• Increase Text Icon
  • Decrease Text Icon
  • Email Icon
  • Print this page
You are here: Home . rules . 2005 . 1005c-059
Archived File – for Reference Use.
Links and contact information may be outdated.

Subchapter A. Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas

28 TAC 9.1

Subchapter C.

Texas Title Insurance Statistical Plan

28 TAC 9.401

The Commissioner of Insurance adopts amendments to 9.1 and 9.401 which concern the adoption by reference of certain amendments to the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas (Basic Manual) and to the Texas Title Insurance Statistical Plan (Statistical Plan). The amended sections are adopted without change to the proposed text as published in the August 12, 2005 , issue of the Texas Register (30 TexReg 4602). There are changes to the items adopted by reference.

The amendments to 9.1 and 9.401 revise the date of the amended Basic Manual and the Statistical Plan. The amendments to the Basic Manual and Statistical Plan, which the amended sections adopt by reference, were considered at the 2004 Texas Title Insurance Biennial Hearing, Rulemaking Phase, Docket Number 2600, (rulemaking hearing), held on December 15, 2004. The adoption of new rules and forms and the modification or replacement of currently existing rules and forms in the Basic Manual and Statistical Plan facilitate the administration and regulation of title insurance in this state. These amendments clarify and standardize the rules and forms regulating the writing and the business of title insurance in the State of Texas . These amendments are identified in this Order by Agenda item number. Pursuant to Commissioner s Order No. 05-0688, August 9, 2005, Agenda items 2004-13, 2004-16, 2004-17, 2004-19, 2004-27, 2004-28, and 2004-32 were disapproved. This adoption order is also necessary to conclude Docket Number 2599 which involved a petition and request to withdraw, amend, and/or modify Procedural Rule P-53, the anti-rebating rule adopted pursuant to Commissioner s Order No. 04-0127 effective April 1, 2004 . By agreement of the petitioner and all parties in the 2004 Texas Title Insurance Biennial Hearing, that petition was consolidated into the 2004 biennial rulemaking hearing.

<p>The effective date of the adopted sections is November 1, 2005 . The department has made typographical corrections to the items adopted by reference, and based on comments, the department has corrected the references to Forms T-40 and T-41 in the Statistical Plan by changing these form numbers to their newly adopted numbers, Forms T-98 and T-99, respectively. The department has further clarified that the Statistical Plan set forth in adopted Agenda Item 2004-43 combines only that portion of Agenda Item 2004-23 that calls for conforming the Statistical Plan to newly adopted forms and endorsements from the biennial hearing. Also in response to comments, the department has clarified the sentence regarding zero reporting on the Policy Guaranty Fee Remittance Form (Agenda Item 2004-35) to read, If you had no closings during the quarter and no policy guaranty fees were received, please enter 0 and mail this form. Likewise, Agenda Item 2004-38 has a corresponding change in the Administrative Rules G.1.II.E. concerning the Policy Guaranty Fee. The revised sentence now reads, If no closings occurred during the quarter and no policy guaranty fees were received, the form must be sent in with the amount of 0. Further in response to comments, the department has made clarifying changes to Procedural Rule P-53 that capitalize the word person in subsection 1(c) and remove the limiting word holiday from subsection 1(d). The department has further added the words or modified in subsection 6 of Procedural Rule P-53 to provide additional options in administering this rule before its stated expiration date of January 1, 2008 .

<p> The items which are the subject of this adoption are as follows:

<p>The items generally relate to: clean up and clarification of insuring forms and procedural rules, new or amended forms and procedural rules to conform to American Land Title Associate forms, updates and modernization of certain administrative rules, definitions and reporting forms in the Basic Manual, and revisions to the rebating and discounts Procedural Rule P-53 resulting from legislation enacted by the 79th Legislature. House Bill (HB) 2565 amended 2502.055 of the Texas Title Insurance Act to define four specific activities that are not rebating activities and to provide a definition of market rate. Other activities not defined or identified by HB 2565 may be violations of the Texas Title Insurance Act and continue to be prohibited. The adopted revisions to P-53 continue to prohibit promotional and educational activities that are conditioned on the referral of title insurance business. The department made corrective and clarifying changes to certain of these items as proposed in the rulemaking hearing, added the words "if any" to the references to "premium" in the procedural rules, and assigned form and rule numbers to the applicable subject of each agenda item. The following is a brief description of each proposed Agenda item considered in the 2004 biennial rulemaking hearing that is adopted in this Order:

Item 2004-1 Adoption of an amendment to the Limited Pre-Foreclosure Policy Form T-40 to change the number of the form.

Item 2004-2 Adoption of an amendment to the Limited Pre-Foreclosure Policy Down Date Endorsement Form T-41 to change the number of the form and make other conforming amendments.

Item 2004-3 Adoption of an amendment to Procedural Rule P-43 to make conforming changes based on amendments to the Limited Pre-Foreclosure Policy and Limited Pre-Foreclosure Policy Down Date Endorsement.

Item 2004-4 Adoption of an amendment to the Verification of Services Rendered Form T-00 to update and clarify the form to comply with new and existing reporting requirements.

Item 2004-5 Adoption of an amendment to the Endorsement Instructions in Section II of the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas and Procedural Rule P-8 to allow for issuance or affirmation of coverage under Forms T-19 or T-19.1 upon completion of contemplated improvements.

Item 2004-6 Adoption of a new Procedural Rule P-59 regarding recodification of the Texas Insurance Code and the reconciliation of references.

Item 2004-7 Adoption of an amendment to the First Loss Endorsement Form T-14 to conform to a new American Land Title Association form and to eliminate the 10% threshold loss requirement.

Item 2004-8 Adoption of a new Assignment of Rents/Leases Endorsement (Form T-27) to insure that the assignment of rents or leases was properly executed and that no existing prior assignment, unless excepted, appears in the public records.

Item 2004-9 Adoption of a new Procedural Rule (P-60) for the new Assignment of Rents/Leases Endorsement.

Item 2004-10 Repeal of the Adjustable Mortgage Loan Endorsement Form T-33 and adoption of a new Variable Rate Mortgage Endorsement Form T-33 and a new Variable Rate Mortgage Negative Amortization Endorsement Form T-33.1 to conform to American Land Title Association forms.

Item 2004-11 Adoption of an amendment to Procedural Rule P-9 to conform to the issuance of the new Variable Rate Mortgage Negative Amortization Endorsement.

Item 2004-12 Adoption of an amendment to the Texas Short Form Residential Mortgagee Policy One-to-Four Family Form T-2R to conform to the issuance of the new variable rate mortgage endorsements and other endorsements.

Item 2004-14 Adoption of a new Condominium Endorsement (Form T-28) in accordance with an American Land Title Association endorsement.

Item 2004-15 Adoption of an amendment to Procedural Rule P-9 to add a new subparagraph b (15) to conform to the issuance of the new Condominium Endorsement form.

Item 2004-18 Withdrawal of certain Bulletins in the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas .

Item 2004-20 Adoption of an amendment to Procedural Rule P-16, Mortgagee Title Policy Binder on Interim Construction Loan (Interim Binder) to re-define situations in which an Interim Construction Binder may be issued.

Item 2004-21 Adoption of a new Texas Master Indemnity Agreement (Form T-29) that will provide a standard master indemnity to address the most often encountered potential defects, such as unreleased liens, thus relieving an underwriter from executing separate indemnity letters on a transaction-by-transaction basis. Separate indemnity letters will still be required as to potential defects that are not covered by the terms of the standard promulgated master indemnity agreement.

Item 2004-22 Adoption of an amendment to Procedural Rule P-11 to conform to the new Texas Master Indemnity Agreement form.

Item 2004-23 Adoption of an amendment to the Texas Title Insurance Statistical Plan. This agenda item, insofar as it requests conforming the Statistical Plan to other adopted agenda items, has been combined with Agenda item 2004-43 in this adoption. As reflected in the adopted Agenda item 2004-43, the department has declined to delete the tables as requested by Item 2004-23 as these are still necessary in Statistical Plan reporting.

Item 2004-24 Adoption of an amendment to Administrative Rule L-1, Title Insurance Agent, in the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas .

Item 2004-25 Adoption of an amendment to Administrative Rule L-2, Title Insurance Escrow Officer, in the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas .

Item 2004-26 Adoption of an amendment to Procedural Rule P-58, Report on Directly Issued Policy to clarify that the reporting of gross premium is for the policy and all endorsements.

<p>Combined Items 2004-30 and 2004-31 Adoption of an amendment to Procedural Rule P-53, Rebates and Discounts Prohibited, (i) to conform to the amendment enacted in HB 2565, 79th Legislature, Regular Session, to Insurance Code 2502.055 regarding certain promotional and educational activities that are statutorily permitted; (ii) to make additional clarifying and formatting changes; and (iii) to add a termination date to P-53. The newly amended statute is self-executing and enforceable as written. It is the department s position that promotional activities engaged in by a person on the condition of referral of title insurance business remains a violation of the statute, and the department will continue to scrutinize promotional activities that are clearly excessive or beyond what is considered reasonable in accordance with the new statute. The department will continue to gather information and collect data on promotional expenditures, including types and amounts, in furtherance of its statutory requirement to make recommendations to the legislature to improve the efficient and effective regulation of title insurance business in Texas . Additionally, the department may further explore rebating issues in other forums to better address continuing issues related to improper rebating and improper promotional activities. Additionally, the deletion of the limiting word holiday in P-53 results in further clarity of what activities are prohibited and helps to prevent potential claims that a party can be allowed because it is not a holiday party. The addition of the words or modified in subsection 6 will provide additional options in administering this rule before its stated expiration date of January 1, 2008 .

Item 2004-33 Adoption of an amendment to Procedural Rule P-1. Definitions, aa. Directly Issued Policy and cc. Commitment for Title Insurance.

Item 2004-34 Adoption of an amendment to the Minimum Standards, Specific Instructions and Report Forms for Audit of Trust Funds Required of Texas Title Insurance Agents, Direct Operations, Title Attorneys and Attorneys Licensed as Escrow Officers.

Item 2004-35 Adoption of a new Policy Guaranty Remittance Form (T-G1) in Section V of the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas and repeal of the existing form. The sentence regarding zero reporting on this form is clarified to read, If you had no closings during the quarter and no policy guaranty fees were received, please enter 0 and mail this form.

Item 2004-36 Adoption of an amendment to Procedural Rule P-28, Requirements for Continuing Education for Title Agents and Escrow Officers.

Item 2004-38 Adoption of an amendment to Section VI, Administrative Rules of the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas . The sentence regarding policy guaranty fee remittances is revised to read , If no closings occurred during the quarter and no policy guaranty fees were received, the form must be sent in with the amount of 0.

Item 2004-39 Adoption of a new procedural rule regarding the timely issuance of title policies.

Item 2004-40 Adoption of a new procedural rule regarding the licensing and location of title agents and direct operations. As a result of input at the rulemaking hearing, additional clarifying language is adopted in this rule.

Item 2004-41 Adoption of an amendment to the Mortgagee Title Policy Binder on Interim Construction Loan Form T-13 to clarify number references in response to inquiries concerning what number to include on the binder.

Item 2004-42 Adoption of an amendment to Procedural Rule P-21, Additional Requirements for Contents of Commitment for Title Insurance to conform this procedural rule with the Commitment for Title Insurance.

Item 2004-43 Adoption of an amendment to the Texas Title Insurance Statistical Plan to update references with conforming changes adopted as a result of the 2004 rulemaking hearing.

The following Agenda items are withdrawn:

Item 2004-29 Withdrawal of item concerning the exceptions from coverage in the forms of title insurance policies as they relate to filled-in lands. The department will continue to work with interested parties in revising this submission for further proposal at a later date.

Item 2004-37 Withdrawal of item concerning a new procedural rule regarding persons or entities using the word Title in the name of their businesses. Because of the existing statutory prohibitions against false information and advertising, the department has withdrawn this item.

<p>The department has filed a copy of each of the adopted items with the Secretary of State s Texas Register section. Copies of the adopted items can be obtained from the Office of the Chief Clerk, Texas Department of Insurance, 333 Guadalupe Street , Austin , Texas , 78714-9104 . To request copies, please contact Sylvia Gutierrez at 512/463-6327.

Comment: Several commenters either supported or had no objection to or position on the various new endorsements, corresponding procedural rules, and clean up, clarification, and modernization of certain insuring forms and administrative rules represented by Agenda Items 2004-1 through 2004-12, 2004-14, 2004-15, 2004-18, 2004-20 through 2004-26, 2004-36, 2004-42, and 2004-43. Commenters supported these items as clarifying and standardizing the rules and forms regulating title insurance as well as facilitating the administration and regulation of title insurance in this state. One commenter described the coverages provided by the new endorsements and stated that they were not suitable for incorporation into the standard policy. Another commenter stated general concerns about new coverages that impose incremental costs to consumers and suggested either putting the endorsements into the policy or not adding a lot of premium for the endorsements.

Agency Response: The department agrees with the stated benefits of the new and amended endorsements, procedural, and administrative rules and further agrees with a commenter s statement that some of the endorsements may not be needed in every instance to justify inclusion in the regular policy of title insurance. It is noted, however, that experience with these endorsements will help the department determine whether the frequent use of these endorsements warrants their incorporation into standard policies.

Comment: One commenter noted that Agenda Item 2004-20, which re-defines situations in which an Interim Construction Binder may be issued, will put Procedural Rule P-16 back in its original position of a builder building a spec home with proper coverages provided to the consumer and the title company being compensated appropriately by getting the deal and issuing the policy at the ultimate end stage. Another commenter noted that the Interim Construction Binder is a builder product and is generally not suitable for the individual consumer.

Agency Response: The department agrees that this change more accurately reflects the original intent of Procedural Rule P-16.

Comment: Several commenters supported Agenda Item 2004-21 concerning the Texas Master Indemnity Agreement, Form T-29, as being a necessary streamlining to relieve an underwriter from executing separate indemnity letters on each transaction for frequently encountered potential defects, such as unreleased liens. The commenters also recognized that separate indemnity letters will still be required as to potential defects that are not covered by the terms of the standard promulgated master indemnity agreement.

Agency Response: The department agrees.

Comment: One commenter stated general support for Agenda Item 2004-26, Procedural Rule P-58, Report on Directly Issued Policy, but opposed removing the language or as required by the Department since once data comes in, the department may want to make other requirements.

Agency Response: The department agrees and has retained this language. The adopted amendment now contains a minor clarification to the reference of gross premium. The department also notes that the distinction between best evidence and multicounty for reporting purposes refers to the descriptions stated in Insurance Code, 2704.002. Thus, best evidence applies to situations in which either a title agent or direct operation does not exist or refuses to provide title evidence; whereas, multicounty refers to situations in which the property is physically located in two or more counties. The department is aware of industry practices which may go beyond the scope of the statute concerning home office issuance (Insurance Code 2704.002) which the department includes in the best evidence category. The P-58 reporting requirements will aid in quantifying this activity. Ideally, the issuing agent should be the agent licensed for the county where the property is located.

Comment: Several commenters stated positions on the filled-in lands exception in title insurance policies and whether there is a necessity for a definition of this standard exception. Many commenters pledged to work on this issue to address concerns which may result in an ultimate proposal being submitted to the department for review.

Agency Response: The department will review any suggestions or future proposals.

Comment: Procedural Rule P-53 regarding the prohibition of rebates and discounts generated many comments and suggested changes. Many commenters either supported the rule in its original form effective April 1, 2004 , or argued against its constitutionality and urged various amendments of clarification and more specific definition. One commenter stated that amending the rule as suggested would open up a gray area that will only cause abuse of the rule and urged the department to let the rule play out through a full rate session so the effects on expenses could be measured. Another commenter stated that the groups working to modify P-53 have come together to help the consumers. One commenter stated that P-53 has had a leveling effect on competition within the industry and independent title agents can now compete with the larger operations. One commenter urged caution in throwing terms into P-53 that may be too broad and suggested that there is a need for data to see how P-53 has worked. Another commenter suggested specific changes regarding the references to person , parties or receptions , and promotion of any property that the commenter felt would be more clear and concise. Other commenters have continued to inquire about P-53 and its applicability to industry practices such as providing to realtors listing packages and copies of restrictions.

Agency Response: P-53 was adopted effective April 1, 2004 and since that time, it has been the subject of many inquiries and at least two hearings requesting either its withdrawal or modification. Indeed, the department s adopted version in this order is the result of a combined effort by several interested parties and the state legislature. HB 2565, 79th Legislature, Regular Session, amended Insurance Code 2502.055 regarding certain promotional and educational activities that are statutorily permitted. The newly amended statute is self-executing and enforceable as written. The department notes that promotional activities engaged in by a person on the condition of referral of title insurance business remains a violation of the statute, and the department will also scrutinize promotional activities that are clearly excessive or beyond what is considered reasonable in accord with the new wording of the statute. The department will continue to gather information and collect data on promotional expenditures, including types and amounts, in furtherance of its statutory requirement to make recommendations to the legislature to improve the efficiency and effective regulation of title insurance business in Texas . Additionally, the department may make further exploration of rebating issues in other forums to better address continuing issues related to improper rebating and improper promotional activities.

Regarding a commenter s specific suggestions concerning person , parties or receptions , and promotion of any property that the commenter felt would be more clear and concise, the department agrees as to two of the suggestions and has modified the rule by capitalizing the word person in subsection 1(c) and removing the limiting word holiday from subsection 1(d). The department disagrees with the suggestion to delete the word one in reference to any one property because this makes clear that title agents and title companies are prohibited from placing ads on fliers advertising one particular property but they can advertise their own businesses in realtor magazines and other similar publications which describe and promote various property listings. Regarding specific questions about particular activities, the department is not in a position to issue pre-approvals or otherwise micro-manage promotional activities. The department will rely on the wording of the statute and the rule to curb abusive practices.

Comment: One commenter stated that the revision of the Policy Guaranty Fee Remittance Form should be within the control of the Texas Title Insurance Guaranty Association. Another commenter asked for clarification concerning the sentence in the form that deals with zero reporting of policy guaranty fees.

Agency Response: The department disagrees concerning control of the form and believes that any changes to this form should be subject to the public comment process involved in rulemaking. In response to the request for clarification, t he department has clarified the sentence regarding zero reporting on the Policy Guaranty Fee Remittance Form (Agenda Item 2004-35) to read, If you had no closings during the quarter and no policy guaranty fees were received, please enter 0 and mail this form. Likewise, Agenda Item 2004-38 has a corresponding change in the Administrative Rules G.1.II.E. concerning the Policy Guaranty Fee. The revised sentence now reads, If no closings occurred during the quarter and no policy guaranty fees were received, the form must be sent in with the amount of 0.

Comment: One commenter opposed removing the word single from the definition of Directly Issued Policy in Procedural Rule P-1, aa. The commenter felt that all activities regarding directly issued policies should be done in a single office.

Agency Response: The department understands the concerns regarding directly issued policies and would point out that Procedural Rule P-31, to which this amended definition conforms, was changed several years ago to remove the word single in response to title insurance and lending practices that require rapid delivery of title insurance forms to insureds. In conjunction with that change, however, the rule also contained amendments providing for continued quality control and safeguards concerning original signatures. The conformed definition of Directly Issued Policy adopted herein allows consistent application of departmental rules with attendant safeguards for regulation of title insurance practices.

Comment: One commenter opposed the revision that adds a line for the guaranty file (GF) number to Form T-13 concerning the Mortgagee Title Policy Binder on Interim Construction Loan (Agenda Item 2004-41). The commenter stated that this would result in additional costs to agents as well as underwriters and that the issue could be clarified by stating in this adoption order that the number blank in the form refers to the construction binder number assigned by the underwriter.

Agency Response: The department disagrees. This agenda item was in response to inquiries concerning what number to include on the Form T-13. The department was advised that even when agents were told to put the binder number on the form, they would sometimes put the GF number. By amending the form to require both numbers, the department believes that there will be less confusion and more certainty in tracking, and the minimal costs associated with reproducing updated forms resulting from the Title biennial hearing will be fully compensated by the existing premium schedule.

For with changes: Texas Land Title Association; Stewart Title Guaranty Company; Office of Public Insurance Counsel; Southern Title Insurance Corporation; individual consumers; Sierra Title Company, Inc., Metro Title Company, Inc., d/b/a Sierra Title of Cameron & Willacy Counties, Sierra Title of North Texas, Inc., and Sierra Title of Hidalgo County, Inc. (Sierra Group); Fidelity National Title Insurance Company/Alamo Title Insurance; South Texas Housing Development Corporation; Texas Title Insurance Guaranty Association; Title Professionals Association; Texas Association of Builders; Texas Association of Realtors; United General Title Insurance Company; RESPRO Chapter of Texas, Inc.; Title Data, Inc.; Charter Title of Houston; Rattikin Title; Texas Association of Abstractors & Title Agents; legislators; several independent title agents.

Against with changes: Office of Public Insurance Counsel; individual consumers; RESPRO Chapter of Texas, Inc.; Integrity Title Company; Mission Title of San Antonio; Title Texas; South Plains Abstract Company; Title Insurance Company of America; General American; Title Star of Texas.

Neither for or against (Procedural Rule P-16): Texas Land Title Association.

The amended sections are adopted pursuant to Insurance Code 2502.051 2502.056, 2551.003, Chapter 2703, and 36.001 and HB 2565 . Chapter 2703 authorizes and requires the commissioner to promulgate or approve rules and policy forms of title insurance and otherwise to provide for the regulation of the business of title insurance. Section 2551.003 authorizes the commissioner to promulgate and enforce rules prescribing underwriting standards and practices and to promulgate and enforce all other rules necessary to accomplish the purposes of Chapter 9, concerning regulation of title insurance. Sections 2502.051 2502.056 prohibit the giving, allowance, acceptance or receipt of a rebate, discount, commission, or other thing of value directly or indirectly or for solicitation or referral of title insurance business. HB 2565, enacted by the 79th Legislature, Regular Session, amended 2502.055 to set forth specific promotional and educational activities that may be engaged in by a title insurance company or a title insurance agent. Section 36.001 provides that the Commissioner of Insurance may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.

Subchapter A. Basic Manual of Rules, Rates and Forms

for the Writing of Title Insurance in the State of Texas

9.1. Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas . The Texas Department of Insurance adopts by reference the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas as amended effective November 1, 2005 . The document is available from and on file at the Texas Department of Insurance, Title Division, Mail Code 106-2T, 333 Guadalupe Street , Austin , Texas 78701-1998 .

Subchapter C. Texas Title Insurance Statistical Plan

9.401. Texas Title Insurance Statistical Plan. The Texas Department of Insurance adopts by reference the rules contained in the Texas Title Insurance Statistical Plan as amended effective November 1, 2005 . This document is published by the Texas Department of Insurance and is available from the Property and Casualty Data Services Division, Mail Code 105-5D, Texas Department of Insurance, William P. Hobby, Jr. State Office Building, 333 Guadalupe Street, P.O. Box 149104 , Austin , Texas 78714-9104 .



For more information, contact:

Contact Information and Other Helpful Links