2006 Utah Code - 31A-23a-204 — Special requirements for title insurance producers and agencies.

     31A-23a-204.   Special requirements for title insurance producers and agencies.
     Title insurance producers shall be licensed in accordance with this chapter, with the additional requirements listed in this section.
     (1) (a) A person that receives a new license under this title on or after July 1, 2007 as a title insurance agency, shall at the time of licensure be owned or managed by one or more natural persons who are licensed with the following lines of authority for at least three of the five years immediately proceeding the date on which the title insurance agency applies for a license:
     (i) both a:
     (A) search line of authority; and
     (B) escrow line of authority; or
     (ii) a search and escrow line of authority.
     (b) A title insurance agency subject to Subsection (1)(a) may comply with Subsection (1)(a) by having the title insurance agency owned or managed by:
     (i) one or more natural persons who are licensed with the search line of authority for the time period provided in Subsection (1)(a); and
     (ii) one or more natural persons who are licensed with the escrow line of authority for the time period provided in Subsection (1)(a).
     (c) The Title and Escrow Commission may by rule made in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, exempt an attorney with real estate experience from the experience requirements in Subsection (1)(a).
     (2) (a) Every title insurance agency or producer appointed by an insurer shall maintain:
     (i) a fidelity bond;
     (ii) a professional liability insurance policy; or
     (iii) a financial protection:
     (A) equivalent to that described in Subsection (2)(a)(i) or (ii); and
     (B) that the commissioner considers adequate.
     (b) The bond or insurance required by this Subsection (2):
     (i) shall be supplied under a contract approved by the commissioner to provide protection against the improper performance of any service in conjunction with the issuance of a contract or policy of title insurance; and
     (ii) be in a face amount no less than $50,000.
     (c) The Title and Escrow Commission may by rule made in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, exempt title insurance producers from the requirements of this Subsection (2) upon a finding that, and only so long as, the required policy or bond is generally unavailable at reasonable rates.
     (3) (a) (i) Every title insurance agency or producer appointed by an insurer shall maintain a reserve fund.
     (ii) The reserve fund required by this Subsection (3) shall be:
     (A) (I) composed of assets approved by the commissioner and the Title and Escrow Commission;
     (II) maintained as a separate trust account; and
     (III) charged as a reserve liability of the title insurance producer in determining the producer's financial condition; and
     (B) accumulated by segregating 1% of all gross income received from the title insurance business.

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     (iii) The reserve fund shall contain the accumulated assets for the immediately preceding ten years as defined in Subsection (3)(a)(ii).
     (iv) That portion of the assets held in the reserve fund over ten years may be:
     (A) withdrawn from the reserve fund; and
     (B) restored to the income of the title insurance producer.
     (v) The title insurance producer may withdraw interest from the reserve fund related to the principal amount as it accrues.
     (b) (i) A disbursement may not be made from the reserve fund except as provided in Subsection (3)(a) unless the title insurance producer ceases doing business as a result of:
     (A) sale of assets;
     (B) merger of the producer with another producer;
     (C) termination of the producer's license;
     (D) insolvency; or
     (E) any cessation of business by the producer.
     (ii) Any disbursements from the reserve fund may be made only to settle claims arising from the improper performance of the title insurance producer in providing services defined in Section 31A-23a-406.
     (iii) The commissioner shall be notified ten days before any disbursements from the reserve fund.
     (iv) The notice required by this Subsection (3)(b) shall contain:
     (A) the amount of claim;
     (B) the nature of the claim; and
     (C) the name of the payee.
     (c) (i) The reserve fund shall be maintained by the title insurance producer or the title insurance producer's representative for a period of two years after the title insurance producer ceases doing business.
     (ii) Any assets remaining in the reserve fund at the end of the two years specified in Subsection (3)(c)(i) may be withdrawn and restored to the former title insurance producer.
     (4) Any examination for licensure shall include questions regarding the search and examination of title to real property.
     (5) A title insurance producer may not perform the functions of escrow unless the title insurance producer has been examined on the fiduciary duties and procedures involved in those functions.
     (6) The Title and Escrow Commission shall adopt rules, in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, after consulting with the department and the department's test administrator, establishing an examination for a license that will satisfy this section.
     (7) A license may be issued to a title insurance producer who has qualified:
     (a) to perform only searches and examinations of title as specified in Subsection (4);
     (b) to handle only escrow arrangements as specified in Subsection (5); or
     (c) to act as a title marketing representative.
     (8) (a) A person licensed to practice law in Utah is exempt from the requirements of Subsections (2) and (3) if that person issues 12 or less policies in any 12-month period.
     (b) In determining the number of policies issued by a person licensed to practice law in Utah for purposes of Subsection (8)(a), if the person licensed to practice law in Utah issues a

policy to more than one party to the same closing, the person is considered to have issued only one policy.
     (9) A person licensed to practice law in Utah, whether exempt under Subsection (8) or not, shall maintain a trust account separate from a law firm trust account for all title and real estate escrow transactions.

Amended by Chapter 312, 2006 General Session