2005 Texas Insurance Code CHAPTER 2501. GENERAL PROVISIONS

INSURANCE CODE

TITLE 11. TITLE INSURANCE

SUBTITLE A. GENERAL PROVISIONS

CHAPTER 2501. GENERAL PROVISIONS


	§ 2501.001. SHORT TITLE.  This title may be cited as the 
Texas Title Insurance Act.

Added by Acts 2003, 78th Leg., ch. 1274, § 6, eff. April 1, 2005.          


	§ 2501.002. PURPOSE;  LEGISLATIVE INTENT.  (a) The 
purpose of this title is to completely regulate the business of 
title insurance, including the direct issuance of policies and the 
reinsurance of any assumed risks, to:
		(1)  protect consumers and purchasers of title 
insurance policies;  and     
		(2)  provide adequate and reasonable rates of return 
for title insurance companies and title insurance agents.
	(b)  It is the express legislative intent that this title 
accomplish the purpose described by Subsection (a).

Added by Acts 2003, 78th Leg., ch. 1274, § 6, eff. April 1, 2005.          


	§ 2501.003. DEFINITIONS.  In this title:                                    
		(1)  "Abstract plant" means an abstract plant as 
defined by the department under Section 2501.004.
		(2)  "Attorney" means:                                                        
			(A)  a person who is licensed to practice law and 
is a member of the State Bar of Texas;  or
			(B)  a Texas professional corporation organized 
to provide professional legal services.
		(3)  "Direct operation" means the operations of a title 
insurance company under a license issued to the company under 
Subchapter B, Chapter 2651.  A reference in this title to a title 
insurance agent shall be construed to include a direct operation 
unless the context indicates otherwise.
		(4)  "Escrow officer" means an attorney, a bona fide 
employee of an attorney licensed as an escrow officer, a bona fide 
employee of a direct operation, or a bona fide employee of a title 
insurance agent whose responsibilities include:
			(A)  countersigning title insurance forms;                                   
			(B)  supervising the preparation and delivery of 
title insurance forms;    
			(C)  signing escrow checks;  or                                              
			(D)  closing the transaction, as described by 
Section 2501.006.            
		(5)  "Foreign title insurance company" means a title 
insurance company organized under the laws of a jurisdiction other 
than this state.
		(6)  "Joint abstract plant operation" means a joint 
abstract plant operation as defined by the department under Section 
2501.004.
		(7)  "Person" includes an individual, corporation, 
association, partnership, or trust.
		(8)  "Premium" means the premium rates promulgated by 
the commissioner under Subchapters D and E, Chapter 2703, and 
includes a charge for:
			(A)  title examination and closing the 
transaction, regardless of whether the examination or closing is 
performed by an attorney;  and
			(B)  issuing the policy.                                                     
		(9)  "Residential real property" means real property 
that is improved and is designed principally for occupancy by one to 
four families.  The term includes an individual unit of a 
condominium or cooperative.
		(10)  "Thing of value" includes any payment, advance, 
funds, loan, service, or other consideration.
		(11)  "Title examination" means the search and 
examination of a title to determine the conditions of the title to 
be insured and to evaluate the risk to be undertaken in the issuance 
of a title insurance policy or other title insurance form.
		(12)  "Title insurance" means:                                                
			(A)  insurance that insures, guarantees, or 
indemnifies an owner of real property, or another interested in the 
real property, against loss or damage resulting from:
				(i)  a lien or encumbrance on or defect in 
the title to the real property;  or
				(ii)  the invalidity or impairment of a lien 
on the real property;  or    
			(B)  any business that is substantially 
equivalent to the insurance described by Paragraph (A) and is 
conducted in a manner designed to evade the provisions of this 
title.
		(13)  "Title insurance agent" means a person owning or 
leasing and controlling an abstract plant or as a participant in a 
bona fide joint abstract plant operation and authorized in writing 
by a title insurance company to solicit insurance and collect 
premiums and to issue or countersign policies on the company's 
behalf.
		(14)  "Title insurance company" means:                                        
			(A)  a domestic company organized under this title 
to engage in the business of title insurance, as described by 
Section 2501.005;
			(B)  a foreign title insurance company that:                                 
				(i)  meets the requirements of this title;  
and                           
				(ii)  holds a certificate of authority to 
engage in business in this state;  or
			(C)  any other domestic or foreign company that:                             
				(i)  meets the requirements of this title;  
and                           
				(ii)  holds a certificate of authority to 
insure a title to real property in this state.

Added by Acts 2003, 78th Leg., ch. 1274, § 6, eff. April 1, 2005.          


	§ 2501.004. ABSTRACT PLANT;  JOINT ABSTRACT PLANT 
OPERATION.  (a) For purposes of this title, the department shall 
define "abstract plant" and "joint abstract plant operation."
	(b)  To provide for the safety and protection of 
policyholders, the department shall require that an abstract plant 
be:
		(1)  geographically arranged;                                                 
		(2)  kept current;  and                                                       
		(3)  adequate for use in insuring titles, as determined 
by the department.  

Added by Acts 2003, 78th Leg., ch. 1274, § 6, eff. April 1, 2005.          


	§ 2501.005. BUSINESS OF TITLE INSURANCE.  (a) For 
purposes of this title, a person engages in the business of title 
insurance if the person:
		(1)  as insurer, guarantor, or surety, makes or 
proposes to make a contract or policy of title insurance or its 
equivalent;
		(2)  transacts or proposes to transact any phase of 
title insurance, including:
			(A)  soliciting;                                                             
			(B)  title examination other than an examination 
conducted by an attorney; 
			(C)  closing the transaction other than a closing 
conducted by an attorney;
			(D)  executing a contract of title insurance;  and                           
			(E)  insuring and transacting matters arising out 
of the contract after the contract is executed, including 
reinsurance;  or
		(3)  makes a guaranty or warranty of a title search or a 
title examination, or any component of a title search or title 
examination, if the person is not the person who performs the search 
or examination.
	(b)  A person engages in the business of title insurance if 
the person engages in or proposes to engage in any business that is 
substantially equivalent to the business of title insurance as 
described by this section, regardless of whether that conduct is 
performed in a manner designed to evade the provisions of this 
title.

Added by Acts 2003, 78th Leg., ch. 1274, § 6, eff. April 1, 2005.          


	§ 2501.006. CLOSING THE TRANSACTION.  (a) For purposes of 
this title, "closing the transaction" describes the investigation 
that is made:
		(1)  on behalf of a title insurance company, title 
insurance agent, or direct operation before the title insurance 
policy is issued;  and
		(2)  to determine proper execution, acknowledgment, 
and delivery of all conveyances, mortgage papers, and other title 
instruments necessary to consummate a transaction.
	(b)  Closing the transaction includes a determination that:                    
		(1)  all delinquent taxes have been paid;                                     
		(2)  in the case of an owner title insurance policy, all 
current taxes, based on the latest available information, have been 
properly prorated between the purchaser and seller;
		(3)  the consideration has been passed;                                       
		(4)  all proceeds have been properly disbursed;                               
		(5)  a final search of the title has been made;  and                          
		(6)  all necessary papers have been filed for record.                         

Added by Acts 2003, 78th Leg., ch. 1274, § 6, eff. April 1, 2005.          


	§ 2501.007. REFERENCES TO TITLE.  In this title, a 
reference to this title includes a reference to:
		(1)  Chapter 223;                                                             
		(2)  Chapter 271;  and                                                        
		(3)  Subchapter U, Chapter 171, Tax Code.                                     

Added by Acts 2003, 78th Leg., ch. 1274, § 6, eff. April 1, 2005.  
Amended by Acts 2005, 79th Leg., ch. 728, § 11.077, eff. Sept. 1, 
2005.