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You are here: www.tdi.texas.gov . title . titlem4d

Basic Manual of Title Insurance, Section IV (continued)

Title Manual Main Index | Section IV Index

Includes Procedural Rules P-21 | P-22 | P-23 | P-24 | P-25 | P-26 | P-27

P-21. Contents of Schedule D to Commitment for Title Insurance

Each Title Insurance Company and each Title Insurance Agent, licensed to do business in Texas, shall, in connection with the issuance of each Commitment for Title Insurance whereby a commitment is made to issue either a binder or policy of title insurance (insuring either a lien or the title to real property), add to the promulgated Commitment for Title Insurance form an additional schedule (which schedule shall be designated "Schedule D") setting forth the following:

  1. As to each Commitment for Title Insurance, the issuing Title Insurance Company shall disclose:

    1. A listing of each shareholder owning or controlling, directly or indirectly, ten percent (10%) or more of the shares of the Title Insurance Company; there shall also be disclosed all individuals, partnerships, corporations, trusts or other entities owning ten percent (10%) or more, of those entities directly owning ten percent (10%), or more, of the Title Insurance Company. Such additional disclosure requirement shall not, however, apply to a publicly held company whose stock is traded on a stock exchange or in the over-the-counter market or is a part of an insurance holding company system the parent of which is so publicly held;

    2. The names of the directors of the Title Insurance Company; and

    3. The names of the president, the executive or senior vice-president, the secretary and the treasurer of the Title Insurance Company.

    In connection with such disclosure, each Title Insurance Company (i) may use in such listing the officers and directors so holding each such respective office on the December 31st immediately preceding the date of such Commitment for Title Insurance, and (ii) shall furnish to each of its appointed Title Insurance Agents the above required information for such Title Insurance Agent to comply with this Paragraph 1 of this Rule P-21; and (iii) each Title Insurance Agent shall be entitled to rely upon and use the information furnished to the Title Insurance Agent by its appointing Title Insurance Company.

  2. As to each Commitment for Title Insurance issued by (i) a Title Insurance Agent, or (ii) a Title Insurance Company, where not issued by a Title Insurance Agent, the issuing Title Insurance Agent or Title Insurance Company shall disclose:

    1. A listing of each shareholder, owner, partner, or other person having, owning or controlling one percent (1%) or more or the Title Insurance Agent that will receive a portion of the premium.

    2. A listing of each shareholder, owner, partner, or other person having, owning or controlling 10 percent (10%) or more of an entity that has, owns or controls one percent (1%) or more of the Title Insurance Agent that will receive a portion of the premium.

    3. If the Agent is a corporation: (i) the name of each director of the Title Insurance Agent, and (ii) the name of the President, the Executive or Senior Vice-President, the Secretary and the Treasurer of the Title Insurance Agent.

    4. The name of 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, the amount of premium that any such person shall receive.

    5. For purposes of this paragraph 2, "having, owning or controlling" includes the right to receipt of a percentage of net income, gross income, or cash flow of the Agent or entity in the percentage stated in subparagraphs (a) or (b).

  3. As to each Commitment for Title Insurance, the following additional language shall be included in each Schedule D, together with all required information included within the blanks contained below:

    You are entitled to receive advance disclosure of settlement charges in connection with the proposed transaction, to which this commitment relates. Upon your request, such disclosure will be made to you. Additionally, the name of any person, firm or corporation receiving a portion of the premium from the settlement of this transaction will be disclosed on the closing or settlement statement.

    You are further advised that the estimated title premium* is:

    Owner's Policy $________________
    Loan Policy $________________
    Endorsement Charges $________________
    Other $________________
    Total $________________

    Of this total amount: $_____ (or %) will be paid to the policy issuing Title Insurance Company; $_____ (or %) will be retained by the issuing Title Insurance Agent; and the remainder of the estimated premium will be paid to other parties as follows:

    Amount To Whom For Services
    $____(or%)____ _______________ _________________
    $____(or%)____ _______________ _________________
    ____(or%)____ _______________ _________________

    "*The estimated premium is based upon information furnished to us as of the date of this Commitment for Title Insurance. Final determination of the amount of the premium will be made at closing in accordance with the Rules and Regulations adopted by the Commissioner of Insurance."

    Each Title Insurance Company and each Title Insurance Agent shall, prior to usage, file its proposed Schedule D form with the Texas Department of Insurance; in like manner each Title Insurance Company and each Title Insurance Agent shall file all amended Schedule D forms with the Texas Department of Insurance prior to usage.

    Nothing contained in this Rule P-21 shall ever be deemed or considered to require the issuance of a Commitment for Title Insurance prior to the issuance of any policy or binder for title insurance.

    Each Title Insurance Agent and Title Insurance company may, in preparing its Schedule D, use whatever reasonable format it elects, provided that such format does not alter or delete the furnishing of the disclosures hereby required. It is the express intent of this paragraph to enable usage of electronic equipment in preparation of the required Schedule D.


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P-22. Payment of a Fee for Examination and/or Closing

No payment shall be made by a Title Insurance Company, Title Insurance Agent, Escrow Officer or any employee or agent of any of them, to any Person who is not its bona-fide employee for furnishing title evidence, examination of a title and/or closing a transaction unless:

  1. Such Person is (i) a Title Insurance Company as defined in Article 9.02, Insurance Code, and qualified to do business in the State of Texas, (ii) a Title Insurance Agent as defined in Article 9.02, Insurance Code, and licensed to do business in the State of Texas by the Texas Department of Insurance, or (iii) an attorney at law duly licensed by the Supreme Court of Texas to practice law in the State of Texas, to the extent not inconsistent with Article 9.34, Texas Insurance Code, or (iv) any Person legally authorized to perform such services; and

  2. Such Person has performed all of the services described in P-1, paragraph f, that such Person is legally authorized to perform and/or the examination of the title required for the issuance of a commitment for title insurance prior to the issuance of any such commitment, construction binder, policy or other contract of title insurance, to determine the condition of the title to be insured. If the parties to the transaction are located in different counties, this paragraph of this rule does not prohibit payment to a Person who has actually performed all the services described in P-1, paragraph f in relation to either (i) the seller(s) or the buyer(s) or (ii) the mortgagor(s) or the mortgagee(s) for closing the transaction and issuance of the policy; and

  3. Timely disclosures of such payment have been made as required by Rule P-21 and Article 9.53; and

  4. Any payment made must be commensurate with the services actually performed; and

  5. The Person rendering the service shall have filed with the Company at least thirty (30) days prior to the rendering of such service a written schedule of charges normally imposed by such Person for such services (Schedule) and such Schedule shall have been agreed to and approved by the Company as being reasonable charges for such services. However, payments to licensed title insurance agents are excluded from the requirements of this paragraph (E); and

  6. The Person rendering the services shall have presented to the Company, at or prior to the time of payment of said services, a written itemized statement or invoice which clearly sets forth in detail the actual services rendered and billed for in representing the Company in the respective settlement, closing and/or examination, and such Company verifies, in writing, that such services were actually rendered in accordance with form T-00; and

  7. In the event of collection of the title insurance premium by such Person, the entirety of such premium shall have been remitted to the Company; and

  8. No portion of the charge for the services actually rendered shall be attributable to, and no payment shall be made for the solicitation of, or as an inducement for the referral or placement of the title insurance business with the Company; and

  9. Any portion of any payment inconsistent with the requirements hereof, or any payment by the Company to any Person for the solicitation of, or as an inducement for the referral or placement of title insurance business, is deemed to be a violation of Article 9.30; and

  10. The Company shall keep written itemized statements or invoices, and the Schedule, in its official records for a period of three years and shall make such copies thereof available to the Texas Department of Insurance and its representatives for inspection and duplication upon request.

    (Go to definition in Rule P-1.o)


Title Manual Main Index | Section IV Index

P-23. Division of Premiums between Title Insurance Agents and Title Insurance Companies

  1. All agency contracts between title insurance companies and title insurance agents must provide for the division of premium between the title insurance company and its title insurance agent on the following basis:

  2. At each hearing required by or held pursuant to Article 9.07, Texas Insurance Code, the Commissioner shall consider what portion of gross title insurance premiums is to be remitted to or retained by the title insurance companies (the Underwriter Portion of the Premium) and what portion is to be remitted to or retained by the title insurance agents (the Agent Portion of the Premium) until after the next hearing is held. The Commissioner shall establish such portions contemporaneously with the fixing and promulgating of the premium rates to be charged to the public.

  3. The sum of the Underwriter Portion of the Premium and the Agent Portion of the Premium shall be the Basic Premium for title insurance charged to the public. Wherever the words "Basic Premium", "Basic Rate" or "Basic Premium Rate" shall appear or be referenced in any other rules, they shall mean the Basic Premium described in the preceding sentence.

  4. The amounts of the Underwriter Portion of the Premium and the Agent Portion of the Premium shall be set by the Commissioner in view of the experience of the title insurance companies as a group (excluding all agents affiliated with a title insurance company, all direct operations of a title insurance company, and all agents unaffiliated with any title insurance company).

  5. The division of premium established by the Commissioner shall be the same for all agents unaffiliated with any title insurance company, all affiliated agents and all direct operations.

  6. During 2000, and thereafter until changed by the Commissioner, on all title insurance written by title insurance agents, the division of premiums between title insurance companies and title insurance agents shall be as follows:

    1. title insurance companies shall receive 15% of each title insurance premium, and

    2. title insurance agents shall receive 85% of each title insurance premium;

    3. provided, however, all Assessment Recoupment Charges authorized and approved by the Commissioner shall be apportioned only to certain underwriters pursuant to other orders and rules of the Commissioner, and shall not be apportioned pursuant to this Rule P-23.


Title Manual Main Index | Section IV Index

P-24. PAYMENT FOR SERVICES RENDERED BY A TITLE INSURANCE COMPANY, TITLE INSURANCE AGENT, OR DIRECT OPERATION TO ANOTHER TITLE INSURANCE COMPANY, TITLE INSURANCE AGENT OR DIRECT OPERATION

In negotiating the portion of the premium to be paid by a Title Insurance Company ("Company"), Title Insurance Agent ("Agent"), or Direct Operation ("Direct Operation"), including any of their attorneys who are licensed escrow officers ("Escrow Officers") to another Company, Agent, Direct Operation or any of their Escrow Officers for: (i) furnishing title evidence, (ii) furnishing title evidence and examining title, (iii) closing a transaction, or (iv) closing a transaction and examining title, the payments shall not exceed the following percentages as applied to the portion of the title insurance premium remaining after payment of the underwriter's portion of the premium:

  1. If the insured policy amount is in excess of $125,000 [ See new amount effective 1/1/2013 ]

    Furnishing title evidence, or furnishing title evidence and title examination by the Company, Agent, or Direct Operation furnishing the evidence 50%

    Closing the transaction, or Closing the transaction and title examination 50%

  2. If the insured policy amount is 125,000, or less. [ See new amount effective 1/1/2013 ]

    Furnishing title evidence, or furnishing title evidence and title examination by the Company, Agent, or Direct Operation furnishing the evidence 90%

    Closing the transaction, or Closing the transaction and title examination 10%

    In addition to these percentages, reasonable charges may also be made and paid for copies of documents.

    Any payment in excess of the sums calculated by use of the percentages specified in this Rule shall be deemed to be an unreasonable and excessive amount, unless the Company, Agent, or Direct Operation providing such services and the Company, Agent, or Direct Operation, paying for such services (i) under section (a) above enter into a prior written agreement not less than ninety (90) days prior to closing specifying and agreeing to percentages (but not services) different from those provided in this Rule or (ii) under section (b) above are licensed in the same county or in contiguous counties and enter into a prior written agreement not less than ninety (90) days prior to closing specifying and agreeing to percentages (but not services) different from those provided in this Rule . All payments must be remitted no later than the thirtieth (30th) day after the date of recording by the county clerk of an instrument conveying an interest in the land.

    On and after January 1, 2013, the insured policy amount in sections (a) and (b) above shall be $150,000.00.

    This Rule, including the provisions pertaining to prior written agreements, and the percentages specified in this Rule apply to each Escrow Officer of a Company, Agent, or Direct Operation to the same extent and in the same manner as is applicable to the Company, Agent, or Direct Operation for which the person is acting as an Escrow Officer.

    Nothing in this Rule 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 company pursuant to ยง2704.002, Insurance Code. For purposes of this Rule, a subsidiary is a company at least fifty percent (50%) of the voting stock of which is owned by the title insurance company or by a wholly owned subsidiary of the title insurance company.

    The amendments to P-24 adopted on May 1, 2008, are effective July 1, 2008.


Title Manual Main Index | Section IV Index

P-25. Reasonable Time for Furnishing Title Evidence

Pursuant to Texas Insurance Code Chapter 2704, a reasonable time for furnishing title evidence is determined to be as follows:

  1. With Prior Title Evidence Satisfactory to the Title Insurance company:

    1. On Acreage Tracts - 15 days.

    2. On Subdivision Tracts - 10 days.

  2. Without Prior Title Evidence Satisfactory to the Title Insurance Company:

    1. On Acreage Tracts - 30 days.

    2. On Subdivision Tracts - 21 days.

These time periods shall begin on the date the order for title evidence is received. If all title insurance agents and direct operations for the county refuse to provide title evidence within such time and for the payments provided in Rule P-24, a title insurance company may directly issue its policy if the title insurance company obtains the best evidence available.

Title agents and direct operations who request that title evidence be provided by another title agent or direct operation shall maintain auditable records and documents demonstrating compliance with this rule. Such auditable records include, but are not limited to, letters, faxes, e-mails, fax confirmations, and certified mail receipts.


Title Manual Main Index | Section IV Index

P-26. Copies of Policies Provided to Agents

Title insurance agents or direct operations that provide title evidence on which policies of title insurance are issued shall be provided with legible complete copies of all policies or contracts of title insurance actually issued in the transaction within 30 days from the date of the policy, which is determined to be a reasonable time.


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P-27. Disbursement From Escrow or Trust Fund Accounts

This Rule shall implement Art. 9.39A, Texas Insurance Code.

  1. Definitions

    1. "Good funds" means:

      1. Cash or wire transfers;

      2. Cashier's check. For purposes of this Rule, a cashier's check is defined to mean a check that is (1) drawn on a financial institution; (2) signed by an officer or employee of the financial institution on behalf of the financial institution as drawer; (3) a direct obligation of the financial institution; and (4) provided to a customer of the financial institution or acquired from the financial institution for remittance purposes.

      3. Certified check. For purposes of this Rule, a certified check is defined to mean a check with respect to which the drawee financial institution certifies by signature on the check of an officer or other authorized employee of the financial institution that: (1) the signature of the drawer on the check is genuine; (2) the financial institution has set aside funds that are equal to the amount of the check and will be used to pay the check; or (3) the financial institution will pay the check upon presentment.

      4. Teller's check. For purposes of this Rule, a teller's check is defined to mean a check (1) provided to a customer of a financial institution or acquired from a financial institution for remittance purposes, (2) that is drawn by the financial institution, and (3) is drawn on another financial institution or payable through or at a financial institution.

      5. Any other instrument that has been determined by the Board of Governors of the Federal Reserve System to be the functional equivalent of a cashier's, certified or teller's check.

      6. Uncertified funds in amounts less than $1,500, including checks, traveler's checks, money orders, and negotiable orders of withdrawal; provided multiple items shall not be used to avoid the $1,500 limitation;

      7. Uncertified funds in amounts of $1,500 or more, drafts, and any other items when collected by the financial institution;

      8. State of Texas Warrants;

      9. United States Treasury Checks;

      10. Checks drawn on an insured financial institution and for which a transaction code has been issued pursuant to, and in compliance with, a fully executed Immediately Available Funds Procedure Agreement (Form T-37) or a fully executed Immediately Available Funds Procedure Agreement (Agent Designation for Federally-insured Lender) (Form T-37A) with such financial institution;

      11. Checks by city and county governments located in the State of Texas.

    2. "Received and deposited" means:

      1. Good funds are in the possession of an employee or representative of the trustee, and

      2. A record of the actual date of receipt has been entered on the books of the trustee, and

      3. The funds are actually delivered for deposit to the financial institution in a timely manner, which shall not exceed three business days as defined in Federal Reserve Board Regulation CC, 12 C.F.R., Part 229, after the funds are received.

      4. In the case of a wire transfer, good funds shall be considered to be "received and deposited" when the financial institution notifies the trustee that the funds have been received.

    3. "Trust account" or "escrow account" means an account maintained at a financial institution for holding and disbursing funds to be paid to and on behalf of parties to a transaction and which are subject to annual audit pursuant to Art. 9.39, Texas Insurance Code.

    4. "Transaction" means the purchase and sale, mortgage, or other act for which a trustee receives trust funds and a guaranty file is opened.

    5. "Trustee" as used in this rule means a title insurance company, title insurance agent, direct operation, or escrow officer that maintains a trust fund account.

    6. "Financial institution" as used in this Rule has the meaning given to "depository institution" in 12 USC Sec. 461(b)(1)(A), which includes (1) any insured bank, mutual savings bank, savings bank, or savings association as defined in the Federal Deposit Insurance Act or (2) any insured credit union.

    7. "Insured" as used in this Rule means that a financial institution is insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Share Insurance Fund (NCUSIF). Any cashier's check, certified check, teller's check or other instrument as used in this Rule must be drawn upon a financial institution insured by the FDIC or NCUSIF. In addition, for teller's checks, both the drawer and drawee financial institutions must be insured.

  2. General Provisions

    1. Good funds in an amount equal to all disbursements must be received and deposited before any disbursement may be made. Partial disbursements, prior to the receipt and deposit of good funds, are not permitted. If a party to the transaction submits too much money, that overage which will not ultimately be a part of the transaction may be refunded at or prior to settlement.

    2. A record of all receipts reflecting the date on which the funds are actually received must be entered on the books of the trustee before any disbursements are made.

    3. The financial institution or branch of a financial institution in which the trust fund account is maintained must be located within the geographic bounds of the State of Texas.

    4. Even though funds are defined as good funds in this Rule, a trustee is not required to disburse if reasonable business judgment would indicate that the funds may not be collected.

    5. An Immediately Available Funds Procedure Agreement (Form T-37) must be fully executed by the Financial Institution, the Federally-insured Lender and the Title Company prior to issuance of checks intended to qualify pursuant to subparagraph A.1.j. of this rule. If the Federally-insured Lender has appointed an Agent and delegated to the Agent some of the duties and responsibilities of the Federally-insured Lender, the Title Company must use an Immediately Available Funds Procedure Agreement (Agent Designation for Federally-insured Lender) (Form T-37A) which must be fully executed by each of the four parties to the Agreement including the Agent for the Federally-insured Lender.

Continue to P-28 Requirements for Continuing Education for Title Agents and Escrow Officers

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