204. EXEMPTION FOR IMPAIRED TITLE INSURANCE
COMPANY.
A title insurance company is exempt from assessment during
the period beginning on the date the commissioner
designates the company as an impaired title insurance
company and ending on the date the commissioner determines
that the company is no longer an impaired title insurance
company.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.205. DEFERMENT.
(a) The association may defer in whole or in part an
assessment of a title insurance company that would cause
the company's financial statement to show amounts of
capital or surplus less than the minimum amount required
for a certificate of authority in any jurisdiction in
which the company is authorized to engage in the business
of insurance.
(b) The title insurance company shall pay the deferred
assessment when payment will not reduce capital or surplus
below required minimums. The payment shall be refunded to
or credited against future assessments of any title
insurance company receiving a larger assessment because of
the deferment, as elected by that company.
(c) During a period of deferment, the title insurance
company may not pay a dividend to shareholders or
policyholders.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.206. PARTICIPATION RECEIPTS.
(a) On receipt from a title insurance company of payment
of an assessment or partial assessment, the association
shall provide the company with a participation receipt. A
participation receipt creates liability against the
impaired title insurance company.
(b) The holder of the receipt is a general creditor of
the impaired title insurance company, except that if the
amount of assessments the association receives exceeds the
amount paid for covered claims, the holders of
participation receipts have preference over other general
creditors to, and are entitled to share pro rata in, the
excess.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.207. ACCOUNTING; REPORTS; REFUND.
(a) The association shall adopt accounting procedures to
show how money received from assessments or partial
assessments is used.
(b) The association shall make interim accounting reports
as the commissioner requires.
(c) The association shall make a final report to the
commissioner showing how money received from assessments
or partial assessments has been used, including a
statement of any final balance of that money. As soon as
practicable after completion of the final report, the
association shall refund the remaining balance to the
holders of participation receipts as required by Section
2602.206(b).
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.208. USE OF ASSESSMENTS.
(a) Money from assessments is considered to supplement
the marshalling of an impaired title insurance company's
assets to make payments on the impaired title insurance
company's behalf. The association may assess title
insurance companies or use money from assessments to pay
covered claims before the receiver exhausts the impaired
title insurance company's assets.
(b) The association may use money from assessments to
negotiate and consummate contracts of reinsurance or
assumption of liabilities or contracts of substitution to
provide for outstanding liabilities of covered claims.
(c) Except as provided by Section 2602.109, money from
assessments may not be used for the guaranty fee account.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.209. FAILURE TO PAY; COLLECTION BY
COMMISSIONER.
(a) The association shall promptly report to the
commissioner a failure of a title insurance company to pay
an assessment when due.
(b) On failure of a title insurance company to pay an
assessment when due, the commissioner may either:
(1) suspend or revoke, after notice and hearing, the
company's certificate of authority to engage in business
in this state; or
(2) assess an administrative penalty as provided by
Chapter 84 in an amount not to exceed the greater of five
percent of the unpaid assessment each month or $100 each
month.
(c) A title insurance company whose certificate of
authority is canceled or surrendered is liable for any
unpaid assessments made before the date of the
cancellation or surrender.
(d) The commissioner may collect an assessment on behalf
of the association through a suit brought for that
purpose.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.210. RECOVERY OF ASSESSMENT IN RATES; TAX
CREDIT.
(a) A title insurance company is entitled to recover in
its rates for the succeeding calendar year amounts paid in
assessments not to exceed one percent of the company's net
direct written premiums. In promulgating or establishing
rates the commissioner shall consider assessments and
refunds of assessments and shall adjust the rates to allow
for recovery under this subsection.
(b) Unless the department determines that all amounts
paid as assessments by each title insurance company have
been recovered under Subsection (a), for any amount not
recovered the title insurance company is entitled to a
credit against its premium tax under Chapter 223. The
credit may be taken at a rate of 20 percent each year for
five successive years following the date of assessment
and, if the title insurance company elects, may be taken
over an additional number of years.
(c) An amount of a tax credit allowed by this section
that is unclaimed may be shown in the title insurance
company's books and records as an admitted asset for all
purposes, including an annual statement under Section
862.001.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
SUBCHAPTER F. COVERED CLAIMS
Sec. 2602.251. COVERED CLAIMS IN GENERAL.
An unpaid claim is a covered claim if:
(1) the claim is made by an insured under a title
insurance policy to which this chapter applies;
(2) the claim arises out of the policy and is within the
coverage and applicable limits of the policy;
(3) the title insurance company that issued the policy or
assumed the policy under an assumption certificate is an
impaired title insurance company; and
(4) the insured real property or a lien on the property
is located in this state.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.252. CLAIM AGAINST TRUST FUNDS OR ESCROW
ACCOUNT.
An unpaid claim is a covered claim if the claim:
(1) is against trust funds or an escrow account of an
impaired title insurance company or agent; and
(2) is unpaid because of a shortage of those funds or in
that account.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.253. CLAIM IN CONNECTION WITH FIDELITY OF
AGENT.
An unpaid claim is a covered claim if an impaired title
insurance company is liable for the claim in connection
with the fidelity of the company's agent as authorized by
Subchapter A, Chapter 2702.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.254. CERTAIN CONSERVATOR AND RECEIVER
EXPENSES COVERED.
Reasonable and necessary administrative expenses incurred
by a conservator appointed by the commissioner or a
receiver appointed by a court for an unauthorized insurer
operating in this state are covered claims if the
commissioner has notified the association or the
association has otherwise become aware that:
(1) the unauthorized insurer has insufficient liquid
assets to pay those expenses; and
(2) insufficient money is available from:
(A) abandoned money under Section 443.304; and
(B) department appropriations for use in paying those
expenses.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Amended
by: Acts 2007, 80th Leg., R.S., Ch. 730, Sec. 2I.007,
eff. April 1, 2009.
Sec. 2602.255. CLAIMS NOT COVERED.
The following are not covered claims:
(1) an amount due a reinsurer, title insurance company,
insurance pool, or underwriting association as a
subrogation recovery or otherwise;
(2) a supplementary payment obligation incurred before a
determination is made under this chapter that a title
insurance company or agent is impaired, including:
(A) adjustment fees or expenses;
(B) attorney's fees or expenses;
(C) court costs;
(D) interest;
(E) enhanced damages, sought as a recovery against the
insured, the impaired title insurance company or agent, or
the association, that arise under Chapter 541 of this code
or Subchapter E, Chapter 17, Business & Commerce Code;
and
(F) bond premiums;
(3) a shortage of trust funds or in an escrow account
resulting from the insolvency of a financial institution;
(4) exemplary, extracontractual, or bad faith damages
awarded against an insured or title insurance company by a
court judgment;
(5) a claim under Section 2602.252 by a claimant who has
a lien against the real property that was the subject of
the transaction from which the claim arises, unless the
lien is held to be invalid as a matter of law;
(6) a claim under Section 2602.251, 2602.252, or 2602.253
by a claimant who caused or substantially contributed to
the claimant's loss by the claimant's action or omission;
and
(7) a claim filed with the association after the final
date set by the court for the filing of claims against a
receiver of an impaired title insurance company or agent.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.256. AMOUNT OF COVERED CLAIM; LIMIT.
(a) A covered claim under Section 2602.251 or 2602.253
may not exceed the lesser of $250,000 for each claimant or
$250,000 for each policy.
(b) A covered claim under Section 2602.252 may not exceed
the lesser of $250,000 for each claimant or the amount of
money actually delivered to the impaired title insurance
company or agent as trust funds or an escrow account for
each claimant in a transaction from which the claim
arises, except that the cumulative amount of covered
claims arising from a single transaction may not exceed
$250,000.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.257. EXHAUSTION OF OTHER RIGHTS REQUIRED.
(a) A person having a covered claim that is also a claim
against a title insurance company under law or under an
insurance policy other than a policy of an impaired title
insurance company must exhaust the person's rights under
law or the policy before asserting the covered claim under
this chapter.
(b) The amount payable on the covered claim is reduced by
the amount of any recovery under law or the policy.
(c) Notwithstanding any other provision, to avoid undue
hardship to a claimant the association may authorize
payment of a covered claim against an impaired agent
without regard to the liability of any title insurance
company or coverage under any insurance policy, subject to
the approval of the receivership court or commissioner, as
applicable. On payment, the association is in all
respects subrogated to the rights and claims of the
claimant.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.258. CERTAIN MONEY AUTHORIZED FOR USE IN
PAYING COVERED CLAIM; LIMIT.
(a) Money from assessments or guaranty fees is liable
only for the difference between the amount of covered
claims and the amount of assets marshalled by a receiver
or conservator for payment to holders of covered claims.
(b) In an ancillary receivership in this state, money
from assessments is liable only for the difference between
the amount of covered claims and the amount of assets
marshalled by receivers in other states for payment of
covered claims in this state.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.259. STAY OF PROCEEDINGS; CERTAIN
DECISIONS NOT BINDING.
(a) To permit the receiver or association to properly
defend a pending cause of action, a proceeding in which an
impaired title insurance company is a party or is
obligated to defend a party in a court in this state,
other than a proceeding directly related to the
receivership or instituted by the receiver, is stayed for:
(1) a six-month period beginning on the later of the date
of the designation of impairment or the date an ancillary
proceeding is brought in this state; and
(2) any subsequent period as determined by the court.
(b) If a covered claim arises from a judgment, order,
verdict, finding, or other decision based on the default
of an impaired title insurance company or its failure to
defend an insured, the association on its own behalf or on
behalf of the insured may apply to the court or
administrator that made the decision to have the decision
set aside and may defend the claim on its merits.
(c) In a proceeding considering a covered claim, a
judgment against an insured taken after the date the
delinquency proceeding begins or a conservator is
appointed is not evidence of liability or of the amount of
damages, and a default or consent judgment against an
insured or the impaired title insurance company or a
settlement, release, or judgment entered into by the
insured or the impaired title insurance company does not
bind the association and is not evidence of liability or
of the amount of damages in connection with a claim
brought against the association or another party under
this chapter.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.260. ADMISSIBILITY OF PAYMENT.
In a lawsuit brought by a conservator or receiver of an
impaired title insurance company or agent to recover
assets of the company or agent, the fact that a claim
against the company or agent has been or will be paid
under this chapter is not admissible and may not be placed
before a jury by evidence, argument, or reference.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
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.
(a) The association shall:
(1) investigate a claim brought against the
association, the commissioner, or a special deputy
receiver appointed under Chapter 443 if the claim
involves or may involve the association's rights and
obligations under this chapter; and
(2) adjust, compromise, settle, and pay a covered claim
to the extent of the association's obligation, and deny
all other claims.
(b) The association may review a settlement, release, or
judgment to which an impaired title insurance company or
agent or its insured was a party to determine the extent
to which the settlement, release, or judgment is
contested.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Amended
by: Acts 2007, 80th Leg., R.S., Ch. 730, Sec. 2I.008,
eff. April 1, 2009.
Sec. 2602.302. PAYMENT OF COVERED CLAIMS.
(a) The association shall pay covered claims:
(1) existing before the determination of impairment; or
(2) arising on or before:
(A) the date of cancellation of the impaired title
insurance company's policies; or
(B) the claim deadline for covered claims against an
impaired agent.
(b) The court in which the receivership proceedings are
pending shall set, as applicable:
(1) the date of cancellation of the policies, which may
not be later than the fifth anniversary of the date of
determination of impairment; or
(2) the claim deadline, which may not be later than the
first anniversary of the date of determination of
impairment.
(c) Subject to the approval of the commissioner, the
association shall establish:
(1) procedures for filing claims with the association;
and
(2) acceptable forms of proof of covered claims.
(d) The association shall pay claims in the order the
association considers reasonable, including payment as
claims are received from the claimants or in groups or
categories of claims.
(e) The association may not pay a claimant an amount
exceeding the amount of the claimant's covered claim.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.303. SERVICING FACILITY.
(a) The association may handle claims through its
employees or through one or more title insurance companies
or other persons designated, subject to the approval of
the commissioner, as a servicing facility.
(b) A title insurance company may decline designation as
a servicing facility.
(c) The association shall reimburse a servicing facility
for:
(1) obligations of the association paid by the facility;
and
(2) expenses incurred by the facility in handling claims
for the association.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.304. ADVANCE AS LOAN.
Money advanced by the association under this chapter is
considered a special fund loan to the impaired title
insurance company or agent for payment of covered claims
and does not become an asset of the title insurance
company or agent. The loan is repayable to the extent
money from the title insurance company or agent is
available.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff.
April 1, 2005.
Sec. 2602.305. ASSOCIATION IN PLACE OF IMPAIRED TITLE
INSURANCE COMPANY OR AGENT.
(a) To the extent of the association's obligation on a
covered claim, the association stands in the place of the
impaired title insurance company or agent | 
