Florida Senate - 2013 SB 1138
By Senator Hukill
8-00325B-13 20131138__
1 A bill to be entitled
2 An act relating to title insurance agents and
3 agencies; reordering and amending s. 626.841, F.S.;
4 revising and adding definitions; amending s. 626.8411,
5 F.S.; revising the list of other code provisions that
6 also apply to title insurance agents or agencies;
7 amending s. 626.8412, F.S.; clarifying that title
8 insurance may be sold only by licensed and appointed
9 agents and agencies; amending s. 626.8413, F.S.;
10 providing additional limitations on the name a title
11 agent or agency may adopt; amending s. 626.8417, F.S.;
12 conforming provisions to changes made by the act;
13 amending s. 626.8418, F.S.; revising the application
14 requirements for a title insurance agency license;
15 requiring the name of any person who directs or
16 participates in the management or control of the
17 agency; requiring proof of name registration with the
18 Division of Corporations; requiring fingerprinting of
19 certain persons involved in the management or control
20 of the agency; deleting certain security requirements
21 and procedures; amending s. 626.8419, F.S.; revising
22 requirements relating to the appointment of a title
23 insurance agency; creating s. 626.8422, F.S.;
24 specifying functions that may be performed by title
25 agents, title agencies, and authorized employees;
26 amending s. 626.8437, F.S.; updating terms relating to
27 grounds for actions against a licensee or appointee;
28 amending s. 626.8443, F.S.; increasing the time period
29 for suspending a license; amending s. 626.8473, F.S.;
30 revising provisions relating to escrow to allow a
31 title agency rather than a title agent to act as an
32 escrow agent; authorizing a licensed title agency to
33 engage in simple escrow; revising and providing
34 additional requirements relating to escrow and title
35 accounts and funds; amending ss. 626.0428 and 627.797,
36 F.S.; conforming cross-references; providing an
37 effective date.
38
39 Be It Enacted by the Legislature of the State of Florida:
40
41 Section 1. Section 626.841, Florida Statutes, is reordered
42 and amended to read:
43 626.841 Definitions.—As used in this part, the term:
44 (1) “Closing or settlement” means the process of
45 transferring an interest in real property or creating a lien on
46 real property and includes the preparation and recordation of
47 documents and the receipt and disbursement of funds relating to
48 such process.
49 (2) “Escrow agreement” means the written conditions and
50 instructions agreed to by an attorney, title agent, title
51 agency, or insurer concerning funds held in a fiduciary
52 capacity.
53 (3) “Escrow or trust account” means an account maintained
54 with a financial institution to hold funds deposited with a
55 title agent, title agency, or insurer in connection with a real
56 estate closing or settlement.
57 (4) “Ledger card” means the document or electronic record
58 that identifies each deposit received and each payment made with
59 respect to a real estate closing or settlement or escrow.
60 (5) “Settlement statement” is a document that discloses the
61 funds received and disbursed pursuant to a closing or
62 settlement.
63 (6) “Simple escrow” means a transaction where a title
64 insurance agent or title insurance agency holds funds under the
65 terms of an escrow agreement not related to a closing or
66 settlement, or the issuance of a title insurance commitment or
67 policy of title insurance.
68 (8)(1) “Title insurance agent” or “title agent” means a
69 person authorized or appointed in writing by a title insurer to
70 issue and countersign the title insurer’s commitments or
71 policies of title insurance in its behalf.
72 (7)(2) “Title insurance agency” or “title agency” means an
73 insurance agency through under which title insurance agents and
74 other individuals employees determine insurability in accordance
75 with underwriting rules and standards prescribed by the title
76 insurer represented by the title agency, and issue and
77 countersign commitments, endorsements, or policies of title
78 insurance, on behalf of the appointing title insurer. The term
79 includes does not include a title insurer issuing title
80 insurance policies directly to the insureds.
81 Section 2. Subsection (1) of section 626.8411, Florida
82 Statutes, is amended to read:
83 626.8411 Application of Florida Insurance Code provisions
84 to title insurance agents or agencies.—
85 (1) The following provisions of part II applicable to
86 general lines agents or agencies also apply to title insurance
87 agents or agencies:
88 (a) Section 626.734, relating to the liability of general
89 lines insurance certain agents.
90 (b) Section 626.747, relating to branch agencies.
91 (c) Section 626.748, relating to agent’s records.
92 (d)(c) Section 626.749, relating to place of business in
93 residence.
94 (e)(d) Section 626.753, relating to sharing of commissions.
95 (f)(e) Section 626.754, relating to the rights of agents
96 agent following termination of appointment.
97 Section 3. Section 626.8412, Florida Statutes, is amended
98 to read:
99 626.8412 License and appointments required.—
100 (1) Except as otherwise provided in this part:
101 (a) Title insurance may be sold only by a licensed and
102 appointed title insurance agent employed by a licensed and
103 appointed title insurance agency or employed by a title insurer.
104 (b) A title insurance agent may not sell a title insurance
105 policy issued by an insurer for which the agent does not hold a
106 current appointment.
107 (2) Except as otherwise provided in this part, a person,
108 other than a title insurance agency or an employee of a title
109 insurance agency, may not perform any of the functions of a
110 title insurance agency without a title insurance agency license.
111 Section 4. Section 626.8413, Florida Statutes, is amended
112 to read:
113 626.8413 Title insurance agents and agency; certain names
114 prohibited.—
115 (1) After October 1, 2013 1985, a title insurance agent or
116 title insurance agency may as defined in s. 626.841 shall not
117 adopt a name that which contains the words “title insurance,”
118 “title company,” “title guaranty,” or “title guarantee,” unless
119 such words are followed by the word “agent” or “agency” in the
120 same size and type as the words preceding them.
121 (2) This section does not apply to a title insurer acting
122 as an agent for another title insurer if both insurers hold
123 active certificates of authority to transact title insurance
124 business in this state and are acting under the names designated
125 on such certificates.
126 Section 5. Section 626.8417, Florida Statutes, is amended
127 to read:
128 626.8417 Title insurance agent licensure; exemptions.—
129 (1) A person may not act as a title insurance agent as
130 defined in s. 626.841 until a valid title insurance agent’s
131 license has been issued to that person by the department.
132 (2) An application for license as a title insurance agent
133 shall be filed with the department on printed forms furnished by
134 the department.
135 (3) The department may shall not grant or issue a license
136 as a title insurance agent to any individual found by it to be
137 untrustworthy or incompetent, who does not meet the
138 qualifications for examination specified in s. 626.8414, or who
139 does not meet the following requirements qualifications:
140 (a) Within the 4 years immediately preceding the date of
141 the application for license, the applicant has must have
142 completed a 40-hour classroom course in title insurance, 3 hours
143 of which are shall be on the subject matter of ethics, as
144 approved by the department, and or must have had at least 12
145 months of experience in responsible title insurance duties,
146 under the supervision of a licensed title insurance agent, title
147 insurer, or attorney, while working in the title insurance
148 business as a substantially full-time, bona fide employee of a
149 title insurance agency, title insurance agent, title insurer, or
150 attorney who conducts real estate closing transactions and
151 issues title insurance policies but who is exempt from licensure
152 pursuant to subsection (4) paragraph (4)(a). If an applicant’s
153 qualifications are based on upon the periods of employment
154 performing at responsible title insurance duties, the applicant
155 must submit, with the application for license on a form
156 prescribed by the department, an the affidavit of the applicant
157 and of the employer setting forth the period of such employment,
158 that the employment was substantially full time, and giving a
159 brief abstract of the nature of the duties performed by the
160 applicant.
161 (b) The applicant has must have passed any examination for
162 licensure required under s. 626.221.
163 (4)(a) Title insurers or attorneys duly admitted to
164 practice law in this state and in good standing with The Florida
165 Bar are exempt from the provisions of this chapter with regard
166 to title insurance licensing and appointment requirements.
167 (5)(b) An insurer may designate a corporate officer of the
168 insurer to occasionally issue and countersign binders,
169 commitments and policies of, title insurance policies, or
170 guarantees of title. The A designated officer is exempt from the
171 provisions of this chapter with regard to title insurance
172 licensing and appointment requirements while the officer is
173 acting within the scope of the designation.
174 (6)(c) If an attorney owns or attorneys own a corporation
175 or other legal entity that which is doing business as a title
176 insurance agency, other than an entity engaged in the active
177 practice of law, the agency must be licensed and appointed as a
178 title insurance agent.
179 Section 6. Section 626.8418, Florida Statutes, is amended
180 to read:
181 626.8418 Application for title insurance agency license.
182 Before Prior to doing business in this state as a title
183 insurance agency, an a title insurance agency must meet all of
184 the following requirements:
185 (1) The applicant must file with the department an
186 application for a license as a title insurance agency, on
187 printed forms furnished by the department, which that includes
188 all of the following:
189 (1)(a) The name of each majority owner, partner, officer,
190 and director of the title agency, and any other person who
191 directs or participates in the management or control of the
192 agency whether through the ownership of voting interests, by
193 contract, or otherwise.
194 (2)(b) The residence address of each person required to be
195 listed under subsection (1) paragraph (a).
196 (3)(c) The name of the title agency and its principal
197 business address.
198 (4)(d) The location of each title agency office and the
199 name under which each agency office conducts or will conduct
200 business.
201 (5) Proof that the title agency name is properly registered
202 and active with the Division of Corporations of the Department
203 of State.
204 (6)(e) The name of each title agent to be in full-time
205 charge of an agency office and specification of which office.
206 (7) The fingerprints of each of the following, which must
207 be processed in accordance with s. 624.34:
208 (a) A sole proprietor.
209 (b) Each partner.
210 (c) Each owner of the title agency.
211 (d) The president, treasurer, and secretary of the title
212 agency.
213 (e) Any other person who directs or participates in the
214 management or control of the title agency, whether through the
215 ownership of voting interests, by contract, or otherwise.
216 (8)(f) Such additional information as the department
217 requires by rule to ascertain the trustworthiness and competence
218 of persons required to be listed on the application and to
219 ascertain that such persons meet the requirements of this code.
220 (2) The applicant must have deposited with the department
221 securities of the type eligible for deposit under s. 625.52 and
222 having at all times a market value of not less than $35,000. In
223 place of such deposit, the title insurance agency may post a
224 surety bond of like amount payable to the department for the
225 benefit of any appointing insurer damaged by a violation by the
226 title insurance agency of its contract with the appointing
227 insurer. If a properly documented claim is timely filed with the
228 department by a damaged title insurer, the department may remit
229 an appropriate amount of the deposit or the proceeds that are
230 received from the surety in payment of the claim. The required
231 deposit or bond must be made by the title insurance agency, and
232 a title insurer may not provide the deposit or bond directly or
233 indirectly on behalf of the title insurance agency. The deposit
234 or bond must secure the performance by the title insurance
235 agency of its duties and responsibilities under the issuing
236 agency contracts with each title insurer for which it is
237 appointed. The agency may exchange or substitute other
238 securities of like quality and value for securities on deposit,
239 may receive the interest and other income accruing on such
240 securities, and may inspect the deposit at all reasonable times.
241 Such deposit or bond must remain unimpaired as long as the title
242 insurance agency continues in business in this state and until 1
243 year after termination of all title insurance agency
244 appointments held by the title insurance agency. The title
245 insurance agency is entitled to the return of the deposit or
246 bond together with accrued interest after such year has passed,
247 if no claim has been made against the deposit or bond. If a
248 surety bond is unavailable generally, the department may adopt
249 rules for alternative methods to comply with this subsection.
250 With respect to such alternative methods for compliance, the
251 department must be guided by the past business performance and
252 good reputation and character of the proposed title insurance
253 agency. A surety bond is deemed to be unavailable generally if
254 the prevailing annual premium exceeds 25 percent of the
255 principal amount of the bond.
256 Section 7. Section 626.8419, Florida Statutes, is amended
257 to read:
258 626.8419 Appointment of title insurance agency.—
259 (1) The title insurer engaging or employing a the title
260 insurance agency must file with the department, on forms
261 furnished by the department, an application certifying that the
262 proposed title insurance agency meets all of the following
263 requirements:
264 (a) The title agency has must have obtained a fidelity bond
265 in an amount of at least, not less than $50,000, acceptable to
266 the insurer appointing the agency. If a fidelity bond is
267 unavailable generally, the department shall must adopt rules for
268 alternative methods to comply with this paragraph.
269 (b) The title agency must have obtained errors and
270 omissions insurance in an amount acceptable to the insurer
271 appointing the agency. The amount of the coverage must be at
272 least may not be less than $250,000 per claim and an aggregate
273 limit that has with a deductible no greater than $10,000. If
274 errors and omissions insurance is unavailable generally, the
275 department shall must adopt rules for alternative methods for
276 complying to comply with this paragraph.
277 (c) Notwithstanding s. 626.8418(2), The agency must have
278 obtained a surety bond in an amount not less than $35,000 made
279 payable to the title insurer or title insurers appointing the
280 agency. The surety bond is must be for the benefit of any
281 appointing title insurer damaged by a violation by the title
282 insurance agency of its contract with the appointing title
283 insurer. If the surety bond is payable to multiple title
284 insurers, the surety bond must provide that each title insurer
285 is to be notified in the event a claim is made upon the surety
286 bond or the bond is terminated.
287 (d) The surety bond must remain in effect and unimpaired as
288 long as the agency is appointed by a title insurer. The agency
289 must provide written proof to the appointing title insurer or
290 insurers on an annual basis evidencing that the surety bond is
291 still in effect and unimpaired.
292 (e) A title insurer may not provide the surety bond
293 directly or indirectly on behalf of the agency.
294 (2) This section does not exempt title insurance agents
295 from the appointment requirements of part I.
296 Section 8. Section 626.8422, Florida Statutes, is created
297 to read:
298 626.8422 Functions that may be performed by title agents,
299 title agencies, and authorized employees.—Functions that may be
300 performed by title agents, title agencies, and authorized
301 employees of title agencies include, but are not limited to:
302 (1) Preparing a search or causing such searches purporting
303 to be a synopsis of instruments of record or other matters
304 affecting the title to real property or other insurable
305 interest.
306 (2) Taking such steps as the title agency deems advisable
307 to inform itself of the status of any title that the title
308 agency, or title insurer for whom the title agency is acting as
309 agent, may be called upon to insure.
310 (3) Examining information concerning title to real property
311 or other insurable interest to determine for itself the
312 conditions upon which the title agency, or any title insurer for
313 whom the title agency is acting as agent, will issue a
314 commitment for title insurance or a policy of title insurance.
315 (4) Issuing title insurance commitments that describe the
316 conditions that must be fulfilled before the title agency, or
317 title insurer for whom the title agency is acting as agent, will
318 issue a title insurance policy in connection with any proposed
319 real estate transaction or other insurable interest.
320 (5) Drawing such documents as may be necessary to fulfill
321 the conditions described in a commitment issued by the title
322 agency or title insurer for whom the title agency is acting as
323 agent.
324 (6) Conducting real estate closings or settlements and the
325 refinancing of real properties incident to the fulfillment of
326 conditions described in the title insurance commitments issued
327 by the title agency or title insurer for whom the title agency
328 is acting as agent.
329 (7) Acting as an escrow agent in a simple escrow
330 transaction in which no title insurance is involved.
331 Section 9. Subsections (3), (4), and (9) of section
332 626.8437, Florida Statutes, are amended to read:
333 626.8437 Grounds for denial, suspension, revocation, or
334 refusal to renew license or appointment.—The department shall
335 deny, suspend, revoke, or refuse to renew or continue the
336 license or appointment of any title insurance agent or agency,
337 and it shall suspend or revoke the eligibility to hold a license
338 or appointment of such person, if it finds that as to the
339 applicant, licensee, appointee, or any principal thereof, any
340 one or more of the following grounds exist:
341 (3) Willful misrepresentation of any title insurance
342 policy, guarantee of title, binder, or commitment, or willful
343 deception with regard to any such policy, guarantee, binder, or
344 commitment, done either in person or by any form of
345 dissemination of information or advertising.
346 (4) Demonstrated lack of fitness or trustworthiness to
347 represent a title insurer in the issuance of its commitments or,
348 binders, policies of title insurance, or guarantees of title.
349 (9) Willful failure to comply with, or willful violation
350 of, any proper order or rule of the department or willful
351 violation of any provision of this part act.
352 Section 10. Subsection (1) of section 626.8443, Florida
353 Statutes, is amended to read:
354 626.8443 Duration of suspension or revocation.—
355 (1) The department shall, in its order suspending a title
356 insurance agent’s or agency’s license or appointment or in its
357 order suspending the eligibility of a person to hold or apply
358 for such license or appointment, specify the period during which
359 the suspension is to be in effect, which may but such period
360 shall not exceed 2 years 1 year. The license, or appointment, or
361 eligibility shall remain suspended during the period so
362 specified, subject, however, to any rescission or modification
363 of the order by the department, or modification or reversal
364 thereof by the court, before prior to expiration of the
365 suspension period. A license, appointment, or eligibility that
366 which has been suspended may not be reinstated except upon
367 request for such reinstatement, but the department may shall not
368 grant such reinstatement if it finds that the circumstance or
369 circumstances for which the license, appointment, and
370 eligibility was suspended still exist or are likely to recur.
371 Section 11. Section 626.8473, Florida Statutes, is amended
372 to read:
373 626.8473 Escrow; trust fund.—
374 (1) A licensed title insurance agency agent may engage in
375 business as an escrow agent as to funds received from others to
376 be subsequently disbursed by the title agency insurance agent in
377 connection with real estate closing transactions involving the
378 issuance of title insurance binders, commitments or, policies of
379 title insurance., or guarantees of title, provided that A
380 licensed and appointed title insurance agency engaging in such
381 business must comply agent complies with the requirements of s.
382 626.8417, including any such requirements added after the
383 initial licensure of the title agency agent.
384 (2) A licensed title insurance agency may act as a simple
385 escrow agent holding a simple escrow if:
386 (a) An escrow agreement describing the terms and conditions
387 of the escrow is executed by the parties.
388 (b) The title agency provides written notice to the parties
389 that the funds and acts of the title agent with respect to
390 simple escrow are not guaranteed or insured by a title insurer.
391 (c) All funds relating to simple escrow are held in a
392 separate escrow account that is not subject to s. 626.792 or the
393 bond requirements of s. 626.8419. A title insurer is not
394 responsible for the acts or funds of the title agent with
395 respect to simple escrow.
396 (d) Written notice is provided to the parties of any
397 insurance or bonding obtained to protect the parties to the
398 simple escrow and the procedure for filing a claim.
399 (e) The identity of the financial institution in which the
400 escrow funds will be held is provided to the parties at the time
401 of or before the delivery of funds to the title agency.
402 (3) All funds received by a licensed title insurance agency
403 agent as described in subsections (1) and (2) must subsection
404 (1) shall be escrow or trust funds received in a fiduciary
405 capacity by the title agency insurance agent and shall be the
406 property of the person or persons entitled thereto and not the
407 property of the title agency.
408 (4)(3) All funds received by a title insurance agency agent
409 to be held in an escrow or trust account must shall be
410 immediately placed in a financial institution that is located
411 within this state and is a member of the Federal Deposit
412 Insurance Corporation or the National Credit Union Share
413 Insurance Fund. These funds shall be invested in an escrow
414 account in accordance with the investment requirements and
415 standards established for deposits and investments of state
416 funds under in s. 17.57, where the funds shall be kept until
417 disbursement thereof is properly authorized. Only authorized
418 employees may be an authorized signer on the escrow account of a
419 title agency.
420 (5) All funds received by a licensed and appointed title
421 insurance agent, title agency, or attorney-agent to be held in
422 trust shall be placed in the escrow or trust account of the
423 title agency or attorney-agent. The bank account used for these
424 funds must include the terms “escrow account” or “trust account”
425 in the name of the account and must be clearly printed on the
426 bank statement, deposit slips, and all disbursement checks.
427 (6)(4) Funds required to be maintained in an escrow or
428 trust account accounts pursuant to this section are shall not be
429 subject to any debts of the title insurance agent or the title
430 insurance agency and shall be used only in accordance with the
431 terms of the individual, escrow, settlement, or closing
432 instructions under which the funds were accepted. Escrow funds
433 may not be commingled with other funds of the title agency.
434 (7)(5) The title insurance agency agents shall maintain a
435 ledger card for each real estate transaction and separate
436 records of all receipts and disbursements of escrow, settlement,
437 or closing funds.
438 (8) Escrow funds shall be held in a fiduciary capacity by
439 the licensed and appointed title insurance agency or attorney
440 agent until the funds are delivered to the proper party
441 identified in the settlement statement, escrow agreement, or
442 other disbursement direction executed by appropriate parties,
443 except as otherwise permitted or required by applicable state or
444 federal law or rule, or until the funds are delivered to the
445 Unclaimed Property Trust Fund as required under chapter 717.
446 (9) A title agent, title agency, attorney-agent, or title
447 insurer shall have the right to interplead any escrow funds it
448 is holding if there is a dispute or uncertainty as to the
449 disbursement thereof. The title agent, title agency, attorney
450 agent, or title insurer is entitled to recover its filing fees,
451 costs, and attorney fees from the escrow funds. If the escrow
452 funds are insufficient, the nonprevailing party is responsible
453 for payment of the shortage.
454 (10)(6) In the event that The department may adopt
455 promulgates rules necessary to administer implement the
456 requirements of this section pursuant to s. 624.308, and to
457 establish the department shall consider reasonable standards
458 necessary for the protection of funds held by a licensed title
459 agent or agency in trust, including, but not limited to,
460 standards for accounting of funds, standards for receipt and
461 disbursement of funds, and protection for the person or persons
462 to whom the funds are to be disbursed.
463 (11)(7) A title insurance agency agent, or any officer,
464 director, agent, or employee thereof, or any person serving
465 associated therewith as an independent contractor for
466 bookkeeping or similar purposes, who converts or misappropriates
467 funds received or held in escrow or in trust by such title
468 insurance agent, or any person who knowingly receives or
469 conspires to receive such funds, commits:
470 (a) If the funds converted or misappropriated are $300 or
471 less, a misdemeanor of the first degree, punishable as provided
472 in s. 775.082 or s. 775.083.
473 (b) If the funds converted or misappropriated are more than
474 $300, but less than $20,000, a felony of the third degree,
475 punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
476 (c) If the funds converted or misappropriated are $20,000
477 or more, but less than $100,000, a felony of the second degree,
478 punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
479 (d) If the funds converted or misappropriated are $100,000
480 or more, a felony of the first degree, punishable as provided in
481 s. 775.082, s. 775.083, or s. 775.084.
482 (12)(8) An attorney shall deposit and maintain all funds
483 received in connection with transactions in which the attorney
484 is serving as a title or real estate settlement agent into a
485 separate trust account that is maintained exclusively for funds
486 received in connection with such transactions and permit the
487 account to be audited by its title insurers, unless maintaining
488 funds in the separate account for a particular client violates
489 would violate applicable rules of The Florida Bar.
490 Section 12. Subsection (3) of section 626.0428, Florida
491 Statutes, is amended to read:
492 626.0428 Agency personnel powers, duties, and limitations.—
493 (3) An employee of an agent or agency may not initiate
494 contact with any person for the purpose of soliciting insurance
495 unless licensed and appointed as an agent or customer
496 representative. As to title insurance, an employee of an agent
497 or agency may not initiate contact with any individual proposed
498 insured for the purpose of soliciting title insurance unless
499 licensed as a title insurance agent or exempt from such
500 licensure under pursuant to s. 626.8417(4).
501 Section 13. Subsection (1) of section 627.797, Florida
502 Statutes, is amended to read:
503 627.797 Exempt agent list.—
504 (1) An Every insurer shall file with the department a list
505 containing the name and address of each appointed agent who is
506 exempt from licensure under s. 626.8417(4) and who issues or
507 countersigns binders, commitments or, title insurance policies,
508 or guarantees of title.
509 Section 14. This act shall take effect July 1, 2013.