Section VI, Title Insurance Basic Manual - Administrative Rules: Definitions and L-1

Title Manual Main Index | Section VI Index

ADMINISTRATIVE RULES

Includes Definitions Effective 01/03/2014 | L-1 Effective 01/03/2014

DEFINITIONS.

In the Administrative Rules:

“Assumed name” has the same meaning as in Texas Business and Commerce Code §71.002(2).
“Business of title insurance” means the business of title insurance as defined in Texas Insurance Code §2501.005.
“Certificate of Formation” means a certificate of formation filed with the Office of the Texas Secretary of State in accordance with the Texas Business Organizations Code and includes valid articles of incorporation, articles of organization, certificates of limited partnership, or other valid filing instruments accepted by the Office of the Texas Secretary of State prior to January 1, 2006, for the purposes of initial business organization.
“Company” means a title insurance company as defined in Texas Insurance Code §2501.003(14).
“Control” means the power to direct or cause the direction of the management and policies of a title insurance agent, whether directly or indirectly. A person is considered to control a title insurance agent structured as an entity, if the person, individually or acting with others, directly or indirectly: (1) holds the power or right to vote, owns, or controls, or holds proxies representing, at least 10 percent of the voting stock or voting rights of the entity; or (2) through any other right or power exercises rights in the management, direction, or conduct of the day-to-day operations of the title insurance agent.
“Designated on-site manager” means the manager responsible for administering the day-to-day operations of a title insurance agent or direct operation in Texas at the principal place of business, and who has been required to submit a Title Insurance Licensing Biographical (FINT08) form.
“Direct Operation” means a direct operation as defined in Texas Insurance Code §2501.003(3).
“Entity” means a domestic or foreign corporation or limited liability company authorized to transact business in the State of Texas.
“Federal Tax Identification Number” means a federally issued Employer Identification Number, Tax Identification Number, or Social Security Number.
“Officer” means president, secretary, treasurer, and chief executive officer, or other individuals who perform the duties of a president, secretary, treasurer, or chief executive officer.
“Partnership” means an association or firm composed only of Texas residents, including a general partnership, limited partnership, limited liability partnership, and limited liability limited partnership. An association or firm is composed of only Texas residents if all persons in control of the association or firm are Texas residents.
“Signing” and “signature” mean the act of signing one's name, whether in writing or electronically.
“Sole proprietorship” means an unincorporated form of business that is owned and operated by one individual who is a resident of Texas and is not a partnership or entity.
“TDI” and “Department” mean the Texas Department of Insurance.
“Title insurance agent” means title insurance agent as defined in Texas Insurance Code §2501.003(13).

Title Manual Main Index | Section VI Index

L-1. TITLE INSURANCE AGENT

GENERAL REQUIREMENTS
1. ENGAGE IN BUSINESS.
  1. A person may not act as a title insurance agent in Texas unless the person:
    1. holds a title insurance agent license issued by TDI;
    2. is appointed by a title insurance company for counties in which the title insurance agent will operate; and
    3. complies with the requirements of Texas Insurance Code Chapter 2651, Subchapter C, and Chapter 2652, Subchapter C.
  2. A title insurance agent may not employ an individual to act as an escrow officer for the title insurance agent unless the individual:
    1. holds an escrow officer license issued by TDI;
    2. is covered by a surety bond or deposit as required under Texas Insurance Code Chapter 2652, Subchapter C; and
    3. is appointed under Texas Insurance Code §2652.1511 as an escrow officer by the title insurance agent.
  3. The sole proprietor of a title insurance agent sole proprietorship and an individual general partner of a title insurance agent partnership may perform the functions of an escrow officer for that title insurance agent without an escrow officer license or appointment.
2. BOOKS AND RECORDS. All books and records of the title insurance agent must be maintained in such a manner as to be auditable and demonstrate compliance.
3. FORMS. All of the forms referred to in this rule are available on the TDI website and on request from TDI. Forms may be submitted electronically if such submission is available.
4. TITLE PLANT. Each title insurance agent must maintain at all times a current and completed Abstract Plant Information T-52 (FINT120) form available for TDI inspection on request. The title insurance agent is not required to submit Abstract Plant Information T-52 (FINT120) form to TDI unless requested.
5. MILITARY SERVICE MEMBERS, MILITARY VETERANS, AND MILITARY SPOUSES. A military service member, military veteran, or military spouse, as defined under Texas Occupations Code §55.001, may apply under 28 Texas Administrative Code §19.803 for, and be granted, any waiver, extension, exemption, or alternative licensing requirement for the applicable requirements of Administrative Rule L-1.
TITLE INSURANCE AGENT LICENSE APPLICATION AND ISSUANCE
1. APPLICANT. An applicant for a title insurance agent license:
  1. must be a sole proprietorship, partnership, or entity; and
  2. may not obtain more than one title insurance agent license for each Federal Tax Identification Number.
2. APPLICATION. An applicant for a title insurance agent license must complete and submit the Application for Title Insurance Agent or Direct Operation License (FINT143) form following all form instructions, and include:
  1. fingerprints, if required under 28 Texas Administrative Code §1.503;
  2. a completed Title Insurance Licensing Biographical Information (FINT08) form for each of the following individuals:
    1. for a sole proprietorship, the individual sole proprietor and each designated on-site manager;
    2. for a partnership, each designated on-site manager and partner who is in control of the partnership;
    3. for an entity, each officer, director, limited liability company manager, designated on-site manager, and person who is in control of the entity; and
    4. each controlling person of an entity or partnership who is in control of the entity or partnership applicant;
  3. if the applicant will use an assumed name, a copy of a valid Assumed Name Certificate filed with the Secretary of State or County Clerk for each county in which the title insurance agent will operate;
  4. at least one Title Insurance Agent or Direct Operation Appointment (FINT10) form completed by the title insurance company's appointing official, following all form instructions, and attesting that the applicant:
    1. has a current Schedule D;
    2. has an agent contract with the title insurance company; and
    3. has an abstract plant that meets the requirements of Procedural Rule P-12 and Texas Insurance Code §2501.004, or has an abstract plant lease for each county listed on the form in which the applicant is appointed to transact business for the title insurance company;
  5. proof of bond purchase or deposit in compliance with the requirements of Texas Insurance Code Chapter 2651, Subchapter C, and Chapter 2652, Subchapter C:
    1. in the form of a completed Texas Title Insurance Agent/Direct Operation Bond (FINT122) form, a completed Texas Escrow Officers Schedule Bond (FINT123) form, a TDI cash receipt or evidence of securities approved by TDI, or a copy of an irrevocable letter of credit;
    2. with the amount of the title insurance agent bond or deposit being the greater of:
      1. $10,000; or
      2. an amount equal to 10 percent of the gross premium written by the title insurance agent in accordance with the latest statistical report to TDI but not to exceed $100,000;
    3. with the aggregate amount of the escrow officer bond or deposit, up to a maximum of $50,000, determined by multiplying the number of employed and appointed escrow officers by:
      1. $5,000 for each individual who is a bona fide Texas resident; and
      2. $10,000 for each individual who is a bona fide resident of a state adjacent to Texas; and
    4. listing each escrow officer employed and appointed by the title insurance agent on the bond schedule;
  6. demonstrated compliance with the capitalization requirements in Texas Insurance Code §2651.012;
  7. a nonrefundable application fee of $50; and
  8. a nonrefundable appointment fee of $16 only for each additional appointment after the first appointment submitted with the application. An appointment fee is not required for the first appointment submitted with the application.
TITLE INSURANCE AGENT APPOINTMENTS
1. APPOINTMENT.
  1. A title insurance company may appoint a title insurance agent with the initial license application or at any other time.
    1. Appointments with the title insurance agent license application must comply with Administrative Rule L-1.II.
    2. A title insurance company may appoint a title insurance agent at any time by submitting the required nonrefundable $16 appointment fee with the Title Insurance Agent or Direct Operation Appointment (FINT10) form completed by the title insurance company's appointing official, following all form instructions, and attesting that the applicant:
      1. has a current Schedule D;
      2. has an agent contract with the title insurance company; and
      3. has an abstract plant that meets the requirements of Procedural Rule P-12 and Texas Insurance Code §2501.004, or has an abstract plant lease for each county listed on the form in which the title insurance agent is appointed to transact business for the title insurance company.
  2. The appointment is effective on the eighth business day following the date the notice of appointment is complete and TDI receives the appointment fee, unless TDI notified the title insurance company that the appointment was rejected. The notice of appointment is complete when TDI receives a complete Title Insurance Agent or Direct Operation Appointment (FINT10) form and the required fee.
  3. A title insurance agent may be appointed by multiple title insurance companies for each county.
  4. Title insurance agent appointments do not expire and remain effective until terminated.
2. APPOINTMENT MAINTENANCE.
  1. After the title insurance agent has been appointed, the title insurance company may add or remove counties from the appointment by submitting the Title Insurance Agent or Direct Operation Appointment (FINT10) form completed by the title insurance company's appointing official, following all form instructions to list any counties to be added or deleted, and attesting that the applicant:
    1. has a current Schedule D;
    2. has an agent contract with the title insurance company; and
    3. has an abstract plant that meets the requirements of Procedural Rule P-12 and Texas Insurance Code §2501.004, or has an abstract plant lease for each county listed on the form in which the title insurance agent is appointed to transact business for the title insurance company.
  2. A title insurance agent may not operate in an additional county on behalf of a title insurance company until the earlier of:
    1. the eighth business day following the date the complete Title Insurance Agent or Direct Operation Appointment (FINT10) form is submitted, unless TDI notified the title insurance company that the appointment was rejected; or
    2. when TDI's website reflects the additional counties.
3. APPOINTMENT TERMINATION.
  1. Termination of an appointment terminates the title insurance agent's authorization to write for the title insurance company in Texas.
  2. Deletion of all counties from an appointment terminates the appointment.
  3. A title insurance agent must comply with Administrative Rule D-1 if, at the time of appointment termination, the title insurance agent has no active title insurance company appointment and is not seeking an appointment by another title insurance company. A title insurance agent is not required to comply with Administrative Rule D-1 if the title insurance agent submits to TDI a sworn statement which identifies a title insurance company for which an appointment is actively being pursued within the existing license period.
  4. Either the title insurance agent or title insurance company may terminate an appointment as follows:
    1. If a title insurance company intends to terminate a title insurance agent's appointment, the title insurance company must give the title insurance agent 30 calendar days' written notice of termination before the effective date of the termination, unless the title insurance agent is terminated for cause, as defined in the agency agreement. The title insurance company must submit the Title Insurance Agent or Direct Operation Appointment (FINT10) form to TDI within three business days of notifying the title insurance agent of the termination. The notice must state the effective date of the termination. If the title insurance company terminates the appointment for cause, the title insurance company must submit an explanation of the circumstances with each notice.
    2. If a title insurance agent intends to terminate the title insurance agent's appointment, the title insurance agent must give the title insurance company 30 calendar days' written notice of the termination. The title insurance agent must notify TDI of the termination in writing within three business days of notifying the title insurance company of the termination. Each notice must state the effective date of the termination.
4. LICENSE SUSPENSION.
  1. TDI will suspend a license pursuant to Texas Insurance Code §2651.010 if the title insurance agent does not have a valid appointment.
  2. TDI will lift the suspension on an unexpired license on the receipt of an appointment filing made in compliance with Administrative Rule L-1.III.A.1.b.
  3. License suspension does not relieve a title insurance company or title insurance agent from complying with Administrative Rule D-1.
TITLE INSURANCE AGENT LICENSE EXPIRATION, RENEWAL, EFFECT OF SUSPENSION, AND SURRENDER
1. EXPIRATION. A title insurance agent license expires two years after the date of issuance.
2. RENEWAL. A title insurance agent may renew a license that has not been suspended, revoked, or surrendered, as follows:
  1. To renew a title insurance agent license, on or before the expiration date of the license, the title insurance agent must submit the following:
    1. the Title Insurance Agent or Direct Operation Renewal Application (FINT03) form, following all form instructions; and
    2. a nonrefundable renewal application fee of $35.
  2. Failure of a title insurance agent to submit a complete renewal application and the required renewal fee on or before the expiration date of the license results in expiration of the title insurance agent's license.
  3. If a title insurance agent's license is expired for 90 calendar days or less, the title insurance agent may renew the license by complying with Administrative Rule L 1.IV.B.1 and submitting an additional nonrefundable late fee in the amount of $25, which is half the initial license application fee.
  4. If a title insurance agent's license is expired for more than 90 calendar days, the license may not be renewed, and all title insurance company and escrow officer appointments terminate. The applicant must submit a new Application for Title Insurance Agent or Direct Operation License (FINT143) form and satisfy the requirements of Administrative Rule L-1.II to obtain a new title insurance agent license. New escrow officer appointments must be submitted prior to engaging in the business of title insurance.
3. EFFECT OF SUSPENSION.
  1. A suspension period does not extend the title insurance agent license's expiration date.
  2. If a title insurance agent license is suspended on expiration of the license, the license is not eligible for renewal and a new license is required as provided in Administrative Rule L-1.IV.B.4.
  3. If a valid appointment is received by TDI prior to the suspended license's expiration, the license may be renewed under Administrative Rule L-1.IV.B.
4. SURRENDER OF LICENSE. A title insurance agent may voluntarily surrender a license at any time. The title insurance agent must notify TDI and each title insurance company that appointed the title insurance agent of the surrender not less than 45 calendar days before the effective date of the surrender. The title insurance agent's notice to TDI must include:
  1. written notification that the title insurance agent is ceasing operations, including the effective date of surrender for the title insurance agent's license; and
  2. the title insurance agent's current plan for an orderly winding down of its operations and compliance with Administrative Rule D-1.
CHANGE IN OPERATIONS
1. NEW LICENSE REQUIRED.
  1. If a title insurance agent's license is expired, surrendered, or revoked, and a new license is required, the title insurance agent license applicant may not conduct the business of title insurance until the applicant has been notified by TDI that its title insurance agent license has been issued.
  2. A title insurance agent license is non-transferrable. The purchase of a title insurance agent's assets may not include the transfer of a title insurance agent license. The purchase of a title insurance agent’s stock or membership interest is not considered a transfer of a title insurance agent license.
2. NEW LICENSE NOT REQUIRED. The following changes in title insurance agent operations only require written notice to TDI, as provided below, unless the title insurance agent is required to apply for a new license under Administrative Rule L-1.V.A.
  1. A Title Insurance Agent or Direct Operation Change Request (FINT129) form, with the information specified below, is required for:
    1. all mergers, exchanges, and conversions, and must include the certificate of merger, exchange, or conversion, if applicable, filed with the Office of the Texas Secretary of State;
    2. a merger of two or more title insurance agents in which an existing title insurance agent survives the merger, and must include:
      1. the notification of surrender of the non-surviving title insurance agents' licenses to TDI required under Administrative Rule L-1.IV.D; and
      2. notification from each affected title insurance company of the changes in counties or appointment terminations as provided in Administrative Rule L-1.III, if the surviving title insurance agent will not serve all of the title insurance companies or counties that the prior title insurance agents served.
      3. TDI will combine all existing title insurance company appointments and escrow officer appointments of the merged title insurance agents into the surviving title insurance agent.
    3. a change of the title insurance agent's name or assumed name, including the use of additional assumed names or the abandonment of an assumed name, and must include:
      1. if the entity name changes, a certified copy of the amended Certificate of Formation reflecting the entity name as amended; and
      2. if an assumed name is used, a copy of a valid Assumed Name Certificate filed with the Secretary of State or County Clerk in each county in which the title insurance agent will operate.
      3. A new name may not be used until the title insurance agent has been notified by TDI that the license has been updated with the new name.
    4. a change in the ownership percentages of the title insurance agent, including a purchase of stock or membership interest by a new owner, and must include:
      1. notification of the individual names and ownership percentage changes; and
      2. the Title Insurance Licensing Biographical Information (FINT08) form, if required under Administrative Rule L-1.V.B.2.
    5. a change in the title insurance agent's physical or mailing address, and must include written notification of the new address.
  2. A Title Insurance Licensing Biographical Information (FINT08) form is required for:
    1. each new officer, director, limited liability company manager, designated on-site manager, and person who is in control of the title insurance agent; and
    2. each controlling partner and shareholder of an entity or partnership who is in control of the title insurance agent.
  3. Changes in the title insurance agent's title plant ownership or lease must be documented in the title insurance agent's records and made available to TDI on request.
  4. Changes in the proof of the bond or deposit requirements of Texas Insurance Code Chapter 2651, Subchapter C, and Chapter 2652, Subchapter C, including the new or amended TDI cash receipt, copy of the surety bond, copy of the irrevocable letters of credit, or copies of securities approved by TDI, must be documented in the title insurance agent's records and made available to TDI on request.

Title Manual Main Index | Section VI Index