INSURANCE CODE - NOT CODIFIED
CHAPTER 9. TEXAS TITLE INSURANCE ACT
Art. 9.01. Short Title and Legislative Purpose and Intent
A. This Act shall be known and may be cited as the "Texas Title
Insurance Act."
B. The Legislature of the State of Texas finds that the business of
title insurance, both the direct issuance of policies and the
reinsurance of any assumed risks, of every type, shall in all
respects be totally regulated by the State of Texas so as to provide
for the protection of every consumer and purchaser of a title
insurance policy and to provide for adequate and reasonable rates
of return for title insurance companies and title insurance agents.
It is the express legislative intent that this Chapter 9 accomplish
such a result.
Amended by Acts 1967, 60th Leg., p. 490, ch. 219, Sec. 1, eff. Oct.
1, 1967; Acts 1975, 64th Leg., p. 1063, ch. 409, Sec. 1, eff. Sept.
1, 1975.
Sec. B amended by Acts 1995, 74th Leg., ch. 127, Sec. 1, eff. Sept.
1, 1995.
Art. 9.02. Definitions
(a) "Title Insurance" means insuring, guaranteeing or indemnifying
owners of real property or others interested therein against loss
or damage suffered by reason of liens, encumbrances upon, or
defects in the title to said property, and the invalidity or
impairment of liens thereon, or doing any business in substance
equivalent to any of the foregoing in a manner designed to evade the
provisions of this Act.
(b) The "business of title insurance" shall be deemed to be (1) the
making as insurer, guarantor or surety, or proposing to make as
insurer, guarantor or surety, of any contract or policy of title
insurance or any equivalent thereof; (2) the transacting or
proposing to transact, any phase of title insurance, including
solicitation, title examination, except when conducted by an
attorney, closing the transaction, except when conducted by an
attorney, execution of a contract of title insurance, insuring and
transacting matters subsequent to the execution of the contract and
arising out of it, including reinsurance; (3) the making of a
guaranty or warranty of a title search, a title examination, or any
component thereof by a person other than the one performing the
search or examination; or (4) the doing, or proposing to do, any
business in substance equivalent to any of the foregoing whether or
not designed to evade the provisions of this Act.
(c) "Title Insurance Company" means any domestic company organized
under the provisions of this Act for the purpose of conducting the
business of title insurance, any title insurance company organized
under the laws of another state or foreign government meeting the
requirements of this Act and holding a certificate of authority to
transact business in Texas and any domestic or foreign company
having a certificate of authority to insure titles to real estate
within this state and which meet the requirements of this Act.
(d) "Commissioner" means the Commissioner of Insurance of the State
of Texas.
(e) "Board" means the State Board of Insurance of the State of
Texas.
(f) "Title Insurance Agent" means a person, firm, association, or
corporation owning or leasing and controlling an abstract plant as
defined by the Board, or as a participant in a bona fide joint
abstract plant operation as defined by the Board, and authorized in
writing by a title insurance company to solicit insurance and
collect premiums and to issue or countersign policies in its
behalf.
(g) "Escrow Officer" means an attorney, or bona fide employee of
either an attorney licensed as an escrow officer, bona fide
employee of a direct operation, or bona fide employee of a title
insurance agent whose duties include any or all of the following:
(1) countersigning title insurance forms; or (2) supervising the
preparation and supervising the delivery of title insurance forms;
or (3) signing escrow checks; or (4) closing the transaction.
(h) "Foreign Title Insurance Company" means a title insurance
company organized under the laws of any jurisdiction other than the
State of Texas.
(i) "Abstract plant" as used herein shall mean a geographical
abstract plant such as is defined by the commissioner, and the
commissioner, in defining an abstract plant, shall require a
geographically arranged plant, currently kept to date, that is
found by the commissioner to be adequate for use in insuring titles,
so as to provide for the safety and protection of the policyholders.
(j) "Residential real property" means any real property which has
improvements thereon and is designed principally for the occupancy
of from one to four families (including individual units of
condominiums and cooperatives).
(k) "Thing of value" includes any payment, advance, funds, loan,
service, or other consideration.
(l ) "Person" includes individuals, corporations, associations,
partnerships and trusts.
(m) "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.
(n) "Closing the Transaction" means the investigation made on
behalf of a title insurance company, title insurance agent, or
direct operation before the actual issuance of the title policy to
determine proper execution, acknowledgment, and delivery of all
conveyances, mortgage papers, and other title instruments which may
be necessary to the consummation of the transaction and includes
the determination that all delinquent taxes are paid, all current
taxes, based on the latest available information, have been
properly prorated between the purchaser and seller in the case of an
owner policy, the consideration has been passed, all proceeds have
been properly disbursed, a final search of the title has been made,
and all necessary papers have been filed for record.
(o) "Premium" means the premium rates promulgated by the Board
pursuant to Article 9.07 of this Code and includes the charges for
title examination and for closing the transaction, whether or not
performed by an attorney, and for issuance of a policy.
(p) "Attorney" means a person licensed to practice law and a member
of the State Bar of Texas and includes a Texas professional
corporation organized for the purpose of rendering professional
legal services.
(q) "Direct Operation" means the operations of a title insurance
company under the authority of a license issued under Article 9.36A
of this Code. Whenever the term "title insurance agent" is used in
this Chapter, it shall be construed to include "direct operation"
unless the context indicates to the contrary.
Amended by Acts 1967, 60th Leg., p. 490, ch. 219, Sec. 1, eff. Oct.
1, 1967; Acts 1975, 64th Leg., p. 1064, ch. 409, Sec. 2, eff. Sept.
1, 1975.
Subsecs. (b), (g) amended and Subsecs. (m) to (q) added by Acts
1987, 70th Leg., ch. 1073, Sec. 3, eff. Sept. 1, 1987; Subsecs.
(a), (i) amended by Acts 1993, 73rd Leg., ch. 685, Sec. 16.01, eff.
Sept. 1, 1993; Subsec. (b) amended by Acts 1995, 74th Leg., ch.
127, Sec. 2, eff. Sept. 1, 1995; Subsec. (c) amended by Acts 1995,
74th Leg., ch. 127, Sec. 3, eff. Sept. 1, 1995; Subsec. (i) amended
by Acts 1995, 74th Leg., ch. 127, Sec. 4, eff. Sept. 1, 1995;
Subsec. (m) amended by Acts 1995, 74th Leg., ch. 127, Sec. 5, eff.
Sept. 1, 1995.
Art. 9.03. May Incorporate
(a) Private corporations may be created and licensed under this
chapter to compile and own or lease, or to acquire and own or lease,
records or abstracts of title to lands and interests in land and to
insure titles to lands or interests therein, both in Texas and other
jurisdictions, and indemnify the owners of such lands, or the
holders of interests in or liens on such lands, against loss or
damage on account of incumbrances upon or defects in the title to
such lands or interests therein; and in transactions in which title
insurance is to be or is being issued, to supervise or approve the
signing of legal instruments (but not the preparation of such
instruments) affecting land titles, disbursement of funds,
prorations, delivery of legal instruments, closing of deals,
issuance of commitments for title insurance specifying the
requirements for title insurance and the defects in title necessary
to be cured or corrected. Nothing herein contained shall authorize
such corporation to practice law, as that term is defined by the
courts of this state, and in the event of any conflict herein, this
clause shall be controlling.
(b) A corporation described by Subsection (a) of this article may
also exercise the following powers by including same in the charter
when filed originally, or by amendment:
(1) To make and sell abstracts of title in any counties of Texas or
other states;
(2) To accumulate and lend money, to purchase, sell or deal in
notes, bonds, and securities, but without banking privileges;
(3) To act as trustee under any lawful trust committed to it by
contract or will, appointment by any court having jurisdiction of
the subject matter as trustee, receiver or guardian and as executor
or guardian under the terms of any will and as any administrator of
the estates of decedents under the appointment of the court.
Amended by Acts 1967, 60th Leg., p. 491, ch. 219, Sec. 1, eff. Oct.
1, 1967.
Amended by Acts 1993, 73rd Leg., ch. 685, Sec. 16.02, eff. Sept. 1,
1993.
Art. 9.04. Governed by Other Laws
The laws governing corporations in general shall apply to and
govern title insurance companies insofar as same are not
inconsistent with the provisions of this Act.
Amended by Acts 1967, 60th Leg., p. 492, ch. 219, Sec. 1, eff. Oct.
1, 1967.
Art. 9.05. Transfer and Assignment of Fiduciary Business to State
Banks or Trust Companies
Sec. 1. Any corporation heretofore chartered under the provisions
of Article 9.03 of this Act, or its antecedents, Article 9.01, Texas
Insurance Code, or Chapter 40, Acts, 41st Legislature, 1929
(codified as Article 1302a, Vernon's Texas Civil Statutes), having
as one of its powers "to act as trustee under any lawful trust
committed to it by contract or will, appointment by any court having
jurisdiction of the subject matter, as trustee, receiver or
guardian and as executor or guardian under the terms of any will and
as any administrator of the estates of decedents under the
appointment of the court" may transfer and assign to a state bank
created under the provisions of Subtitle A, Title 3, Finance Code,
or a predecessor of that law, as amended, or to a state trust
company created under the provisions of Chapter 181, Finance Code,
or a predecessor of that law, as amended, all of its fiduciary
business in which such corporation is named or acting as guardian,
trustee, executor, administrator or in any other fiduciary
capacity, whereupon said state bank or trust company shall, without
the necessity of any judicial action in the courts of the State of
Texas or any action by the creator or beneficiary of such trust or
estate, continue the guardianship, trusteeship, executorship,
administration or other fiduciary relationship, and perform all of
the duties and obligations of such corporation, and exercise all of
the powers and authority relative thereto now being exercised by
such corporation, and provided further that the transfer or
assignment by such corporation of such fiduciary business being
conducted by it under the powers granted in its original charter, as
amended, shall not constitute or be deemed a resignation or refusal
to act upon the part of such corporation as to any such
guardianship, trust, executorship, administration, or any other
fiduciary capacity; and provided further that the naming or
designation by a testator or the creator of a living trust of such
corporation to act as trustee, guardian, executor, or in any other
fiduciary capacity, shall be considered the naming or designation
of the state bank or trust company and authorizing such state bank
or trust company to act in said fiduciary capacity. All transfers
and assignments of fiduciary business by such corporations to a
state bank or trust company consistent with the provisions of this
Act are hereby validated.
Sec. 2. Repealed by Acts 1987, 70th Leg., ch. 1073, Sec. 24, eff.
Sept. 1, 1987.
Amended by Acts 1967, 60th Leg., p. 492, ch. 219, Sec. 1, eff. Oct.
1, 1967.
Sec. 1 amended by Acts 1995, 74th Leg., ch. 914, Sec. 8, eff. Sept.
1, 1995; amended by Acts 1997, 75th Leg., ch. 769, Sec. 4, eff.
Sept. 1, 1997; amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.67,
eff. Sept. 1, 1999.
Art. 9.06. Capital Stock and Surplus Required
Except as provided by Article 9.56, Section 4A of this Chapter 9,
all title insurance companies created and operating under the
provisions of this Chapter must have a paid up capital of not less
than One Million Dollars ($1,000,000) and a surplus of not less than
One Million Dollars ($1,000,000).
Amended by Acts 1967, 60th Leg., p. 493, ch. 219, Sec. 1, eff. Oct.
1, 1967; Acts 1975, 64th Leg., p. 1065, ch. 409, Sec. 3, eff. Sept.
1, 1975.
Amended by Acts 1987, 70th Leg., ch. 1073, Sec. 4, eff. Sept. 1,
1987.
Art. 9.06A. Purchase by Corporation of Own Shares
(a) Subject to Article 9.06 of this Code and the Texas Business
Corporation Act, a title insurance company may purchase its own
shares. A purchase of its own shares is not considered an
investment and does not constitute a violation of the provisions of
this Code relating to admissible investments.
(b) A company that purchases its own shares shall, not later than
the 10th (tenth) day after the date of purchase, file a statement
with the Commissioner of Insurance listing the name of each
shareholder from whom the shares have been purchased and the sum of
money paid for those shares.
Added by Acts 1987, 70th Leg., ch. 1073, Sec. 5, eff. Sept. 1, 1987.
Art. 9.07. Policy Forms and Premiums
(a) Corporations organized under this Chapter, as well as foreign
corporations and those created under Subdivision 57, Article 1302,
of the Revised Civil Statutes of 1925 before the repeal of that
statute, or under Chapter 8 of this Code, or any other law insofar
as the business of either may be the business of title insurance,
shall operate in Texas under the control and supervision and under
such uniform rules and regulations as to forms of policies and
underwriting contracts and premiums therefor, and such
underwriting standards and practices as may be prescribed by the
commissioner; and no Texas or foreign corporation, whether
incorporated under this Chapter or any other law of the State of
Texas, shall be permitted to conduct the business of title
insurance, to issue any title policy of any character, or
underwriting contract, to delete any policy exclusion or to
reinsure any portion of the risk assumed by any title policy, on
Texas real property other than under this Chapter and under such
rules and regulations. No policy of title insurance, title
insurance coverage, reinsurance of any risk assumed under any
policy of title insurance, or any guarantee of any character made
when insuring Texas titles shall be issued or valid unless written
by a corporation complying with the provisions of and authorized or
qualified under this Chapter, except as is provided in Article
9.19D. Before any premium rate provided for herein shall be fixed
or charged, reasonable notice shall issue, and a hearing afforded
to the title insurance companies and title insurance agents
authorized or qualified under this Chapter and the public. Under no
circumstances may any title insurance company or title insurance
agent use any form which is required under the provisions of this
Chapter 9 to be promulgated or approved until the same shall have
been so promulgated or approved by the commissioner.
(b) The commissioner shall have the duty to fix and promulgate the
premium rates to be charged by title insurance companies and title
insurance agents created or operating under this Chapter for
policies of title insurance or other promulgated or approved forms,
and the premiums therefor shall be paid in the due and ordinary
course of business. Premium rates for reinsurance as between title
insurance companies qualified under this Chapter shall not be fixed
or promulgated by the commissioner, and title insurance companies
may set such premium rates for reinsurance as such title insurance
companies shall agree upon. Under no circumstance shall any
premium be charged for any policy of title insurance or other
promulgated or approved forms different from those fixed and
promulgated by the commissioner, except for premiums charged for
reinsurance. The premium rates fixed by the commissioner shall be
reasonable to the public and nonconfiscatory as to the title
insurance companies and title insurance agents. For the purpose of
collecting data on which to determine the proper rates to be fixed,
the commissioner shall require all title insurance companies and
all title insurance agents operating in Texas to submit such
information in such form as the commissioner may deem proper, all
information as to loss experience, expense of operation, and other
material matters for the commissioner's consideration. In fixing
the rate of premiums, the commissioner shall consider all relevant
income and expenses of title insurance companies and title
insurance agents attributable to Texas title insurance business.
(c) The commissioner shall hold a biennial hearing not earlier than
July 1 of each even-numbered calendar year, to consider adoption of
premium rates and such other matters and subjects relative to the
regulation of the business of title insurance as may be requested by
any association, any title insurance company, any title insurance
agent, any member of the public, or as the commissioner may
determine necessary to consider. Any person, association, or
entity recommending adoption of premium rates or other matters and
subjects shall be admitted as a party to the hearing. Not less than
60 days prior to the public hearing, notice of the hearing and the
items to be considered shall be sent direct to all title insurance
companies and title insurance agents qualified or authorized to do
business under this Chapter and to the public in such a manner as to
give fair publicity thereto. The hearing shall consist of a
rulemaking phase for consideration of rules, forms, and
endorsements, and related matters not having rate implications and
a ratemaking phase for consideration of fixing the premium rate and
other matters with rate implications. The commissioner shall
certify which matters have rate implications to be considered in
the ratemaking phase of the hearing. The commissioner shall
conduct both phases of the hearing; provided, however, that the
ratemaking phase of the hearing shall be conducted by the State
Office of Administrative Hearings in accordance with Article 1.33B
of this code at the direction of the commissioner or at the written
request of any person seeking admission as a party to the ratemaking
phase of the hearing. Such request must be made at the time a person
seeks to be admitted as a party to the hearing but in no event more
than 10 days after issuance of public notice of the hearing. The
ratemaking phase of the hearing shall be conducted as a contested
case pursuant to Chapter 2001, Government Code (Administrative
Procedure Act). Presentation by any party of relevant, admissible
oral testimony shall not be limited. All matters in all phases of
the hearing shall be considered by the commissioner and decisions
thereon rendered in open meeting. Changes to the Basic Manual of
Rules, Rates, and Forms for the Writing of Title Insurance in the
State of Texas, including additions or amendments thereto, may be
proposed and adopted by reference by publishing a notice of such
proposal or adoption by reference in the Texas Register. The notice
must include a brief summary of the substance of the matter to be
added or changed and a statement that the full text of the matter is
available for review in the office of the chief clerk of the Texas
Department of Insurance.
(d) Premium rates when once fixed shall not be changed until after a
public hearing shall be had by the commissioner. Not less than 60
days prior to the public hearing, notice of the hearing and the
items to be considered shall be sent direct to all title insurance
companies and title insurance agents qualified or authorized to do
business under this Chapter, and public notice shall be provided in
such manner as to give fair publicity thereto. The commissioner
must call such additional hearings to consider premium rate changes
at the request of a title insurance company or the office of public
insurance counsel.
(e) The commissioner may, on his or her own motion, following notice
as required for the biennial hearing hold at any time a public
hearing to consider adoption of premium rates and such other
matters and subjects relative to the regulation of the business of
title insurance as the commissioner shall determine necessary or
proper.
(f) Any title insurance company, any title insurance agent, or
other person or association of persons interested, feeling injured
by any action of the commissioner with regard to premium rates or
other action taken by the commissioner, shall have the right to
appeal in accordance with Article 1.04 of this code.
Amended by Acts 1967, 60th Leg., p. 493, ch. 219, Sec. 1, eff. Oct.
1, 1967; Acts 1975, 64th Leg., p. 1065, ch. 409, Sec. 4, eff. Sept.
1, 1975.
Amended by Acts 1987, 70th Leg., ch. 1073, Sec. 6, eff. Sept. 1,
1987; Acts 1993, 73rd Leg., ch. 685, Sec. 16.02, eff. Sept. 1,
1993; Acts 1995, 74th Leg., ch. 127, Sec. 6, eff. Sept. 1, 1995.
Art. 9.07A. Policy Forms for Residential Real Property
(a) The board shall adopt an owner policy form to be issued in
connection with transactions involving residential real estate in
this state.
(b) A title insurance company or title insurance agent shall use a
form adopted by the commissioner under this article in issuing
owner policies to natural persons relating to residential real
property in this state.
(c) An insurer may not enter into a contract or agreement concerning
an individual policy that is not expressed in the policy unless
permitted by rules adopted by the board. Such a contract or
agreement is void.
(d) Endorsements promulgated by the board may be attached to the
policy form, provided such an endorsement is in conformity with
rules adopted by the board.
(e) The board may not adopt an owner policy form for residential
real property or any endorsement to the policy if the policy or
endorsement is not in plain language. For the purposes of this
subsection, a policy or endorsement is written in plain language if
it achieves the minimum score established by the commissioner on
the Flesch reading ease test or an equivalent test selected by the
commissioner or, at the option of the commissioner, if it conforms
to the language requirements in a National Association of Insurance
Commissioners model act relating to plain language. This
subsection does not apply to policy language that is mandated by
state or federal law.
(f) For an owner policy on residential real property that is issued
to a natural person, the commissioner may adopt coverages that
insure against:
(1) ad valorem taxes, including penalties and interest, to be paid
with respect to the property for a previous tax year and that are
delinquent on the effective date of the policy because of sale,
diversion, or change of use, unless excluded because the insured
has actual knowledge of the delinquent taxes; and
(2) ad valorem taxes, including penalties and interest, to be paid
with respect to the property for a previous tax year because of an
exemption granted to a previous owner of the property under Section
11.13, Tax Code, or because of improvements not assessed for a
previous tax year, unless excluded because the insured has actual
knowledge of the taxes.
Added by Acts 1991, 72nd Leg., ch. 242, Sec. 2.44, eff. Sept. 1,
1991. Subsec. (b) amended by Acts 1995, 74th Leg., ch. 127, Sec. 7,
eff. Sept. 1, 1995; Subsec. (f) added by Acts 1999, 76th Leg., ch.
1379, Sec. 1, eff. Sept. 1, 1999.
Art. 9.07B. Abstract of Title; Commitment for Title Insurance
Distinguished
(a) An abstract of title prepared from an abstract plant for a chain
of title of real property described in the abstract of title is not
title insurance, a commitment for title insurance, or any other
title insurance form.
(b) The Board may not adopt regulations relating to abstracts of
title.
(c) A "commitment for title insurance" means a title insurance form
that offers to issue a title policy subject to stated exceptions,
requirements, and terms. The term includes a mortgagee title
policy binder on an interim construction loan. The commitment,
binder, title policy, or other insurance form is not an abstract of
title. The commitment or binder constitutes a statement of the
terms and conditions on which the title insurance company is
willing to issue its policy. The title insurance policy or other
insurance form constitutes a statement of the terms and conditions
of the indemnity under the title insurance policy or other form.
Added by Acts 1993, 73rd Leg., ch. 685, Sec. 16.03, eff. Sept. 1,
1993.
Art. 9.07C. Area and Boundary Coverage
(a) In this article, " area and boundary coverage" means title
insurance coverage relating to discrepancies, conflicts, or
shortages in area or boundary lines, or any encroachments or
protrusions, or any overlapping of improvements.
(b) The commissioner may adopt rules allowing a title insurance
company to accept an existing real property survey and not require a
new survey when providing area and boundary coverage if the title
insurance company is willing to accept evidence of an existing real
property survey, and an affidavit verifying the existing survey, as
prescribed by the commissioner, notwithstanding the age of the
survey or the identity of the person for whom the survey was
prepared.
(c) A title insurance company may not discriminate in providing
area and boundary coverage in connection with residential real
property solely because:
(1) the real property is platted or unplatted; or
(2) a municipality did not accept a subdivision plat in relation to
the real property before September 1, 1975.
(d) A title insurance company may not require an indemnity from a
seller, buyer, borrower, or lender to provide area and boundary
coverage.
Added by Acts 2001, 77th Leg., ch. 764, Sec. 1, eff. June 13, 2001.
Art. 9.08. Prohibiting Guarantee of Payment of Obligations of
Others--and "Insuring Around"
Title insurance companies, domestic or foreign, operating under
this chapter shall not have the right to guarantee the payment of
mortgages which cover real estate, and if any such corporation
shall do so it shall forthwith forfeit and surrender its permit to
do business.
"Insuring around" is defined as the willful issuance of a title
binder or title insurance policy showing no outstanding enforceable
recorded liens while the title insurance company knows that in fact
a lien or liens are of record against the real property, and shall
be prohibited, except under circumstances as the commissioner under
his or her rule-making powers shall approve. A title insurance
company knows that an outstanding enforceable recorded matter
exists if it determines that the matter is valid and enforceable
based on the examination of the title pursuant to which the title
binder or title insurance policy is issued. In its discretion, the
title insurance company may determine the insurability of title and
those matters which it considers to be insurable under the title
binder or title insurance policy; provided, however, that insuring
around enforceable recorded liens shall be prohibited except as
allowed by regulation.
Any person who willfully violates the provisions of this Article
9.08, or who disobeys an order of the commissioner refusing to
approve an application to insure around, shall, upon proof thereof
to the satisfaction of the District Court of Travis County, Texas,
forfeit and pay to the State of Texas a sum not to exceed $5,000,
which may be recovered in a civil action by the commissioner.
The commissioner, upon giving thirty (30) days' notice by
registered mail, and upon hearing had for that purpose, may forfeit
the Certificate of Authority to do business of any company
violating the provisions of this Article 9.08.
Amended by Acts 1967, 60th Leg., p. 494, ch. 219, Sec. 1, eff. Oct.
1, 1967.
Amended by Acts 1995, 74th Leg., ch. 127, Sec. 8, eff. Sept. 1,
1995.
Art. 9.09. Prohibiting Transacting of Other Kinds of Insurance by
Title Insurance Companies or the Transacting of Title Insurance by
Other Types of Insurance Companies
Corporations, domestic or foreign, operating under this Chapter
shall not transact, underwrite or issue any kind of insurance other
than title insurance on real property; nor shall the business of
title insurance be transacted, underwritten, or issued by any
company transacting any other kinds of insurance.
Amended by Acts 1967, 60th Leg., p. 494, ch. 219, Sec. 1, eff. Oct.
1, 1967; Acts 1975, 64th Leg., p. 1067, ch. 409, Sec. 5, eff. Sept.
1, 1975.
Amended by Acts 1993, 73rd Leg., ch. 685, Sec. 16.04, eff. Sept. 1,
1993; Acts 1995, 74th Leg., ch. 127, Sec. 9, eff. Sept. 1, 1995.
Art. 9.09A. Prohibiting Unmarketability of Title Insurance
An insurance company may not insure against loss or damage by reason
of unmarketability of title. The commissioner may not promulgate
rules or forms providing for that coverage.
Added by Acts 1993, 73rd Leg., ch. 685, Sec. 16.05, eff. Sept. 1,
1993.
Art. 9.10. Foreign Corporations
Corporations organized under the laws of any other state shall be
permitted to do business in this state on exactly the same basis and
subject to the same rules, regulations and prices and supervision
as fixed for Texas corporations doing business under this Act.
Amended by Acts 1967, 60th Leg., p. 495, ch. 219, Sec. 1, eff. Oct.
1, 1967.
Art. 9.11. Revocation of Right to do Business
Any foreign or domestic corporations conducting the business of
title insurance or issuing any form of title insurance policy or
other promulgated or approved forms, or charging any premium rates
on an owner, mortgagee, or other title insurance policy, or on other
promulgated or approved forms, except for the premium rates charged
for reinsurance, on Texas real property other than forms and
premium rates prescribed by the commissioner, under the provisions
of this Chapter shall forfeit its right to do business in this
state. The provisions of this Article 9.11 shall not, however, be
applicable to premium rates charged in connection with reinsurance
transactions between or among title insurance companies doing
business under the provisions of this Chapter, provided any such
reinsurance contract complies with the provisions of Article 9.19
of this Chapter.
Amended by Acts 1967, 60th Leg., p. 495, ch. 219, Sec. 1, eff. Oct.
1, 1967; Acts 1975, 64th Leg., p. 1067, ch. 409, Sec. 6, eff. Sept.
1, 1975.
Amended by Acts 1995, 74th Leg., ch. 127, Sec. 10, eff. Sept. 1,
1995.
Art. 9.12. Deposits
All title insurance companies, domestic and foreign, engaged in the
title insurance business must at all times have and keep on deposit
with the State Treasury or such other depository in the State of
Texas as may be named by such corporation and approved by the Board,
either cash or such securities as are listed in Article 9.18 of this
Act as approved investments for title insurance companies, to an
amount equal to one-fourth of the authorized capital of such
corporation; provided, however, that such deposit shall in no
event exceed the sum of One Hundred Thousand Dollars ($100,000).
Such corporation, at its option may withdraw from time to time such
securities or any part thereof, first having deposited in such
depository in lieu thereof other securities of sufficient value to
maintain the required deposit. Funds deposited under this
provision shall never be used for the payment of any obligation
other than those connected with title insurance, and in the event of
the insolvency or dissolution of a corporation, the fund hereby
provided shall be used to protect title insurance policyholders
even though there be no accrued title insurance claims and even
though there be unpaid obligations of other sorts; provided,
however, that same shall be applied to the payment of other
obligations and liabilities of said corporation and/or
distribution to stockholders after complete payment of the
obligations and liabilities of the corporation connected with title
insurance business and the establishment of adequate reserves or
reinsurance for the protection of any subsequently accruing or
maturing title insurance obligations and liabilities, the amount of
such reserves and the handling and distribution of same to be
subject to the control and discretion of the Board, same to be
reviewable in judicial proceedings to be governed by like rules as
are applicable to review of rates under Article 9.07 of this Act.
This deposit shall be for the benefit of all policyholders.
If a foreign title insurance company has on deposit with insurance
regulatory bodies in the United States sums aggregating the amount
of deposit required by this Article in such manner as to secure all
policyholders wherever located, then no deposit shall be required
in this state, but a certificate of deposit under the hand and seal
of such insurance regulatory body or bodies with whom the deposits
have been made shall be filed with the Board.
Amended by Acts 1967, 60th Leg., p. 495, ch. 219, Sec. 1, eff. Oct.
1, 1967.
Art. 9.13. Fees
The general laws applicable to payment of filing fees of
corporations having capital stock are hereby made applicable to
corporations coming under the provisions of this Chapter.
Amended by Acts 1967, 60th Leg., p. 495, ch. 219, Sec. 1, eff. Oct.
1, 1967; Acts 1975, 64th Leg., p. 1067, ch. 409, Sec. 7, eff. Sept.
1, 1975.
Art. 9.14. Charter and Amendments
The original charter of corporations doing the business of title
insurance and incorporated under the provisions of this Chapter, or
under Subdivision 57, Article 1302, Revised Civil Statutes of 1925,
or under Article 1302a, Texas Civil Statutes (Acts 1929, 41st
Legislature, page 383, Chapter 245, Section 1) or under any other
law regardless of the nature of such amendment, shall be certified
only to and filed only with the Board, and only the Board shall
collect from the said companies filing fees required under the law.
All other laws or parts of laws, to the extent that the same are in
conflict with the provisions of this Article, shall not hereafter
apply to such corporations.
Amended by Acts 1967, 60th Leg., p. 496, ch. 219, Sec. 1, eff. Oct.
1, 1967; Acts 1975, 64th Leg., p. 1068, ch. 409, Sec. 8, eff. Sept.
1, 1975.
Art. 9.15. Certificate of Authority
The Board after having satisfied itself by such investigation as it
may deem proper with reference to the payment of capital stock and
surplus as required by this Chapter 9, and the value of the assets
offered in payment thereof (the expense of which examination shall
be borne by the title insurance company), shall issue to such title
insurance company a certificate of authority to transact the
characters of business provided for in this Chapter on either an
annual or a continuing basis. No title insurance company, domestic
or foreign, shall transact business under this Chapter unless it
shall hold a valid certificate of authority.
Amended by Acts 1967, 60th Leg., p. 496, ch. 219, Sec. 1, eff. Oct.
1, 1967; Acts 1975, 64th Leg., p. 1068, ch. 409, Sec. 9, eff. Sept.
1, 1975.
Art. 9.16. Reserves
Article repealed effective April 1, 2005.
Statutory premium reserve required
Sec. 1. (a) Each domestic title insurer doing a title insurance
business under this chapter shall establish and maintain a
statutory premium reserve during the period and for the uses and
purposes provided by this article, which shall at all times and for
all purposes be deemed and shall constitute unearned portions of
the original premium, and shall be charged as a reserve liability of
that insurer in determining its financial condition.
(b) The reserve required under Subsection (a) of this section shall
be cumulative. The reserve shall be established and shall consist
of the amounts required under this article.
Amounts added to reserve for calendar year 1997; reductions
Sec. 2. (a) The total charges of a domestic title insurer for title
insurance policies written or assumed on or after January 1, 1997,
but before January 1, 1998, are computed by adding the following, as
set forth in the title insurer's annual statement:
(1) the direct premium written by the title insurer;
(2) the escrow and settlement service fees paid directly to and
collected by the title insurer;
(3) other title fees and service charges paid directly to and
collected by the title insurer, including fees for closing
protection letters; and
(4) premiums for reinsurance assumed less premiums for reinsurance
ceded during the 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) of this
section by:
(1) 6-2/10 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) Additions to the statutory premium reserve set aside for title
insurance policies written or assumed during 1997 shall be reduced
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)
of this section, by:
(1) 26 percent of the additions in the first year succeeding the
year of addition;
(2) 20 percent of the additions in the second succeeding year;
(3) 10 percent of the additions in the third succeeding year;
(4) nine percent of the additions in the fourth succeeding year;
(5) five percent of the additions in the fifth and sixth succeeding
years;
(6) three percent of the additions in the seventh, eighth, and ninth
succeeding years;
(7) two percent of the additions in the 10th through 14th succeeding
years; and
(8) one percent of the additions in the last six years.
(d) The annual reductions under Subsection (c) of this section
shall be made 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.
Amounts added to reserve in calendar years after 1997; reductions
Sec. 3. (a) Out of total charges for title insurance policies
written or assumed on or after January 1, 1998, 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 set forth in the
title insurer's annual statement:
(1) $0.25 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) $0.30 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) Additions to the statutory premium reserve set aside for title
insurance policies written or assumed after 1997 shall be reduced
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 2(c) and (d) of this article.
Transitional release; transitional charge
Sec. 4. (a) In addition to the requirements imposed under Sections 2
and 3 of this article, each domestic title insurer shall compute a
total statutory premium reserve balance for all policy years
combined as of December 31, 1996.
(b) The balance under Subsection (a) of this section shall be
computed as if Section 2 of this article 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 greater than zero or is the insurer's
transitional release if the resulting amount is zero or less.
(c) If the domestic title insurer has a transitional charge under
Subsection (b) of this section, in addition to the changes to the
statutory premium reserve otherwise required by this article, the
domestic title 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 the domestic title insurer has a transitional release under
Subsection (b) of this section, in addition to the changes to
statutory premium reserve otherwise required by this article, the
domestic title 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.
Runoff balance
Sec. 5. (a) At the end of each calendar year beginning in 1997, each
domestic title insurer shall also compute a total statutory premium
reserve balance for all policy years before January 1, 1997,
combined. That balance shall be computed as of the year-end
evaluation date and as if Section 2 of this article were in effect
during the 20-year period ending December 31, 1996. The balance
computed under this subsection is the runoff balance.
(b) The title insurer shall reduce its statutory premium reserve by
an amount equal to the difference between the runoff balance
computed under Subsection (a) of this section and the runoff
balance computed for the preceding calendar year.
(c) The reduction of the statutory premium reserve under Subsection
(b) of this section is in addition to any other changes to the
statutory premium reserve required by this article.
Actuarial certification
Sec. 6. (a) Each domestic and foreign title insurer shall file
annually with the annual statement required under Article 9.22 of
this code an actuarial certification made by a member in good
standing of the American Academy of Actuaries.
(b) The actuarial certification must conform to the annual
statement instructions for title insurers adopted by the National
Association of Insurance Commissioners and must include the
actuary's professional opinion of the insurer's reserves as of the
date of the annual statement. 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.
Supplemental reserve
Sec. 7. (a) Each domestic and foreign title insurer shall establish
a supplemental reserve in 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 title insurer's
annual statement, subject to Subsection (b) of this section.
(b) The supplemental reserve required under this section shall be
phased in as follows:
(1) 25 percent of the otherwise applicable supplemental reserve is
required until December 31, 1996;
(2) 50 percent of the otherwise applicable supplemental reserve is
required until December 31, 1997;
(3) 75 percent of the otherwise applicable supplemental reserve is
required until December 31, 1998; and
(4) 100 percent of the supplemental reserve is required after
December 31, 1998.
Foreign companies
Sec. 8. A foreign title insurer doing business in this state shall
be required to comply with the provisions of Section 6 and Section 7
of this article.
Reevaluation of reserve requirements
Sec. 9. The commissioner may reevaluate the adequacy of the
statutory premium reserves required under Section 3 of this article
and may make recommendations for legislative changes as the
commissioner considers appropriate.
Maintenance of fund
Sec. 10. The statutory premium reserve and supplemental reserve
fund shall be held in cash or invested in first mortgage notes or
other securities admissible for investment by title insurers under
Article 9.18 of this code .
Effect of insolvency or dissolution
Sec. 11. In the event of the insolvency or dissolution of a title
insurer, the statutory premium reserve and supplemental reserve
fund shall be used to protect title insurance contract holders,
even if there are no accrued title insurance claims and even if
there are unpaid obligations of other types.
Amended by Acts 1967, 60th Leg., p. 496, ch. 219, Sec. 1, eff. Oct.
1, 1967.
Subsecs. (2), (4) amended by Acts 1987, 70th Leg., ch. 1073, Sec. 7,
eff. Sept. 1, 1987; Subsec. (2) amended by Acts 1995, 74th Leg.,
ch. 898, Sec. 3, eff. Aug. 28, 1995. Amended by Acts 1997, 75th
Leg., ch. 360, Sec. 1, eff. May 27, 1997.
Art. 9.17. Reserve for Unpaid Losses and Loss Expenses
(a) All title insurance companies operating under the provisions of
this Act shall at all times establish and maintain, in addition to
other reserves, a reserve against (1) unpaid losses, and (2) loss
expense for 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, and shall calculate such reserves by making a careful
estimate in each case of the loss and loss expense likely to be
incurred, by reason of every claim presented, pursuant to notice
from or on behalf of the insured, of a title defect in or lien or
adverse claim against the title insured, that may result in a loss
or cause expense to be incurred for the proper disposition of the
claim. The sums of items so estimated 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 under the
terms of the title insurance policy shall be the total expenses of
such title insurance company.
(b) The amounts so estimated may be revised from time to time as
circumstances warrant, but shall be redetermined at least once each
year.
(c) The amounts set aside in such reserve in any year shall be
deducted in determining the net profits for such year of any title
insurance company.
Amended by Acts 1967, 60th Leg., p. 497, ch. 219, Sec. 1, eff. Oct.
1, 1967.
Subsec. (a) amended by Acts 1993, 73rd Leg., ch. 685, Sec. 16.06,
eff. Sept. 1, 1993.
Art. 9.18. Admissible Investments for Title Insurance Companies
Investments of all title insurance companies operating under the
provisions of this Act shall be held in cash or may be invested in
the following:
(a) Any corporation organized under this Act having the right to do
a title insurance business may invest as much as 50 percent of its
capital stock in an abstract plant or plants, provided that the
valuation to be placed upon such plant or plants shall be approved
by the Board; provided, however, that if such corporation
maintains with the Board the deposit of One Hundred Thousand
Dollars ($100,000) in securities as provided in Article 9.12 of
this Act, such of its capital in excess of 50 percent, as deemed
necessary to its business by its board of directors may be invested
in abstract plants; and provided further, that a corporation
created or operating under the provisions of this Act 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.
(b) Those securities set forth in Article 3.39, Insurance Code, and
in authorized investments for title insurance companies under the
laws of any other state in which the affected company may be
authorized to do business from time to time.
(c) Real estate or any interest therein which may be:
(1) required for its convenient accommodation in the transaction of
its business with reasonable regard to future needs;
(2) acquired in connection with a claim under a policy of title
insurance;
(3) acquired in satisfaction or on account of loans, mortgages,
liens, judgments or decrees, previously owing to it in the course of
its business;
(4) acquired in part payment of the consideration of the sale of
real property owned by it if the transaction shall result in a net
reduction in the company's investment in real estate;
(5) reasonably necessary for the purpose of maintaining or
enhancing the sale value of real property previously acquired or
held by it under Subparagraphs (1), (2), (3) or (4) of this Section;
provided, however, that no title insurance company shall hold any
real estate acquired under Subparagraphs (2), (3) or (4) for more
than ten (10) years without written approval of the Board.
(d) First mortgage notes secured by:
(1) abstract plants and connected personalty within or without the
State of Texas;
(2) stock of title insurance agents within or without the State of
Texas;
(3) construction contract or contracts for the purpose of building
an abstract plant and connected personalty;
(4) any combination of two or more of items (1), (2), and (3).
In no event shall the amount of any first mortgage note exceed 80
percent of the appraised value of the security for such note as set
out above.
(e) The shares of any federal home loan bank in the amount necessary
to qualify for membership and any additional amounts approved by
the Commissioner.
(f) Investments in foreign securities that are substantially of the
same kinds, classes, and investment-grade as those eligible for
investment under other provisions of this Article. Unless the
investment is also authorized under Subsection (b) of this Article
the aggregate amount of foreign investments made under this Section
may not exceed:
(1) five percent of the insurer's admitted assets at the last year
end;
(2) two percent of the insurer's admitted assets at the last year
end invested in the securities of all entities domiciled in any one
foreign country; and
(3) one-half of one percent of the insurer's admitted assets at the
last year end invested in the securities of any one individual
entity domiciled in a foreign country.
Any investments which do not qualify under this Article and which
were owned by the title insurance company on October 1, 1967,
continue to qualify.
If any otherwise valid investment which qualifies under the
provisions of this Article shall exceed in amount any of the
limitations on investment contained in this Article, it shall be
inadmissible only to the extent that it exceeds such limitation.
(g) Securities Lending, Repurchase, Reverse Repurchase and Dollar
Roll Transactions as provided for in Section 4(q), Article 3.33, of
this code and Money Market Funds as provided for in Section 4(s),
Article 3.33, of this code.
Amended by Acts 1967, 60th Leg., p. 498, ch. 219, Sec. 1, eff. Oct.
1, 1967.
Amended by Acts 1987, 70th Leg., ch. 1073, Sec. 8, eff. Sept. 1,
1987; Acts 1993, 73rd Leg., ch. 685, Sec. 16.07, eff. Sept. 1,
1993; Acts 1997, 75th Leg., ch. 556, Sec. 8, eff. Sept. 1, 1997.
Art. 9.19. Maximum Liability
A. No title insurance company operating under the provisions of
this Chapter shall issue any policy of title insurance on any real
property located within the State of Texas involving a potential
liability by virtue of such policy of more than fifty (50%) percent
of the capital stock and surplus as stated in the most recent annual
statement of the company unless the excess shall in due course be
reinsured in some other title insurance company authorized to do
business in Texas under this Chapter. Each title insurance company
authorized to do business under the provisions of this Chapter may
reinsure any or all of its policies and contracts issued on real
property situated within the State of Texas, provided: (i) the
reinsuring title insurance company shall be licensed to do business
in the State of Texas under the provisions of this Chapter; and
(ii) the form of the reinsurance contract shall be approved in
advance by the Board.
B. If the Board has first approved one or more forms of reinsurance
contracts for a title insurance company, such title insurance
company may thereafter continue using such form or forms without
submitting individual reinsurance contracts to the Board.
Authority is reserved to the Board, however, to alter the required
form so previously approved by it after first giving written notice
to the title insurance company or title insurance companies
affected by such required change.
C. No title insurance company authorized to do business in Texas
under the provisions of this Chapter may accept reinsurance risks
on real property situated within the State of Texas except from
other title insurance companies holding a certificate of authority
to do business in the State of Texas under the provisions of this
Chapter.
D. The Board may, however, upon application and hearing permit any
title insurance company licensed to do business in this State under
this Chapter to acquire reinsurance upon an individual policy or
facultative basis from title insurance companies not licensed to do
business in this State, provided: (i) any such non-admitted
foreign title insurance company has a combined capital and surplus
of at least $1,400,000 evidenced by its annual statement last
preceding the acceptance of such reinsurance; and (ii) any such
title insurance company so authorized to do business under this
Chapter has exhausted the opportunity to acquire such reinsurance
from all other title insurance companies so authorized to do
business under the provisions of this Chapter.
E. The board may, however, upon application and hearing, permit any
title insurance company licensed to do business in this state under
this chapter and any title insurance company authorized to reinsure
pursuant to the provisions of this chapter to retain an additional
potential liability of not more than 40 percent of the capital stock
and surplus as stated in the most recent annual statement of the
company, provided: (i) the title insurance company so authorized
to do business under this chapter has exhausted the opportunity to
acquire reinsurance pursuant to Section D of this article; and (ii)
the additional potential liability is incurred only if the loss
suffered by the insured or insureds under the policy or policies,
and for which the insurer becomes liable, exceeds the amount of
insurance and reinsurance authorized and accepted by the insurer
and other title insurance companies pursuant to the provisions of
Sections A, B, C, and D of this article.
Amended by Acts 1967, 60th Leg., p. 498, ch. 219, Sec. 1, eff. Oct.
1, 1967; Acts 1975, 64th Leg., p. 1068, ch. 409, Sec. 10, eff. Sept.
1, 1975.
Sec. E added by Acts 1983, 68th Leg., p. 1113, ch. 253, Sec. 1, eff.
Aug. 29, 1983.
Art. 9.20. Capital Stock and Minimum Surplus Impairment
The capital stock and minimum surplus requirement of every title
insurance company, domestic or foreign, operating under the
provisions of the Act must be maintained intact over and above all
its outstanding liabilities, except contingent liabilities on
policies of title insurance, and if such company shall suffer the
impairment of its capital stock, or minimum surplus requirements it
shall report such impairment forthwith to the Board.
Amended by Acts 1967, 60th Leg., p. 499, ch. 219, Sec. 1, eff. Oct.
1, 1967.
Art. 9.21. Authority of Board of Insurance of the State of Texas
(a) If any company operating under the provisions of this Act shall
engage in the characters of business described in Subdivisions (1)
and (2) of Article 9.03 of this Act, in such manner as might bring it
within the provision of any other regulatory statute now or
hereafter to be in force within the State of Texas, all examination
and regulation shall be exercised by the Board rather than any other
state agency which may be named in such other laws, so long as such
corporation engages in the title guaranty or insurance business.
(b) The Board is hereby vested with power and authority under this
Act to promulgate and enforce rules and regulations prescribing
underwriting standards and practices upon which title insurance
contracts are to be issued, and is hereby further vested with the
power and authority to define risks which may not be assumed under
title insurance contracts, including risks that may not be assumed
because of the insolvency of the parties to the transaction. In
addition, the Board is hereby vested with power and authority to
promulgate and enforce all other such rules and regulations which
in the discretion of the Board are deemed necessary to accomplish
the purposes of this Act.
Amended by Acts 1967, 60th Leg., p. 499, ch. 219, Sec. 1, eff. Oct.
1, 1967.
Amended by Acts 1993, 73rd Leg., ch. 685, Sec. 16.07, eff. Sept. 1,
1993.
Art. 9.22. Annual Statement of Title Insurance Companies;
Examination
(a) Every title insurance company, domestic and foreign, operating
under the provisions of this Act shall, on or before the first of
March every year, file with the commissioner a verified statement,
in such form as the commissioner may require, setting forth the
statement of the business done by it during the preceding year, and
the condition of its affairs as of December 31st preceding.
(b) Each title insurance company is subject to Articles 1.15 and
1.16 of this code.
Amended by Acts 1967, 60th Leg., p. 499, ch. 219, Sec. 1, eff. Oct.
1, 1967.
Amended by Acts 1997, 75th Leg., ch. 879, Sec. 1, eff. Sept. 1,
1997.
Art. 9.23. Regulating of Names
Corporations chartered or operating under the provisions of this
Act may use in their corporate name the words "Title and Trust
Company" but they shall not use the word "Trust" alone, and where
the word "Trust" appears, when in letterheads and literature used
by them, they shall print the words "Without Banking Privileges."
Amended by Acts 1967, 60th Leg., p. 500, ch. 219, Sec. 1, eff. Oct.
1, 1967.
Art. 9.24. Foreign Corporations; Permits
Any foreign corporations desiring to transact the character of
business provided for in this Act in this state shall make an
application for permit or certificate of authority to the Board in
such form as the Board shall prescribe and shall submit a financial
statement showing its condition in such form as the Board shall
prescribe.
Amended by Acts 1967, 60th Leg., p. 500, ch. 219, Sec. 1, eff. Oct.
1, 1967.
Art. 9.25. Capital and Surplus Required; Foreign Corporations
No foreign corporation shall conduct the business of title
insurance in this state unless it shall show from its financial
statement and such other examination as the Board may desire to
make, an unimpaired capital of not less than One Million Dollars
($1,000,000.00) and surplus of not less than One Million Dollars
($1,000,000.00).
Amended by Acts 1967, 60th Leg., p. 500, ch. 219, Sec. 1, eff. Oct.
1, 1967; Acts 1975, 64th Leg., p. 1069, ch. 409, Sec. 11, eff. Sept.
1, 1975.
Amended by Acts 1987, 70th Leg., ch. 1073, Sec. 8, eff. Sept. 1,
1987.
Art. 9.28. Authority Revoked; When
If any corporation, domestic or foreign, while holding a
certificate of authority to transact business in this state, shall
fail or refuse to comply with any of the provisions or requirements
of this Chapter, the Board, upon ascertaining this fact, shall
notify such company by actual notice in writing delivered to an
executive officer of such company, of his intention to revoke its
certificate of authority to transact business in this state at the
expiration of thirty (30) days after the mailing of such registered
letter, or the date upon which such actual notice is served. If
such provisions or requirements are not fully complied with upon
the expiration of said thirty (30) days, it shall be the duty of the
Board to revoke the certificate of authority of such company. In
case of such revocation, such company shall not be entitled to
receive another certificate of authority for a period of one year,
and until it shall have fully and in good faith complied with all
such provisions and requirements of this Chapter. Any company
feeling itself aggrieved by the action of the Board in revoking its
certificate of authority to do business in this state may bring suit
against it in Travis County, Texas, to annul and vacate the order
revoking such certificate.
Added by Acts 1967, 60th Leg., p. 501, ch. 219, Sec. 1, eff. Oct. 1,
1967.
Art. 9.29. Supervision, Conservation and Liquidation of Title
Insurance Companies
Articles 21.28 and 21.28-A of this code apply to title insurance
companies, title insurance agents, and other companies doing a
title insurance business in this state.
Added by Acts 1967, 60th Leg., p. 501, ch. 219, Sec. 1, eff. Oct. 1,
1967.
Amended by Acts 1987, 70th Leg., ch. 1073, Sec. 1, eff. Sept. 1,
1987.
Art. 9.30. Rebates and Discounts
A. No commission, rebate, discount, portion of any title insurance
premium, or other thing of value shall be directly or indirectly
paid, allowed or permitted by any person doing the business of title
insurance or received or accepted by any person for doing the
business of title insurance or for soliciting or referring title
insurance business.
B. This Article may not be construed as prohibiting:
(1) a foreign or domestic title insurance company doing business in
this state under this Chapter, from appointing as its title
insurance agent pursuant to this Chapter a person owning or leasing
and operating an abstract plant of such county and making the
arrangement for division of premiums with the agent as shall be set
by the commissioner;
(2) payments for services actually performed by a title insurance
company, a title insurance agent, or a direct operation, in
connection with closing the transaction, furnishing of title
evidence, or title examination, which payment may not exceed the
percentages of the premium or amounts established by the
commissioner for those payments; or
(3) payment of bona fide compensation to a bona fide employee
principally employed by a title insurance company, direct
operation, title insurance agent, or other reasonable payment for
goods or facilities actually furnished and received; or
(4) payments for services actually performed by an attorney in
connection with title examination or closing a transaction, which
payment may not exceed a reasonable charge for such services.
(5) Nothing in this article shall affect the division of premium
between a title insurance company and its subsidiary title
insurance agent when the title insurance company directly issues
its policy or contract of title insurance pursuant to Article 9.34.
For purposes of this provision, 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.
(6) legal promotional and educational activities that are not
conditioned on the referral of title insurance business.
C. A person receiving any form of compensation under Section B(2) of
this Article must be licensed as provided for under this Chapter.
D. The payment or receipt of a commission, rebate, discount, or
other thing of value to or by any person for soliciting or referring
title insurance business in violation of this Article is engaging
in the unauthorized business of insurance, and in addition to any
other penalty, after notice and opportunity for hearing, is subject
to a monetary forfeiture not less than the value nor more than three
times the value of the commission, rebate, discount, or other thing
of value.
E. No person shall give and no person shall accept any portion,
split, or percentage of any charge made or received for the
rendering of a real estate settlement or closing in connection with
a transaction involving the conveyance or mortgaging of real estate
located in the State of Texas other than for services actually
performed.
Added by Acts 1967, 60th Leg., p. 504, ch. 219, Sec. 1, eff. Oct. 1,
1967. Amended by Acts 1975, 64th Leg., p. 1069, ch. 409, Sec. 12,
eff. Sept. 1, 1975.
Amended by Acts 1987, 70th Leg., ch. 1073, Sec. 8, eff. Sept. 1,
1987; Sec. B(5) added by Acts 1991, 72nd Leg., ch. 242, Sec. 2.53,
eff. Sept. 1, 1991; Sec. B amended by Acts 1995, 74th Leg., ch. 127,
Sec. 11, eff. Sept. 1, 1995.
Art. 9.31. Fees and Occupation Tax on Foreign Corporations
Any corporation organized and incorporated under the laws of any
other state, territory or country for the purpose of transacting a
title insurance or title guaranty business shall be required to pay
the same filing fees and occupation tax as any foreign casualty
company is required to pay in order to procure a permit to do
business in Texas. Such foreign title companies will not be
required to pay a franchise tax.
Added by Acts 1967, 60th Leg., p. 505, ch. 219, Sec. 1, eff. Oct. 1,
1967.
Art. 9.32. Prohibiting Further Chartering of Corporations Under
Article 1302
No corporation shall be chartered under Subdivision 57, Article
1302, Revised Statutes of Texas, 1925, but all corporations
heretofore incorporated and now doing business in Texas shall be
permitted to continue in business and shall be subject to all the
provisions of this Act, and such companies shall be required to
comply with the requirements of this Act with reference to
investments and deposits.
Stockholders in a company acting under this Act shall not be liable
in the event of default in the payment of any debt or liability of
such company beyond their subscription for such stock.
Added by Acts 1967, 60th Leg., p. 505, ch. 219, Sec. 1, eff. Oct. 1,
1967.
Art. 9.33. To Cancel License; Appeals by Companies
(a) The terms and provisions of this Act are conditions upon which
corporations doing the business provided for in this Act may
continue to exist, and failure to comply with any of them or a
violation of any of the terms of this Act shall be proper cause for
revocation of the permit and forfeiture of charter of a domestic
corporation or the permit of a foreign corporation.
(b) Any company qualified or seeking to qualify under this Act,
feeling aggrieved by any action of the Board, especially, but not
limited to, any action against such company, shall have the right to
file a suit in the District Court of Travis County, within thirty
(30) days after the Board has made its order or ruling; provided,
however, that if the order or ruling is directed against such
company, whether or not directed against other companies, such
company shall have thirty (30) days after receipt of official
notice of such ruling from the Board to review such action of the
Board. Such cases shall be subject to the same standard of review
as other appeals under this code in accordance with Article 1.04 of
this code.
Added by Acts 1967, 60th Leg., p. 505, ch. 219, Sec. 1, eff. Oct. 1,
1967.
Amended by Acts 1993, 73rd Leg., ch. 685, Sec. 4.04, eff. Sept. 1,
1993.
Art. 9.34. Determination of Insurability
No policy or contract of title insurance shall be written unless (1)
there has been compliance with the provisions of Article 9.30(B),
(2) said policy or contract of title insurance is based on an
examination of title made from title evidence prepared from an
abstract plant owned, or leased and operated by a licensed Texas
title insurance agent or direct operation for the county in which
the real property is located, (3) there has been made a
determination of insurability of title in accordance with sound
title underwriting practices, and (4) evidence thereof shall be
preserved and retained in the files of the title insurance company,
direct operation, or title insurance agent for a period of not less
than fifteen (15) years after the policy or contract of title
insurance has been issued. If no licensed title insurance agent or
direct operation exists for the county in which the real property is
located, a title insurance company may directly issue its policy of
title insurance based on the best title evidence available. If all
licensed title insurance agents and direct operations for the
county refuse to provide the title evidence within such reasonable
time as determined by the Board, and in compliance with the
provisions of Article 9.30(B)(2), the title insurance company may
directly issue its policy if the title insurance company obtains
the best title evidence available. The licensed Texas title
insurance agent or direct operation which provided the title
evidence on which the policies or contracts of title insurance are
issued shall be provided with legible complete copies of all
policies or contracts of title insurance actually issued in the
transactions within a reasonable period of time as determined by
the Board. This Article shall not apply to (a) a company assuming
no primary liability in a contract of reinsurance, or (b) a company
acting as a co-insurer if one of the other co-insuring companies has
complied with this Article.
Added by Acts 1967, 60th Leg., p. 505, ch. 219, Sec. 1, eff. Oct. 1,
1967.
Amended by Acts 1985, 69th Leg., ch. 56, Sec. 1, eff. Aug. 26, 1985;
Acts 1987, 70th Leg., ch. 1073, Sec. 8, eff. Sept. 1, 1987.
Art. 9.35. Requirements for Agents
No person, firm, association or corporation shall act within this
state as agent for any title insurance company, domestic or
foreign, without first having been (1) licensed as an agent by the
Board and (2) filing a bond or cash deposit in lieu thereof as
required in Article 9.38; and no title insurance company shall
allow or permit any person, firm, association or corporation to act
as its agent within the state unless said person, firm, association
or corporation shall first have obtained a license, and filed a bond
as required by this Act.
Added by Acts 1967, 60th Leg., p. 506, ch. 219, Sec. 1, eff. Oct. 1,
1967.
Art. 9.36. Agent's License: Application, Issuance, Renewal, and
Cancellation
Sec. 1. (a) Before an initial license is issued to any person, firm,
association or corporation to act as an agent within the State of
Texas for any title insurance company, there shall first be filed by
the title insurance company with the Board an application for
agent's license, on forms to be provided by the Board, accompanied
by a nonrefundable license fee in an amount not to exceed Fifty
Dollars ($50) as determined by the Board, which fee including
license renewal fees shall be deposited in the state treasury to the
credit of the State Board of Insurance operating fund to be used by
the State Board of Insurance to enforce the provisions of this
article and all laws of this state governing and regulating title
agents for such insurance companies. The application shall be
signed and duly sworn to by the title insurance company and the
proposed agent. Such application shall contain the following:
(1) That the proposed agent, if an individual, is a bona fide
resident of Texas; or if a firm or association, that it is composed
wholly of Texas residents; or if a corporation, that it is a Texas
corporation or a foreign corporation which has been authorized to
do business in Texas; and
(2) That the proposed agent (and if a corporation, its managerial
personnel) has reasonable experience or instruction in the field of
title insurance; and
(3) That the proposed agent is known to the title insurance company
to have a good business reputation and is worthy of the public trust
and said title insurance company knows of no fact or condition which
would disqualify the agent from receiving a license; and
(4) That the proposed agent qualified as a title insurance agent as
defined in this Act.
(b) The Board shall grant such license if it determines from the
application and its own investigation that the foregoing
requirements have been met.
(c) The Commissioner shall collect in advance from agents
requesting duplicate licenses a fee not to exceed $20. The State
Board of Insurance shall determine the amount of the fee.
Sec. 2. (a) To renew a license, an agent shall file a completed
application for renewal on a form prescribed by the Board and pay a
nonrefundable license renewal fee in an amount not to exceed $50 as
determined by the Board.
(b) Unless a staggered renewal system is adopted under Article
21.01-2 of this code and its subsequent amendments, a license shall
continue in force until June 1 after the second anniversary of the
date on which the license was issued unless previously cancelled.
(c) The Board shall keep a record of the names and addresses of all
licensed agents in such manner that the agents appointed by any
company authorized to transact title insurance business within the
State of Texas may be conveniently ascertained and inspected by any
person upon request.
Sec. 3. (a) A licensed title insurance agent may be appointed to
represent additional title insurance companies. Each additional
company must notify the Board of the appointment in the manner
prescribed by the Board. The agent shall pay a nonrefundable fee
for each additional appointment set by the Board in an amount not to
exceed $16. The fee must accompany the notice. A title insurance
company may not permit an agent appointed by the company to write,
sign, or deliver title insurance until the agent has complied with
this subsection. The agent shall be deemed appointed for the
additional title insurance company on the eighth day following the
date the Board receives the completed notice of appointment and the
nonrefundable fee unless the Board rejects the appointment for
reasons stated in writing not later than the seventh day after the
date on which the Board receives the notice of appointment.
(b) An appointment made under Subsection (a) of this section
continues in effect without the necessity of renewal until it is
terminated and withdrawn by the title insurance company as provided
by Subsection (c) of this section or is otherwise terminated in
accordance with this article. Each renewal license issued to the
agent authorizes the agent to represent and act for the title
insurance companies for which the agent holds an appointment until
the appointment is terminated, and that agent is considered to be
the agent of the appointing title insurance companies for the
purposes of this article.
(c) On the termination of the appointment of an agent of a title
insurance company, the company immediately shall file with the
State Board of Insurance a statement of the facts relating to the
termination of the appointment and the effective date and cause of
the termination. The Board shall terminate the appointment of the
agent to represent that insurance company in this state on receipt
of the statement.
(d) Any information, document, record, or statement required to be
made or disclosed to the Board under this article is a privileged
communication, and is not admissible in evidence in any court
action or proceeding except under a subpoena issued by a court of
record.
Sec. 4. The Board shall suspend the license of a title insurance
agent during any period in which the agent does not have an
outstanding valid appointment. The Board shall end the suspension
on receipt of acceptable notice of a valid appointment.
Secs. 5 to 7. Repealed by Acts 1993, 73rd Leg., ch. 685, Sec.
12.51(2), eff. Sept. 1, 1993.
Added by Acts 1967, 60th Leg., p. 506, ch. 219, Sec. 1, eff. Oct. 1,
1967. Amended by Acts 1979, 66th Leg., p. 1890, ch. 765, Sec. 1,
eff. Aug. 27, 1979.
Sec. A amended by Acts 1983, 68th Leg., p. 3935, ch. 622, Sec. 26,
eff. Sept. 1, 1983; Sec. B amended by Acts 1983, 68th Leg., p. 3959,
ch. 622, Sec. 51, eff. Sept. 1, 1983; Secs. E to H added by Acts
1983, 68th Leg., p. 3960, ch. 622, Sec. 52, eff. Sept. 1, 1983; Sec.
A amended by Acts 1985, 69th Leg., ch. 841, Sec. 5, eff. Sept. 1,
1985; Sec. C amended by Acts 1987, 70th Leg., ch. 1073 Sec. 9, eff.
Sept. 1, 1987. Amended by Acts 1991, 72nd Leg., ch. 242, Sec.
11.53, eff. Sept. 1, 1991. Sec. 2(b) amended by Acts 1993, 73rd
Leg., ch. 685, Sec. 12.05, eff. Sept. 1, 1993; Secs. 5 to 7 repealed
by Acts 1993, 73rd Leg., ch. 685, Sec. 12.51(2), eff. Sept. 1, 1993.
Art. 9.36A. Direct Operation License
A. A title insurance company owning or leasing and operating an
abstract plant or participating in a bona fide joint abstract plant
operation in any county in this state must be licensed by the Board
for that county.
B. Before a license for a county is issued, an application must be
filed for a direct operation license, on forms to be provided by the
Board, accompanied by a nonrefundable license fee in an amount not
to exceed $50 as determined by the Board. The license fee and
renewal fees shall be deposited in the state treasury to the credit
of the State Board of Insurance operating fund to be used by the
Board to enforce this Article and all laws of this state governing
and regulating title insurance agents and title insurance
companies.
The application shall be signed and duly sworn to by the title
insurance company. The applicant must comply with and must include
in the application the following:
(1) that the title insurance company is a Texas corporation or a
foreign corporation holding a certificate of authority to insure
titles to real estate within this state and meets the requirements
of this chapter; and
(2) that the abstract plant to be licensed complies with
requirements made by the Board pertaining to abstract plants and
has been approved by the Board.
C. Each foreign or domestic title insurance company operating under
this Article shall certify to the Board on or before the expiration
date of the company's license or licenses, on forms provided by the
Board, the counties and addresses of each location within the state
at which the title insurance company operates an abstract plant for
which a license is to be renewed and shall file a completed renewal
application and pay a nonrefundable license renewal fee in an
amount not to exceed $50, as determined by the Board, for a license
in each county. If a license has been expired for not longer than 90
days, the licensee may renew the license by paying to the Board the
required nonrefundable renewal fee and a nonrefundable fee that is
one-half of the original license fee. If a license has been expired
for more than 90 days, the license may not be renewed. If any
company ceases to operate a licensed abstract plant, it shall
immediately notify the Board in writing and request cancellation of
the license. A title insurance company may not write, sign, or
deliver title insurance in any county in which it operates an
abstract plant until the Board has issued a license. This Article
may not be construed to prohibit the issuance of title insurance by
a title insurance company by and through a duly licensed title
insurance agent.
Unless a staggered renewal system is adopted, a license continues
in force until the second June 1 after its issuance, unless
previously cancelled. If a title insurance company surrenders or
has its certificate of authority revoked by the Board, all existing
licenses of its abstract plants automatically terminate.
The Board shall keep a record of the counties and addresses of each
location in which the title insurance company operates an abstract
plant in such a manner that the plants may be conveniently
ascertained and inspected by any person on request.
Added by Acts 1987, 70th Leg., ch. 1073, Sec. 10, eff. Sept. 1,
1987. Sec. C amended by Acts 1991, 72nd Leg., ch. 242, Sec. 11.54,
eff. Sept. 1, 1991.
Art. 9.37. Agent's Licenses: Surrender, Forfeiture; Grounds for
Revocation; Notice, Hearing and Appeal
A. Any title insurance agent or direct operation may voluntarily
surrender his license at any time by giving notice to the Board and
to the title insurance company concerned. Any agent or direct
operation shall automatically forfeit the license under the title
insurance company represented if he shall terminate his agency
contract with such company.
B. The department may discipline any agent or direct operation or
deny an application under Section 5, Article 21.01-2, of this code
and its subsequent amendments if it finds that the applicant for or
holder of such license:
(1) Has wilfully violated any provision of this Act;
(2) Has intentionally made a material misstatement in the
application for such license;
(3) Has obtained, or attempted to obtain, such license by fraud or
misrepresentation;
(4) Has misappropriated or converted to his own use or illegally
withheld money belonging to a title insurance company, an insured
or any other person;
(5) Has been guilty of fraudulent or dishonest practices;
(6) Has materially misrepresented the terms and conditions of title
insurance policies or contracts; or
(7) Has failed to maintain a separate and distinct accounting of
escrow funds, and has failed to maintain an escrow bank account or
accounts separate and apart from all other accounts.
C. Repealed by Acts 1993, 73rd Leg., ch. 685, Sec. 12.51(3), eff.
Sept. 1, 1993.
D. No applicant or licensee whose license has been denied, refused
or revoked hereunder shall be entitled to file another application
for a license as an agent or direct operation within one year from
the effective date of such denial, refusal or revocation, or, if
judicial review of such denial, refusal or revocation is sought,
within one year from the date of final court order or decree
affirming such action. Such application, when filed after one
year, may be refused by the Board unless the applicant shows good
cause why the denial, refusal or revocation of his license shall not
be deemed a bar to the issuance of a new license.
E. A disciplinary action or denial of an application under this
article may be appealed under Article 1.04 of this code and its
subsequent amendments.
F. The voluntary surrender or automatic forfeiture of a title
insurance agent license or direct operation license to the
department under Section A of this article does not affect the
culpability of the license holder for conduct of the license holder
committed before the effective date of the surrender or forfeiture,
and the commissioner may institute a disciplinary proceeding
against the license holder for conduct of the license holder
committed before the effective date of the surrender or forfeiture.
Added by Acts 1967, 60th Leg., p. 507, ch. 219, Sec. 1, eff. Oct. 1,
1967. Amended by Acts 1981, 67th Leg., p. 2638, ch. 707, Sec.
4(24), eff. Aug. 31, 1981.
Secs. A to D amended by Acts 1987, 70th Leg., ch. 1073, Sec. 11, eff.
Sept. 1, 1987; Sec. B amended by Acts 1993, 73rd Leg., ch. 685, Sec.
12.06, eff. Sept. 1, 1993; Sec. C repealed by Acts 1993, 73rd Leg.,
ch. 685, Sec. 12.51(3), eff. Sept. 1, 1993; Sec. E amended by Acts
1993, 73rd Leg., ch. 685, Sec. 12.06, eff. Sept. 1, 1993; Sec. F
added by Acts 1999, 76th Leg., ch. 1168, Sec. 1, eff. Sept. 1, 1999.
Art. 9.38. Bonds for Agents and Direct Operations
(a) Every person, firm, association, or corporation which has been
licensed as a title insurance agent or direct operation shall make,
file, and pay for a surety bond with a corporate surety company
authorized to write surety bonds in this state, payable to the State
Board of Insurance in the sum of the greater of Ten Thousand Dollars
($10,000) or an amount equal to ten percent (10%) of the gross
premium written by the agent or direct operation in accordance with
the latest statistical report to the Board, but not to exceed One
Hundred Thousand Dollars ($100,000). The bond shall obligate the
principal and surety to pay such pecuniary losses as may result to
any participant in an insured real estate transaction which shall
be sustained through acts of fraud, dishonesty, theft,
embezzlement, or wilful misapplication on the part of a title
insurance agent or direct operation, or which may result to the
Board due to administrative expenses incurred in a receivership of
a title insurance agent or direct operation. In lieu of such bond
any title insurance agent or direct operation may deposit with the
Board cash or irrevocable letters of credit issued by a financial
institution in this state insured by an agency of the United States
government (or securities approved by the Board) which deposits
shall be subject to the same conditions as provided for in said
bond.
(b) If at any time it appears to the Board that a loss covered by the
bond or deposit has been suffered, the Board may require the title
insurance agent or direct operation to appear in Travis County with
such records as the Board deems proper on a named date not earlier
than ten (10) days nor later than fifteen (15) days from service of
notice, and there conduct an examination into the matter. If upon
such examination the Board is satisfied that a loss covered by the
bond or deposit has been suffered, the Board shall immediately
notify the surety and prepare a written statement covering the
facts and deliver it to the Attorney General of Texas, whose duty it
shall be to investigate the charges, and if satisfied that a loss
covered by the bond or deposit has been suffered, then to enforce
the liability against cash or securities, or by suit on said bond in
Travis County in the name of the Board for the benefit of all
parties who have suffered any loss covered by the bond or deposit.
(c) Each title insurance agent receiving a portion of a premium
shall, in a form prescribed by the Board, disclose to each purchaser
of a title insurance policy or other title insurance form the
following:
(1) each shareholder, owner, or partner having, owning, or
controlling one percent or more of the title insurance agent;
(2) each shareholder, owner, or partner having, owning, or
controlling 10 percent or more of an entity that has, owns, or
controls one percent or more of the title insurance agent;
(3) any person who is not a full-time employee of the title
insurance agent and who receives any portion of the title insurance
premium for services performed on behalf of the title insurance
agent in connection with the issuance of a title insurance form;
and
(4) the amount of premium that any person disclosed in accordance
with Subdivision (3) of this subsection shall receive.
Added by Acts 1967, 60th Leg., p. 508, ch. 219, Sec. 1, eff. Oct. 1,
1967.
Amended by Acts 1987, 70th Leg., ch. 1073, Sec. 12, eff. Sept. 1,
1987; Subsec. (c) added by Acts 1991, 72nd Leg., ch. 242, Sec.
2.51, eff. Sept. 1, 1991.
Art. 9.39. Annual Audit
(a) Every title insurance agent and direct operation shall have an
annual audit, at the agent's or direct operation's expense, made of
trust fund accounts, and before the 91st day after the date of the
termination of its fiscal year, shall send by certified mail,
postage prepaid, to the department one copy of such audit report
with a letter of transmittal, and each such agent, shall also send a
copy of such letter of transmittal and audit report to every title
insurance company which it represents.
(b) Every title insurance company shall have an annual audit, at its
expense, made of trust fund accounts for each county in which it
operates in its own name and before the 91st day after the date of
the termination of its fiscal year shall send by certified mail,
postage prepaid, to the department one copy of such audit report.
(c) The Commissioner shall promulgate regulations setting forth the
standards of audit and the form of audit report required.
(d) Said audit shall be made by an independent certified public
accountant or licensed public accountant, or a firm composed of
either.
(e) If a title insurance company fails to receive an audit report
from any of its agents or direct operations before the 91st day
after the date of the termination of the fiscal year of the agent or
direct operation, it shall report that omission to the department
not later than the 30th day after the expiration of the 90-day
period.
(f) All such reports furnished by the title insurance company to the
department shall, at the election of the Commissioner, be classed
as confidential and privileged after having been filed with the
department.
(g) If any agent, direct operation, or title insurance company
shall fail or refuse to furnish an audit report within the time
required, or shall furnish an audit report which reveals any
shortage or other irregularity, or any practice not in keeping with
sound, honest business practices, the department may, after notice
to the agent, direct operation, or each title insurance company
involved and after a hearing at which the agent, direct operation,
or title insurance company may offer evidence explaining or
excusing such omissions or irregularity, revoke the license of such
agent or direct operation or revoke the certificate of authority of
such title insurance company.
(h) Any agent, direct operation, or title insurance company feeling
aggrieved by any action of the Commissioner shall have the right to
appeal under Article 1.04 of this code.
Added by Acts 1967, 60th Leg., p. 509, ch. 219, Sec. 1, eff. Oct. 1,
1967. Amended by Acts 1979, 66th Leg., p. 1891, ch. 765, Sec. 2,
eff. Aug. 27, 1979.
Amended by Acts 1987, 70th Leg., ch. 1073, Sec. 13, eff. Sept. 1,
1987; Acts 1999, 76th Leg., ch. 1171, Sec. 1, eff. Sept. 1, 1999.
Art. 9.39A. Disbursement from Trust Fund Accounts
(a) A title insurance company, title insurance agent, direct
operation, or escrow officer shall not disburse funds from a trust
fund account until good funds related to the transaction in amounts
sufficient to fund any disbursements from the transaction have been
received and deposited to the trust fund account.
(b) The State Board of Insurance shall adopt rules and definitions
to implement this Article.
(c) A title insurance company, title insurance agent, direct
operation, or escrow officer is not liable for a violation of this
Article if the violation was not intentional and if it resulted from
a bona fide error notwithstanding the maintenance of procedure
reasonably adopted to avoid the error.
Added by Acts 1987, 70th Leg., ch. 1073, Sec. 14, eff. Sept. 1,
1987.
Art. 9.40. Right of Title Insurance Company to Examine Agent's
Trust Fund Accounts and to Require Reports
Any title insurance company may at such time or times as it sees
fit, through its examiners or auditors or through independent
certified public accountants commissioned by it, examine the trust
fund accounts and records pertaining thereto of any of its title
insurance agents, such examination to be made at the expense of the
title insurance company; or the title insurance company may
require special reports from any such agent regarding any of its
transactions. Each title insurance company shall periodically, but
at least every two years, audit the unused forms in the possession
of each of its title insurance agents so as to determine that all
used forms have been reported to the title insurance company. A
report of each such audit shall be made to the State Board of
Insurance.
Added by Acts 1967, 60th Leg., p. 509, ch. 219, Sec. 1, eff. Oct. 1,
1967. Amended by Acts 1975, 64th Leg., p. 1090, ch. 409, Sec. 22,
eff. Sept. 1, 1975.
Art. 9.41. Requirements for Escrow Officers
A. No person shall act in the capacity of escrow officer without (1)
being licensed by the Board, and (2) obtaining and maintaining a
surety bond as required by Article 9.45; and no title insurance
agent or direct operation shall employ any person as escrow officer
who is not licensed and bonded in accordance with the provisions of
this Act.
B. No attorney shall be required to be licensed as an escrow officer
in order to perform the duties of an escrow officer as defined in
Article 9.02(g) of this Chapter. However, an attorney may become
licensed as an escrow officer, and the employees of an attorney
licensed as an escrow officer may become licensed escrow officers,
in which case the attorney shall comply with all requirements of
this Code with regard to escrow officers and trust funds, as if the
attorney were a title insurance agent.
C. Notwithstanding any provision in this Chapter to the contrary,
no title insurance company or title insurance agent shall permit an
attorney to conduct the attorney's business in the name of such
title insurance company or title insurance agent unless the
attorney and the attorney's bona fide employees who close
transactions are licensed as escrow officers.
D. All escrow accounts utilized by licensed escrow officers for
closing transactions shall be subject to the audit requirements
contained in Article 9.39 of this Code.
Added by Acts 1967, 60th Leg., p. 509, ch. 219, Sec. 1, eff. Oct. 1,
1967.
Amended by Acts 1987, 70th Leg., ch. 1073, Sec. 15, eff. Sept. 1,
1987.
Art. 9.42. List of Escrow Officers Must be Filed
Sec. 1. (a) Each title insurance agent and direct operation
licensed and operating under the provisions of this Act shall
certify to the Board on or before the expiration date of its license
on forms provided by the Board the names and addresses of every
person employed by it to serve in the capacity of escrow officer
within the state, whose license is to be renewed, and shall apply
for and pay a nonrefundable license renewal fee in an amount not to
exceed Fifty Dollars ($50) as determined by the Board for each
person included in said list. If it shall terminate any licensed
escrow officer, it shall immediately notify the Board in writing of
such act and request cancellation of the license, notifying such
escrow officer of such action. No title insurance agent or direct
operation shall permit any person to act as escrow officer within
the state until the foregoing conditions have been complied with,
and the Board has granted the said license.
(b) Unless a system of staggered renewal is adopted under Article
21.01-2 of this code and its subsequent amendments, a license shall
continue in force until the second June 1 after its issuance, unless
previously cancelled. Provided, however, that if any title
insurance agent or direct operation surrenders its license or has
its license revoked by the Board, all existing licenses of its
escrow officers shall automatically terminate without notice.
(c) The Board shall keep a record of the names and addresses of all
escrow officers licensed by the Board in such manner that the escrow
officers employed by any title insurance agent or direct operation
within the state may be conveniently determined.
Secs. 2 to 4. Repealed by Acts 1993, 73rd Leg., ch. 685, Sec.
12.51(4), eff. Sept. 1, 1993.
Added by Acts 1967, 60th Leg., p. 509, ch. 219, Sec. 1, Oct. 1, 1967.
Amended by Acts 1979, 66th Leg., p. 1892, ch. 765, Sec. 3, eff. Aug.
27, 1979.
Amended by Acts 1983, 68th Leg., p. 3961, ch. 622, Sec. 53, eff.
Sept. 1, 1983; Sec. A amended by Acts 1987, 70th Leg., ch. 1073,
Sec. 16, eff. Sept. 1, 1987. Amended by Acts 1991, 72nd Leg., ch.
242, Sec. 11.55, eff. Sept. 1, 1991. Sec. 1(b) amended by Acts
1993, 73rd Leg., ch. 685, Sec. 12.07, eff. Sept. 1, 1993; Secs. 2 to
4 repealed by Acts 1993, 73rd Leg., ch. 685, Sec. 12.51(4), eff.
Sept. 1, 1993.
Art. 9.43. Application for Escrow Officer's License
A. Before an initial license is issued to any person to act as
escrow officer within the State of Texas for any title insurance
agent or direct operation, there shall be first filed by such title
insurance agent or direct operation with the Board an application
for an escrow officer's license on forms provided by the Board,
accompanied by a nonrefundable license fee in an amount not to
exceed Fifty Dollars ($50) as determined by the Board, which fees
including license renewal fees under Article 9.42 shall be
deposited in the state treasury to the credit of the State Board of
Insurance operating fund to be used by the State Board of Insurance
to enforce the provisions of this article and all laws of this state
governing and regulating escrow officers for such title insurance
agents or direct operation. The application shall be signed and
duly sworn to by such title insurance agent or direct operation and
by the proposed escrow officer.
B. Such application shall contain the following:
(1) that the proposed escrow officer is a natural person, a bona
fide resident of the State of Texas, and either an attorney or a
bona fide employee of an attorney licensed as an escrow officer, a
bona fide employee of a title insurance agent, or a bona fide
employee of a direct operation;
(2) that the proposed escrow officer has reasonable experience or
instruction in the field of title insurance; and
(3) that the direct operation or title insurance agent knows of no
fact or condition which would disqualify the proposed escrow
officer from receiving a license.
C. The Board shall grant such license, if it determines from the
application and its own investigation that the foregoing
requirements have been met.
D. The Commissioner of Insurance shall collect in advance from
agents requesting duplicate licenses a fee not to exceed $20. The
State Board of Insurance shall determine the amount of the fee.
Added by Acts 1967, 60th Leg., p. 510, ch. 219, Sec. 1, eff. Oct. 1,
1967. Amended by Acts 1979, 60th Leg., p. 1893, ch. 765, Sec. 4,
eff. Aug. 27, 1979.
Sec. A amended by Acts 1983, 68th Leg., p. 3936, ch. 622, Sec. 27,
eff. Sept. 1, 1983. Amended by Acts 1985, 69th Leg., ch. 841, Sec.
6, eff. Sept. 1, 1985; Acts 1987, 70th Leg., ch. 1073, Sec. 17, eff.
Sept. 1, 1987. Sec. B amended by Acts 1993, 73rd Leg., ch. 685, Sec.
12.08, eff. Sept. 1, 1993.
Art. 9.44. License of Escrow Officers; Surrender and Cancellation
Sec. 1. Any escrow officer may voluntarily surrender the escrow
officer's license at any time by giving notice to the Board. An
escrow officer shall likewise automatically forfeit the license if
the officer shall fail to be employed as an escrow officer.
Sec. 2. The department may discipline an escrow officer or deny an
application under Section 5, Article 21.01-2, of this code and its
subsequent amendments if it finds that the applicant for or holder
of such license:
(1) has wilfully violated any provision of this Act;
(2) has intentionally made a material misstatement in the
application for such license;
(3) has obtained, or attempted to obtain, such license by fraud or
misrepresentation;
(4) has misappropriated or converted to the escrow officer's own
use or illegally withheld money belonging to a direct operation,
title insurance agent, or any other person;
(5) has been guilty of fraudulent or dishonest practices;
(6) has materially misrepresented the terms and conditions of title
insurance policies or contracts; or
(7) has failed to complete all educational requirements.
Sec. 3. Repealed by Acts 1993, 73rd Leg., ch. 685, Sec. 12.51(5),
eff. Sept. 1, 1993.
Sec. 4. No applicant or licensee whose license has been denied,
refused or revoked hereunder shall be entitled to file another
application for a license as an escrow officer within one year from
the effective date of such denial, refusal or revocation, or, if
judicial review of such denial, refusal or revocation is sought,
within one year from the date of final court order or decree
affirming such action. Such application, when filed after one
year, may be refused by the Board unless the applicant shows good
cause why the denial, refusal or revocation of his license shall not
be deemed a bar to the issuance of a new license.
Sec. 5. A disciplinary action or denial of an application under this
article may be appealed under Article 1.04 of this code and its
subsequent amendments.
Sec. 6. The voluntary surrender or automatic forfeiture of an
escrow officer license to the department under Section 1 of this
article does not affect the culpability of the license holder for
conduct of the license holder committed before the effective date
of the surrender or forfeiture, and the commissioner may institute
a disciplinary proceeding against the license holder for conduct of
the license holder committed before the effective date of the
surrender or forfeiture.
Added by Acts 1967, 60th Leg., p. 510, ch. 219, Sec. 1, eff. Oct. 1,
1967. Amended by Acts 1981, 67th Leg., p. 2638, ch. 707, Sec.
4(25), eff. Aug. 31, 1981.
Secs. B, C amended by Acts 1987, 70th Leg., ch. 1073, Sec. 18, eff.
Sept. 1, 1987. Amended by Acts 1991, 72nd Leg., ch. 242, Sec.
11.56, eff. Sept. 1, 1991. Sec. 2 amended by Acts 1993, 73rd Leg.,
ch. 685, Sec. 12.09, eff. Sept. 1, 1993; Sec. 3 repealed by Acts
1993, 73rd Leg., ch. 685, Sec. 12.51(5), eff. Sept. 1, 1993; Sec. 5
amended by Acts 1993, 73rd Leg., ch. 685, Sec. 12.09, eff. Sept. 1,
1993; Sec. 6 added by Acts 1999, 76th Leg., ch. 1168, Sec. 2, eff.
Sept. 1, 1999.
Art. 9.45. Bonds for Escrow Officers
(a) Every title insurance agent and direct operation shall procure
at its expense for its escrow officers, a bond of such type as may be
approved by the State Board of Insurance with a surety licensed by
the Board to do business in Texas, in an amount to be determined by
multiplying the number of escrow officers by Five Thousand Dollars
($5,000) but not exceeding Fifty Thousand Dollars ($50,000) payable
to the State Board of Insurance, which bond shall obligate the
principal and surety to pay such pecuniary loss as the title
insurance agent or direct operation shall sustain through acts of
fraud, dishonesty, forgery, theft, embezzlement, or wilful
misapplication on the part of such escrow officer, either directly
and alone, or in connivance with others. In lieu of such bond, cash
or irrevocable letters of credit issued by a financial institution
insured by an agency of the United States government (or securities
approved by the Board) in multiples of Five Thousand Dollars
($5,000) per escrow officer employed but not exceeding Fifty
Thousand Dollars ($50,000) may be deposited by the title insurance
agent or direct operation with the Board, subject to the same
conditions as provided for in said bond.
(b) If at any time it appears to the Board that a loss covered by the
bond or deposit has been suffered, the Board may require the escrow
officer to appear in Travis County with such records as the Board
deems proper on a named date not earlier than ten (10) days nor
later than fifteen (15) days from service of notice, copies of which
notice shall also be sent to any title insurance agent or direct
operation concerned, and there conduct an examination into the
matter. If upon such examination the Board is satisfied that a loss
covered by the bond or deposit has been suffered, the Board shall
immediately notify the surety and title insurance agent or direct
operation concerned and prepare a written statement covering the
facts and deliver it to the Attorney General of Texas, whose duty it
shall be to investigate the charges, and if satisfied that a loss
covered by the bond or deposit has been suffered, then to enforce
the liability against cash or securities, or by suit on said bond in
Travis County in the name of the Board for the benefit of all
parties who have suffered any loss covered by the bond or deposit.
Added by Acts 1967, 60th Leg., p. 511, ch. 219, Sec. 1, eff. Oct. 1,
1967.
Amended by Acts 1987, 70th Leg., ch. 1073, Sec. 19, eff. Sept. 1,
1987.
Art. 9.46. Maintenance Fee; Disposition of Unexpended Balance
Text of article as amended by Acts 1993, 73rd Leg., ch. 486, Sec.
6.04
The State of Texas by and through the State Board of Insurance shall
charge an annual maintenance fee necessary to pay the expenses of
the regulation of title insurers and title insurance agents during
the succeeding year. The State Board of Insurance shall determine
the rate of assessment and collect a maintenance fee in an amount
not to exceed one percent of all amounts defined to be premium in
this chapter. This fee is not a tax and shall be reported and paid
separately from premium and retaliatory taxes. The State Board of
Insurance, after taking into account the unexpended funds produced
by this fee, if any, shall adjust the rate of assessment each year
to produce the amount of funds th
