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Section VI, Title Insurance Basic Manual - Administrative Rules: L-2 through G.2

Title Manual Main Index | Section VI Index

ADMINISTRATIVE RULES

Includes L-2 Effective 01/03/2014 | L-3 Effective 01/03/2014 | D.1 | G.1 | G.2

L-2. TITLE INSURANCE ESCROW OFFICER


All of the forms referred to herein are available upon request from the Department. [ Go to TDI Title Forms]

I. PERSONS REQUIRED TO BE LICENSED

  1. The Texas Title Insurance Act defines "Escrow Officer" as an attorney, or bona fide employee of either (i) an attorney licensed as an Escrow Officer, (ii) a Direct Operation, or (iii) a Title Insurance Agent, whose duties include any or all of the following:

    1. countersigning title insurance forms;
    2. supervising the preparation and supervising the delivery of title insurance forms;
    3. signing escrow checks;
    4. closing the transaction.
  2. No person shall act in the capacity of Escrow Officer without being licensed by the Department, and obtaining and maintaining a surety bond as required by Texas Insurance Code Chapter 2652 Subchapter C; 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 the Texas Title Insurance Act.

  3. 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 Texas Insurance Code §2501.003(4). All non-attorney employees of an attorney who perform any or all of the duties of an Escrow Officer are required to be licensed. Notwithstanding the foregoing a Direct Operation or Title Insurance Agent shall NOT permit an attorney to conduct the attorney's business in the name of the Direct Operation or Title Insurance Agent unless the attorney and all of the bona fide employees of the attorney who perform any or all of the duties of an Escrow Officer are licensed as Escrow Officers.

  4. An attorney may become licensed as an Escrow Officer, in which case the attorney shall comply with all requirements of the Texas Insurance Code with regard to Escrow Officers and trust funds, as if the attorney were a Title Insurance Agent. All escrow accounts utilized by licensed Escrow Officers for closing transactions shall be subject to the audit requirements contained in Texas Insurance Code Chapter 2651 Subchapter D. An attorney licensed as an escrow officer must use a title agency escrow account to close title insurance transactions. The transaction must be closed in the title agent's name.

  5. Neither the sole owner nor individual partners of a Title Insurance Agent, doing business as an Individual or Partnership, are required to be licensed as an Escrow Officer, only the employees of such Agents who perform any or all of the duties of an Escrow Officer. Each corporate officer and employee of a Title Agent, doing business as an Entity, who performs any or all of the duties of an Escrow Officer must obtain an Escrow Officer's license.

    Effective January 3, 2014 (Order 2806)

II. ISSUANCE

[ Go to TDI Title Forms]

To appoint an individual to act as Escrow Officer for any Title Insurance Agent/Direct Operation, the following forms must be filed with the Department:

  1. An original application for Escrow Officer's license (Sections A and B).

    1. Each application shall be completed in full before it is submitted to the Department.
    2. The signature appearing on Section B of the application must be the signature of the Title Insurance Agent/Direct Operation.
  2. Non-refundable license fee of $35.00.

  3. The proper Texas Escrow Officer's Schedule Bond or in lieu thereof a cash deposit or irrevocable letter of credit issued by a financial institution in this state insured by an agency of the United States Government (or securities approved by the Department), procured at the expense of the Title Insurance Agent/Direct Operation.

    1. The aggregate amount is to be determined by multiplying the number of Escrow Officers by:
      a. $5,000 for each individual who is a bona fide resident of this state; plus

      b. $10,000 for each individual who is a bona fide resident of a state adjacent to this state;

      c. Notwithstanding Subsection (a) or Subsection (b), the maximum amount of the bond or deposit shall not exceed $50,000.
    2. The bond form will provide that the entire penal sum shall be applicable for losses caused by any one or all of the Escrow Officers covered by the obligation.

Effective January 3, 2014 (Order 2806)

III. ADDITIONAL APPOINTMENTS

[ Go to TDI Title Forms]

The Department must be notified immediately whenever a Title Insurance Agent/Direct Operation or attorney licensed as an Escrow Officer employs an additional individual to act as Escrow Officer, and the following forms are required by the Department:

  1. An original application for Escrow Officer's license having the same specifications as listed under ISSUANCE.

  2. Non-refundable license fee of $35.00.

  3. An original rider or endorsement to the Texas Escrow Officer's Schedule Bond adding the individual to the schedule and increasing the penalty thereof by:

    1. $5,000 if an in-state applicant; or


    2. $10,000 per applicant if a bona fide resident of a state adjacent to this state, if necessary.

Effective January 3, 2014 (Order 2806)

IV. CANCELLATION

[ Go to TDI Title Forms]

  1. Whenever an individual ceases to act as Escrow Officer for any Title Insurance Agent/Direct Operation written notice shall be sent immediately to the Escrow Officer and to the Department with the following:

    1. Completed notification of cancellation (reverse side of Certificate of License), or a sworn statement that the Certificate of License has been lost or misplaced and a written statement indicating the reason for cancellation and the date the cancellation is effective.
    2. An original rider to the Texas Escrow Officer's Schedule Bond deleting the individual from the schedule and decreasing the penalty thereof by:
      a. $5,000 per escrow officer if an in-state resident; or

      b. $10,000 per escrow officer if a bona fide resident of a state adjacent to this state, if necessary.
  2. An escrow officer may voluntarily surrender his license at any time by giving notice to the Department and submitting their current, original escrow officer license or a sworn statement that the license has been lost or misplaced or he has been unable to obtain the original license from the Title Agent/Direct Operation.

  3. The license will be cancelled by the Department upon receipt of the items in A.1 or B notwithstanding the receipt of an original rider to the Escrow Officer's Schedule Bond.

Effective January 3, 2014 (Order 2806)

V. RENEWAL

[ Go to TDI Title Forms]

  1. Escrow Officer licenses shall, on the date of expiration, be renewed pursuant to Texas Insurance Code §4003.002. Escrow Officer Licenses will be renewed with an expiration date to coincide with the expiration date of the license of the Title Agent/Direct Operation for which the Escrow Officer is licensed.

  2. For all Escrow Officer Licenses renewed: Escrow Officer Licenses expire on the same date as the Title Insurance Agent /Direct Operation for which the Escrow Officer is licensed. To renew any license, on or before the expiration date of the license, the Title Insurance Agent/Direct Operation must submit the following to the Department on behalf of each Escrow Officer whose license is expiring:

    1. The original Title Insurance Escrow Officer's License renewal form provided by the Department.
    2. Non-refundable renewal fee of $35.00. If a license is renewed for less than two (2) years the non-refundable renewal fee shall be prorated on a monthly basis.
  3. Failure of a Title Insurance Agent/Direct Operation to submit any of the required renewal forms for any Escrow Officer on or before the expiration date of the license, results in automatic expiration of the respective license, and the proper rider to the Texas Escrow Officer's Bond will then be required.

  4. If an Escrow Officer's License is expired for not longer than 90 days, the license may be renewed by submitting the renewal form and paying the required non-refundable renewal fee and a fee of one half (1/2) of the initial license fee.

  5. If the Escrow Officer's License is expired for more than 90 days, the license may not be renewed. An original application for Escrow Officer's license must be submitted with the same requirements as listed under ISSUANCE.


VI. CHANGE IN EMPLOYMENT STATUS OF AN ESCROW OFFICER WHO REMAINS LICENSED WITH THE SAME TITLE AGENT OR DIRECT OPERATION

Upon a change in the employment status of a licensed escrow officer with the same title agent or direct operation, joint written notification must be made to the Department by the licensed escrow officer, the title agent or direct operation and the employer attorney, if applicable, within fifteen (15) calendar days of the change in employment status. The written notification must be acknowledged and sworn to by the escrow officer, the title agent or direct operation and the employer attorney, if applicable.

Effective January 3, 2014 (Order 2806)


VII. CHANGE OF RESIDENCE ADDRESS OF A LICENSED ESCROW OFFICER

Upon a change in the residence address of a licensed escrow officer, written notification must be made to the Department by the licensed escrow officer. Written notification may be by letter, fax, or e-mail and must include the new residence address as well as new residence phone number if applicable.

Effective January 3, 2014 (Order 2806)


VIII. CHANGE OF NAME OF A LICENSED ESCROW OFFICER

Upon a change in the name of a licensed escrow officer, written notification must be made to the Department by the title insurance agent/direct operation. Written notification must be by letter and must include the new name and the reason for the name change, such as marriage or divorce. The written notification must be accompanied by the escrow officer's current, original license and an original rider for the Texas Escrow Officers Schedule Bond on file with this Department for the title agent/direct operation changing the escrow officer's name on the bond.

Effective January 3, 2014 (Order 2806)


Title Manual Main Index | Section VI Index

L-3. DIRECT OPERATIONS LICENSE


An applicant for a Direct Operation License must comply with the instructions in the Application for Texas Direct Operation License (Form FINT130), and must submit all required fees. Each Federal Identification Number holder is potentially eligible for one license. An applicant may only submit an application under one FIN, and must use the same FIN for all filings with the Department. An applicant may file an original application or submit the forms electronically, when available. All of the forms referred to herein are available online or upon request from the Department.

[ Go to TDI Title Forms]

I. LICENSE ISSUANCE

Submit the following to the Department to license a Direct Operation:

  1. Completed Application for Texas Direct Operation License (Form FINT130), signed by a corporate officer of the Title Insurance Company.
  2. Non-refundable license fee of $50.00.
  3. Abstract Plant Information Form (Form FINT120 or Form T-52) for each county(ies) in which the Direct Operation will operate.
  4. List of all branch office addresses and telephone numbers.
  5. Direct Operation's bond or in lieu thereof a cash deposit or irrevocable letter(s) of credit issued by a financial institution in this state insured by an agency of the United States Government (or securities approved by the Department) 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 direct operation in accordance with the latest statistical report to the Department but not to exceed One Hundred Thousand Dollars ($100,000).

Effective January 3, 2014 (Order 2806)

II. CHANGE IN OPERATIONS

[ Go to TDI Title Forms]

The following changes in operations do not require cancellation of existing license and issuance of a new license but require written notice to the Department:

  1. A change in office location or contact information (addition or deletion) requires written notification from the Direct Operation to the Department, accompanied by a completed Title Agent Update Form.

  2. A change in abstract plant requires written notification from the Direct Operation to the Department if:

    1. an abstract plant owned by the Direct Operation is sold;
    2. an abstract plant is purchased by the Direct Operation;
    3. a Joint Abstract Plant is used and a change in ownership occurs; or
    4. the Direct Operation changes leased abstract plant provider.


      Submit the following additional documents, if applicable:

      a. Abstract Plant Information Form (Form FINT120 or Form T-52) for each county affected by the change, and any applicable agreements.

      b. Complete, signed copy of the plant lease with the new abstract plant provider.

      c. Copy of the bill of sale or other documentation evidencing the sale or purchase of an abstract plant.

  3. Change in County. Addition or deletion of a County requires written notification as follows, as applicable:

    1. Cover letter describing the change. The cover letter must identify the documents submitted and the reason for making the filing.

    2. Abstract Plant Information Form (Form FINT120 or Form T-52) for all new counties, and any applicable agreements.

    3. Title Agent Update Form (Form FINT129) signed and dated by an authorized representative for the Title Agent.

    4. Agent Contract Submission Form (Form FINT141).

    Effective January 3, 2014 (Order 2806)

III. CANCELLATION

  1. To cancel a Direct Operation License, the Title Insurance Company must submit written notice of cancellation to the Department within three business days of the effective date of cancellation. The notice must state the reason for cancellation and the effective date of the cancellation.

  2. A Direct Operation may voluntarily surrender a license at any time. The Direct Operation must notify the Department and the affected Title Insurance Company of the surrender not less than 45 days before the surrender becomes effective. The Direct Operation's notice to the Department must include:

    1. Written notification that the Direct Operation is ceasing operations, including the effective date of cancellation for the Direct Operation's license.

    2. The Direct Operation's current plan for an orderly winding down of its operations and compliance with Administrative Rule D-1.

    Effective January 3, 2014 (Order 2806)

IV. RENEWAL

  1. Direct Operation licenses shall, on the date of expiration, be renewed pursuant to Texas Insurance Code §2651.055. Direct Operation Licenses will be renewed for a period of not more than two years and expire on the date designated by the Department.

  2. For all licenses renewed: Direct Operation Licenses expire on the first day of the month two years after their issuance. To renew any license, on or before the expiration date of the license, the Title Insurance Company must submit the following to the Department on behalf of all Direct Operations licenses which they hold:

    1. The application for renewal of Direct Operation's license provided by the Department.
    2. Non-refundable renewal fee of $35.00. If a license is renewed for less than two (2) years the non-refundable renewal fee shall be prorated on a monthly basis.
  3. Failure of a Title Insurance Company to submit any of the above forms for Direct Operation on or before the expiration date of the license, results in automatic expiration of the respective license.

  4. If a Direct Operation's license is expired for no longer than 90 days, the license may be renewed by submitting the renewal form and paying the required non-refundable renewal fee and a fee of one half (1/2) of the initial license fee.

  5. If a Direct Operation's license is expired for more than 90 days, the license may not be renewed.

  6. If the amount of the Bond or other security required by the Texas Insurance Code has changed from the Bond or other security on file with the Department, the Direct Operation must file a new Bond, Rider, Endorsement, increase in cash, or an amended letter of credit.

    Effective January 3, 2014 (Order 2806)


Title Manual Main Index | Section VI Index


D.1 REQUIREMENTS FOR CEASING OPERATIONS BY AGENTS AND DIRECT OPERATIONS

Any Title Insurance Agent or Direct Operation that intends to cease operations in the business of title insurance pursuant to a surrender, forfeiture or revocation of license, pursuant to Texas Insurance Code §§2651.201, 2651.301, or 2651.302, must comply with the following mandatory requirements:


I. NOTICE REQUIREMENTS

The Agent/Direct Operation must provide written notice of its intent to cease operations no later than forty-five (45) days prior to its final date of operation to:

  1. the Department, addressed to the Texas Department of Insurance, Title Division, Post Office Box 149104, Austin, Texas 78714-9104;
  2. all Title Insurance Companies for which the Title Agent/Direct Operation holds an appointment and is currently licensed; and
  3. the Public, by public announcement in a local publication of general circulation.

II. AUDIT AND ACCOUNTING REQUIREMENTS

  1. The Agent/Direct Operation and Company must conduct a final audit of the Agent's/Direct Operation's trust fund accounts, the records pertaining thereto and the unused forms in Agent's/Direct Operation's possession, pursuant to the requirements of Texas Insurance Code §§2651.151-157 and 2651.251-253.

  2. The Agent/Direct Operation must provide a final accounting of all funds held in its escrow account for the State of Texas Policy Guaranty Fees and Recoupment Charge funds. Such final accounting together with a final disbursement of any due funds shall be made to the Texas Title Insurance Guaranty Association c/o General Counsel for the Texas Title Insurance Guaranty Association, 301 Congress, Suite 800, Austin, Texas 78701.

  3. The final audit and final accounting required by this section must be delivered to the Department within 90 days after an Agent's/Direct Operation's surrender of its license. If an Agent/Direct Operation fails to complete and submit such audit and accounting, it shall be the responsibility of the respective Companies to use their best efforts to complete and submit such final audits and accountings to the Department. A copy of the final audit shall also be sent to each title insurance company that the agent represents. If a title insurance company fails to receive a final audit report within 90 days of the date of the license surrender, the company shall (1) report that failure to the Department not later than the 100th day after the date of the license surrender and (2) use its best efforts to complete and submit a final audit and/or accounting to the Department within 150 days of the date of surrender of the license.

    A Company must provide written explanation and justification to the Department documenting those portions of the final audit and/or accounting that the Company was not able to complete; including the records and personnel available to the company and the efforts the Company used in its attempt to fully complete the final audit and/or final accounting as required under this section.

    Each title insurance agent operating in Texas shall prepare a plan for winding down the title agent's operations by the Company should the title insurance agent fail to wind down its own operations, including the title insurance agent's immediate cessation of business due to title insurance agent or Company action. The title insurance agent's plan must provide at a minimum the following:

    1. The storage of each Company's guaranty files in one location for a period of at least ninety (90) days so that a final audit and final accounting may be conducted. Each Company shall have access to its own guaranty files and the independent auditors shall have access to all guaranty files. After the final audit and final accounting are conducted under this section, each Company shall obtain and store its own guaranty files.
    2. Authorization to each Company to obtain all books, bank statements, associated accounting files and bank records relative to the Company's trust accounts.
    3. Authorization to each Company to access its trust accounts.

    The title insurance agent's plan and authorization must be furnished to each Company and the Department. The title insurance agent's plan must be reviewed by the title insurance agent annually and updated as necessary. The title insurance agent's plan shall be implemented by the Company immediately upon receipt of written notification by the Department that the Department has determined that the title agent has failed to wind down its own operations.

  4. The expenses of such final audit and accounting shall be borne by the respective Company(ies) in proportion to their share of premiums for the twelve month period immediately preceding the date of final audit and accounting.


III. TRANSFER OF FILES AND ACCOUNTS

  1. The Agent/Direct Operation must surrender all files, together with a list of all pending files and outstanding commitments, to the appropriate Companies. The Agent/Direct Operation must send written notice to all interested parties in pending transactions that the appropriate Companies have custody and control of such files. Such notice to interested parties shall be provided on a Notice of Cessation Form Ti-100, no later than forty-five (45) days prior to its final date of operation, with a copy sent to the appropriate Company and a copy retained in the appropriate guaranty file.

  2. The Agent/Direct Operation shall transfer all escrow accounts and investment accounts, which have not been fully disbursed, to the appropriate Companies for the benefit of the parties to pending transactions and the general public. Such transfer shall include a listing of the sources of all transferred funds, and a list of pending transactions. A copy of such list of pending transactions shall be provided to the Department.


IV. ESCROW LICENSES AUTOMATICALLY FORFEITED

Pursuant to Texas Insurance Code §§2652.201-202 the licenses of any Escrow Officers employed by an Agent/Direct Operation ceasing business shall be automatically cancelled.


V. OTHER NOTICE REQUIREMENTS

The provisions of this Administrative Rule shall be in addition to and cumulative of any other notice provisions found in Sec. VI Administrative Rules of the Basic Manual of Rules, Rates, and Forms for the Writing of Title Insurance in the State of Texas.


Title Manual Main Index | Section VI Index

G.1. POLICY GUARANTY FEE


I. Definitions

  1. "Association" means the Texas Title Insurance Guaranty Association.

  2. "Board" means the Board of Directors of the Association.

  3. "Policy Guaranty Fee" means that sum of money established by the Board pursuant to Texas Insurance Code §§2602.151-154, which is required to be remitted to the Association upon the issuance of each owner's policy and each loan policy of title insurance issued in the State of Texas in accordance with the procedures as set forth in these administrative rules.


II. Remittance Procedures

  1. Each policy guaranty fee shall be collected directly from the purchaser of each owner's and loan policy at the closing of the transaction and such itemized charge shall be disclosed on the settlement statement and designated thereon "State of Texas Policy Guaranty Fee." Upon collection of the premium for each owner's and loan policy of title insurance, the issuing Title Insurance Agent/Direct Operation, or if no Agent/Direct Operation actually issues, the issuing Title Insurance Company shall forthwith deposit all policy guaranty fees in the amount determined by the Board into an audited escrow or trust account.

    Each issuing Agent/Direct Operation or issuing Company is responsible for the actual remittance of these fees to the Association.

  2. No Title Insurance Agent/Direct Operation or Title Insurance Company may utilize the policy guaranty fees so maintained for any purpose other than the actual payment of all policy guaranty fees to the Association quarterly. The schedule of remittance is as follows:

    Calendar Quarter Ending Remittance Due Date
    March 31 May 1
    June 30 August 1
    September 30 November 1
    December 31 February 1
  3. Each Title Insurance Agent/Direct Operation shall report and remit the fees for all of its offices on a single remittance form and payment. Permissible methods of payment include check, wire transfer, certified check, cashier's check, or money order.

  4. The remitting Title Insurance Agent/Direct Operation or Title Insurance Company shall maintain records reflecting the quarterly policy count. No policy guaranty fee shall be reported to the Texas Department of Insurance as an expense of operation for the purpose of establishing title insurance rates.

  5. All remittances shall be addressed to the designated address of the Association and shall be accompanied by a completed Policy Guaranty Fee Remittance Form. 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." All remittances must be postmarked on or before the remittance due date.


Title Manual Main Index | Section VI Index

G.2 AUDIT AND REVIEW OF AGENT/DIRECT OPERATION ESCROW AND TRUST ACCOUNTS


I. Definitions

  1. "Audit and review of Agent/Direct Operation escrow and trust accounts" includes auditing of escrow and trust accounts, auditing of statistical reports, auditing of all other accounting records and review of complaints relating to Agents/Direct Operations.

  2. "Escrow and trust accounts" includes those accounts which are subject to annual audit pursuant to Texas Insurance Code §§2651.151-157.

II. Procedures

Upon the request of the Commissioner of Insurance, the Board will authorize expenditure of funds from the guaranty fee account to retain, compensate and reimburse for reasonable and necessary expenses persons who will audit and review Agent/Direct Operation escrow and trust accounts. Such persons shall act solely under the direction of the Commissioner of Insurance, or his designee and make such reports as are required.

Title Manual Main Index | Section VI Index



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Last updated: 11/23/2015

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