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215 ILCS 155/ Title Insurance Act.

(215 ILCS 155/1) (from Ch. 73, par. 1401)     Sec. 1. This Act may be cited as the Title Insurance Act. (Source: P.A. 86‑239.)

    (215 ILCS 155/2)(from Ch. 73, par. 1402)
    Sec. 2. Any corporation which has been or shall be incorporated or qualified to do business under the Business Corporation Act of 1983, as now or hereafter amended, or any predecessor law for the purpose, in whole or part, of doing the business of title insurance, may transact such business during the time for which it may be incorporated or qualified to do business in this State, subject to the requirements of this Act.
(Source: P.A. 94‑893, eff. 6‑20‑06.)

    (215 ILCS 155/3)(from Ch. 73, par. 1403)
    Sec. 3. As used in this Act, the words and phrases following shall have the following meanings unless the context requires otherwise:
    (1) "Title insurance business" or "business of title insurance" means:
        (A) Issuing as insurer or offering to issue as

insurer title insurance; and

(B) Transacting or proposing to transact one or more

of the following activities when conducted or performed in contemplation of or in conjunction with the issuance of title insurance;

(i) soliciting or negotiating the issuance of

title insurance;

(ii) guaranteeing, warranting, or otherwise

insuring the correctness of title searches for all instruments affecting titles to real property, any interest in real property, cooperative units and proprietary leases, and for all liens or charges affecting the same;

(iii) handling of escrows, settlements, or

closings;

(iv) executing title insurance policies;             (v) effecting contracts of reinsurance;             (vi) abstracting, searching, or examining

titles; or

(vii) issuing insured closing letters or closing

protection letters;

(C) Guaranteeing, warranting, or insuring searches

or examinations of title to real property or any interest in real property, with the exception of preparing an attorney's opinion of title; or

(D) Guaranteeing or warranting the status of title

as to ownership of or liens on real property and personal property by any person other than the principals to the transaction; or

(E) Doing or proposing to do any business

substantially equivalent to any of the activities listed in this subsection, provided that the preparation of an attorney's opinion of title pursuant to paragraph (1)(C) is not intended to be within the definition of "title insurance business" or "business of title insurance".

(1.5) "Title insurance" means insuring, guaranteeing, warranting, or indemnifying owners of real or personal property or the holders of liens or encumbrances thereon or others interested therein against loss or damage suffered by reason of liens, encumbrances upon, defects in, or the unmarketability of the title to the property; the invalidity or unenforceability of any liens or encumbrances thereon; or doing any business in substance equivalent to any of the foregoing. "Warranting" for purpose of this provision shall not include any warranty contained in instruments of encumbrance or conveyance. Title insurance is a single line form of insurance, also known as monoline. An attorney's opinion of title pursuant to paragraph (1)(C) is not intended to be within the definition of "title insurance".     (2) "Title insurance company" means any domestic company organized under the laws of this State for the purpose of conducting the business of title insurance and any title insurance company organized under the laws of another State, the District of Columbia or foreign government and authorized to transact the business of title insurance in this State.     (3) "Title insurance agent" means a person, firm, partnership, association, corporation or other legal entity registered by a title insurance company and authorized by such company to determine insurability of title in accordance with generally acceptable underwriting rules and standards in reliance on either the public records or a search package prepared from a title plant, or both, and authorized in addition to do any of the following: act as an escrow agent, solicit title insurance, collect premiums, issue title reports, binders or commitments to insure and policies in its behalf, provided, however, the term "title insurance agent" shall not include officers and salaried employees of any title insurance company.     (4) "Producer of title business" is any person, firm, partnership, association, corporation or other legal entity engaged in this State in the trade, business, occupation or profession of (i) buying or selling interests in real property, (ii) making loans secured by interests in real property, or (iii) acting as broker, agent, attorney, or representative of natural persons or other legal entities that buy or sell interests in real property or that lend money with such interests as security.     (5) "Associate" is any firm, association, partnership, corporation or other legal entity organized for profit in which a producer of title business is a director, officer, or partner thereof, or owner of a financial interest, as defined herein, in such entity; any legal entity that controls, is controlled by, or is under common control with a producer of title business; and any natural person or legal entity with whom a producer of title business has any agreement, arrangement, or understanding or pursues any course of conduct the purpose of which is to evade the provisions of this Act.     (6) "Financial interest" is any ownership interest, legal or beneficial, except ownership of publicly traded stock.     (7) "Refer" means to place or cause to be placed, or to exercise any power or influence over the placing of title business, whether or not the consent or approval of any other person is sought or obtained with respect to the referral.     (8) "Escrow Agent" means any title insurance company or any title insurance agent, including independent contractors of either, acting on behalf of a title insurance company which receives deposits, in trust, of funds or documents, or both, for the purpose of effecting the sale, transfer, encumbrance or lease of real property to be held by such escrow agent until title to the real property that is the subject of the escrow is in a prescribed condition. An escrow agent conducting closings shall be subject to the provisions of paragraphs (1) through (4) of subsection (e) of Section 16 of this Act.     (9) "Independent Escrowee" means any firm, person, partnership, association, corporation or other legal entity, other than a title insurance company or a title insurance agent, which receives deposits, in trust, of funds or documents, or both, for the purpose of effecting the sale, transfer, encumbrance or lease of real property to be held by such escrowee until title to the real property that is the subject of the escrow is in a prescribed condition. Federal and State chartered banks, savings and loan associations, credit unions, mortgage bankers, banks or trust companies authorized to do business under the Illinois Corporate Fiduciary Act, licensees under the Consumer Installment Loan Act, real estate brokers licensed pursuant to the Real Estate License Act of 2000, as such Acts are now or hereafter amended, and licensed attorneys when engaged in the attorney‑client relationship are exempt from the escrow provisions of this Act. "Independent Escrowee" does not include employees or independent contractors of a title insurance company or title insurance agent authorized by a title insurance company to perform closing, escrow, or settlement services.     (10) "Single risk" means the insured amount of any title insurance policy, except that where 2 or more title insurance policies are issued simultaneously covering different estates in the same real property, "single risk" means the sum of the insured amounts of all such title insurance policies. Any title insurance policy insuring a mortgage interest, a claim payment under which reduces the insured amount of a fee or leasehold title insurance policy, shall be excluded in computing the amount of a single risk to the extent that the insured amount of the mortgage title insurance policy does not exceed the insured amount of the fee or leasehold title insurance policy.     (11) "Department" means the Department of Financial and Professional Regulation.     (12) "Secretary" means the Secretary of Financial and Professional Regulation.     (13) "Insured closing letter" or "closing protection letter" means an indemnification or undertaking to a party to a real estate transaction, from a principal such as a title insurance company or similar entity, setting forth in writing the extent of the principal's responsibility for intentional misconduct or errors in closing the real estate transaction on the part of a settlement agent, such as a title insurance agent or other settlement service provider.     (14) "Residential real property" means a building or buildings consisting of one to 4 residential units or a residential condominium unit where at least one of the residential units or condominium units is occupied or intended to be occupied as a residence by the purchaser or borrower, or in the event that the purchaser or borrower is the trustee of a trust, by a beneficiary of that trust. (Source: P.A. 94‑893, eff. 6‑20‑06; 95‑570, eff. 8‑31‑07.)

(215 ILCS 155/3.1)     Sec. 3.1. Public policy. It is declared to be the public policy of this State, pursuant to subsection (h) of Section 6 of Article VII of the Illinois Constitution of 1970, that any power or function set forth in this Act to be exercised by the State is an exclusive State power or function. Such power or function shall not be exercised concurrently, either directly or indirectly, by any unit of local government, including home rule units, except as otherwise provided in this Act. The fees, charges, and taxes provided for by this Act shall, as provided in Section 15.1 of this Act, be in lieu of all license fees or privilege or occupation taxes or other fees levied or assessed by any home rule unit. (Source: P.A. 90‑317, eff. 8‑1‑97.)

    (215 ILCS 155/4)(from Ch. 73, par. 1404)
    Sec. 4. Deposits.
    (a) Before doing business in the State of Illinois, a title insurance company must file with and have approved by the Secretary cash or bonds of the United States, this State or any body politic of this State in amounts as specified in subsection (b). The deposit is not to be otherwise pledged or subject to distribution among creditors or stockholders until all claims of escrow depositors, claims of policyholders, and claims under reinsurance contracts have been paid in full or discharged, reinsured, or otherwise assumed by a title insurance company authorized to do business under this Act. The cash, bonds, and securities so deposited may be exchanged for other such securities. No such cash, bond, or security shall be sold or transferred by the Secretary except on order of the circuit court or as provided in subsection (d). As long as the company depositing such securities remains solvent, the company shall be permitted to receive from the Secretary the interest on such deposit.
    (b) The deposit required under subsection (a) must have a then current value of $1,000,000. All deposits shall be held for the benefit of any insured under a policy the title insurance company issued or named party to a written escrow it accepted. The deposit is not to be otherwise pledged or subject to distribution among creditors or stockholders.
    (c) The Secretary may provide for custody of the deposits by any trust company or bank located in this State and qualified to do business under the Corporate Fiduciary Act, as now or hereafter amended. The compensation, if any, of such custodian shall be paid by the depositing company. When the required deposits have been made by a title insurance company, the Secretary shall certify that the company has complied with the provisions of this Section and is authorized to transact the business of insuring and guaranteeing titles to real estate.
    (d) If, at any time, a title insurance company causes all of its unexpired policies, escrow deposits, and reinsurance obligations in Illinois to be paid in full, cancelled, discharged, reinsured, or otherwise assumed by another title insurance company authorized to do business under this Act, the Secretary shall, upon application of the company, verified by the oath of its president or secretary and on being satisfied by an examination of its books and its officers under oath that all of its policies are paid in full, cancelled, discharged, reinsured, or otherwise assumed, authorize the release of any bond or deposit posted under this Section.
    (e) The Secretary may revoke the certificate of authority of a company that fails to maintain the deposit required by this Section. The Secretary shall give notice of that revocation to the company as provided by this Act, and during the time of the revocation, the company may not conduct a title insurance business. A company may complete contractual obligations, such as issuing a policy where the obligations have already been assumed. However, it may not solicit new business, complete new searches or examinations, or close transactions. A revocation shall not be set aside until a good and sufficient deposit has been filed with the Secretary and the company is otherwise in compliance with this Act.
(Source: P.A. 94‑893, eff. 6‑20‑06.)

    (215 ILCS 155/4.1)
    Sec. 4.1. Minimum capital and surplus. Before doing business in the State of Illinois, a title insurance company must satisfy the Secretary that it has a minimum capital and surplus of $2,000,000. The Secretary may provide the forms and standards for this purpose by rule.
(Source: P.A. 94‑893, eff. 6‑20‑06.)

    (215 ILCS 155/5)(from Ch. 73, par. 1405)
    Sec. 5. Certificate of authority required. It is unlawful for any company to engage or to continue in the business of title insurance without first procuring from the Secretary a certificate of authority stating that the company has complied with the requirements of Section 4 of this Act. An insurer that transacts any class of insurance other than title insurance anywhere in the United States is not eligible for the issuance of a certificate of authority to transact title insurance in this State nor for a renewal of a certificate of authority.
(Source: P.A. 94‑893, eff. 6‑20‑06.)

    (215 ILCS 155/6)(from Ch. 73, par. 1406)
    Sec. 6. Reinsurance.
    (a) A title insurance company may obtain reinsurance for all or any part of its liability under one or more of its title insurance policies or reinsurance agreements and may also reinsure title insurance policies issued by other title insurance companies on risks located in this State or elsewhere.
    (b) A title insurance company licensed to do business in this State shall retain at least $100,000 of primary liability for policies it issues, unless a lesser sum is authorized by the Secretary. A lesser sum may be retained at the request of an insured for a particular policy. This subsection (b) applies only to policies issued on or after the effective date of this amendatory Act of the 94th General Assembly.
(Source: P.A. 94‑893, eff. 6‑20‑06.)

    (215 ILCS 155/7)(from Ch. 73, par. 1407)
    Sec. 7. Investments.
    (a) Subject to the specific provisions of this Section, the Secretary may, after a notice and hearing, order a domestic title insurance company to limit or withdraw from certain investments, or discontinue certain investment practices, to the extent the Secretary finds that such investments or investment practices endanger the solvency of the company. The Secretary may consider the general investment provisions of the Illinois Insurance Code, as now or hereafter amended, in exercising the authority granted under this subsection (a).
    (b) A domestic title insurance company may invest in title plants. For determination of the financial condition of such title insurance company, a title plant shall be treated as an asset valued at actual cost except that the combined value of all title plants owned shall be limited for asset valuation purposes to 50% of the surplus as regards policyholders as shown on the most recent annual statement of the title insurance company.
    (c) Any investment of a domestic title insurance company acquired before the effective date of this Act and which, under this Section, would be considered ineligible as an investment on that date shall be disposed of within 2 years of the effective date of this Act. The Secretary, upon application and proof that forced sale of any such investment would be contrary to the best interests of the title insurer or its policyholders, may extend the period for disposal of the investment for a reasonable time.
(Source: P.A. 94‑893, eff. 6‑20‑06.)

    (215 ILCS 155/8)(from Ch. 73, par. 1408)
    Sec. 8. Retained liability.
    (a) The net retained liability of a title insurance company for a single risk on property located in this State, whether assumed directly or as reinsurance, may not exceed 50% of the total surplus to policyholders as shown in the most recent annual statement of the title insurance company on file with the Department.
    (b) The Secretary may waive the limitation of this Section for a particular risk upon application of the title insurance company and for good cause shown.
(Source: P.A. 94‑893, eff. 6‑20‑06.)

    (215 ILCS 155/9)(from Ch. 73, par. 1409)
    Sec. 9. Impairment of capital; discontinuance of issuance of new policies; penalty.
    (a) Whenever the capital of any title insurance company authorized to do business under this Act is determined by the circuit court, upon the application of the Secretary, to be impaired to the extent of 25% of its capital, or to have otherwise become unsafe, the Secretary shall cancel the authority of the company to do business.
    (b) The Secretary shall give notice as provided by this Act to the company to discontinue doing business until its capital has been made good. The title insurance company may continue to issue policies and perform other actions that are required to complete contractual obligations undertaken prior to the notice.
    (c) Any officer or management employee who continues to take orders for title insurance or close transactions on behalf of a company after the notice to discontinue doing business, and before its capital has been made good, may, for each offense, be fined as provided by this Act.
(Source: P.A. 94‑893, eff. 6‑20‑06.)

    (215 ILCS 155/10)(from Ch. 73, par. 1410)
    Sec. 10. Reserves. All title insurance companies authorized to do business under this Act shall establish and maintain reserves against unpaid losses and loss expenses. Upon receiving notice from or on behalf of the insured of a title defect, lien or adverse claim against the title of the insured that may result in a loss or cause expense to be incurred in the proper disposition of the claim, the title insurance company shall determine the amount to be added to the reserve, which amount shall reflect a careful estimate of the loss or loss expense likely to result by reason of the claim. Reserves required under this Section may be revised from time to time and shall be redetermined at least once each year. A title insurance company must maintain its reserves for losses independent of any other form of insurance and therefore may not issue other lines of insurance.
(Source: P.A. 94‑893, eff. 6‑20‑06.)

    (215 ILCS 155/11)(from Ch. 73, par. 1411)
    Sec. 11. Statutory premium reserve.
    (a) A domestic title insurance company shall establish and maintain a statutory premium reserve computed in accordance with this Section. The reserve shall be reported as a liability of the title insurance company in its financial statements. The statutory premium reserve shall be maintained by the title insurance company for the protection of holders of title insurance policies. Except as provided in this Section, assets equal in value to the statutory premium reserve are not subject to distribution among creditors or stockholders of the title insurance company until all claims of policyholders or claims under reinsurance contracts have been paid in full and discharged, lawfully reinsured, or otherwise assumed by another title insurance company authorized to do business under this Act.
    (b) A foreign or alien title insurance company authorized to do business under this Act shall maintain at least the same reserves on title insurance policies issued on properties located in this State as are required of domestic title insurance companies.
    (c) The statutory premium reserve shall consist of:
        (1) the amount of the statutory premium reserve on

January 1, 1990; and

(2) a sum equal to 12 1/2 cents for each $1,000 of

net retained liability under each title insurance policy on a single risk written on properties located in this State after January 1, 1990.

(d) Amounts placed in the statutory premium reserve in any year in accordance with this Section shall be deducted in determining the net profit of the title insurance company for that year.     (e) A title insurance company shall release from the statutory premium reserve a sum equal to 10% of the amount added to the reserve during a calendar year on July 1 of each of the 5 years following the year in which the sum was added, and shall release from the statutory premium reserve a sum equal to 3 1/3% of the amount added to the reserve during that year on each succeeding July 1 until the entire amount for that year has been released. The amount of the statutory premium reserve or similar premium reserve maintained before January 1, 1990, shall be released in accordance with the law in effect before January 1, 1990.     (f) This reserve is independent of the deposit requirements of Section 4 of this Act. (Source: P.A. 94‑893, eff. 6‑20‑06.)

    (215 ILCS 155/12)(from Ch. 73, par. 1412)
    Sec. 12. Examinations; compliance.
    (a) The Secretary or his authorized representative shall have the power and authority, and it shall be his duty, to cause to be visited and examined annually any title insurance company doing business under this Act, and to verify and compel compliance with the provisions of law governing it.
    (b) The Secretary or his authorized agent shall have power and authority to compel compliance with the provisions of this Act and shall, only upon the showing of good cause, require any title insurance company to take all legal means to obtain the appropriate records of its registered agents and make them available for examination at a time and place designated by the Secretary. Expenses incurred in the course of such examinations will be the responsibility of the title insurance company. In the event that a present or former registered agent or its successor refuses or is unable to cooperate with a title insurance company in furnishing the records requested by the Secretary or his or her authorized agent, then the Secretary or his or her authorized agent shall have the power and authority to obtain those records directly from the registered agent.
(Source: P.A. 94‑893, eff. 6‑20‑06.)

    (215 ILCS 155/13)(from Ch. 73, par. 1413)
    Sec. 13. Annual statement.
    (a) Each title insurance company shall file with the Department during the month of March of each year, a statement under oath, of the condition of such company on the thirty‑first day of December next preceding disclosing the assets, liabilities, earnings and expenses of the company. The report shall be in such form and shall contain such additional statements and information as to the affairs, business, and conditions of the company as the Secretary may from time to time prescribe or require.
    (b) By June 1 of each year, a title insurance company must file with the Department a copy of its most recent audited financial statements.
(Source: P.A. 94‑893, eff. 6‑20‑06.)

    (215 ILCS 155/14)(from Ch. 73, par. 1414)
    Sec. 14. Fees.
    (a) Every title insurance company and every independent escrowee subject to this Act shall pay the following fees:
        (1) for filing the original application for a

certificate of authority and receiving the deposit required under this Act, $500;

(2) for the certificate of authority, $10;         (3) for every copy of a paper filed in the

Department under this Act, $1 per folio;

(4) for affixing the seal of the Department and

certifying a copy, $2; and

(5) for filing the annual statement, $50.     (b) Each title insurance company shall pay, for all of its title insurance agents subject to this Act for filing an annual registration of its agents, an amount equal to $3 for each policy issued by all of its agents in the immediately preceding calendar year. (Source: P.A. 93‑32, eff. 7‑1‑03; 94‑893, eff. 6‑20‑06.)

    (215 ILCS 155/14.1)
    Sec. 14.1. Financial Institutions Fund. All moneys received by the Department of Financial and Professional Regulation under this Act shall be deposited in the Financial Institutions Fund created under Section 6z‑26 of the State Finance Act.
(Source: P.A. 94‑893, eff. 6‑20‑06.)

    (215 ILCS 155/15)(from Ch. 73, par. 1415)
    Sec. 15. Retaliatory provisions; fees. Whenever the existing or future laws of any State or country shall require of title insurance companies incorporated or organized under the laws of this State, as a condition precedent to their transacting in such other State or country the business of title insurance, compliance with laws, rules, regulations or prohibitions more onerous or burdensome than those imposed under this Act by this State on foreign title insurance companies transacting such business in this State, or shall require any deposit of securities or other obligations in such State or country for the protection of policyholders, or otherwise, in excess of the amounts required of foreign title insurance companies by this Act, or shall require of Illinois title insurance companies doing such business in such State or country, the payment of penalties, fees, charges or taxes greater than the aggregate for like purposes imposed by the laws of this State upon such foreign title insurance companies, then such laws, rules, regulations, and prohibitions of said other State or country shall apply to title insurance companies incorporated or organized under the laws of such State or country doing business in this State, and all such companies, doing business in this State, shall be required to make deposits with the Department, and to pay to the Department penalties, fees, charges, and taxes at least in amounts equal to those required in the aggregate for like purpose of Illinois companies doing such business in such State or country.
(Source: P.A. 94‑893, eff. 6‑20‑06.)

(215 ILCS 155/15.1)     Sec. 15.1. No taxes to be imposed by political subdivisions. The fees, charges, and taxes provided for by this Act shall be in lieu of all license fees or privilege or occupation taxes or other fees levied or assessed by any municipality, county, or other political subdivision of this State. No municipality, county, or other political subdivision of this State shall impose any license fee or privilege or occupation tax or fee upon any domestic, foreign, or alien company, or upon any of its agents, for the privilege of doing insurance business therein. This Section shall not be construed to prohibit the levy and collection of State, county, or municipal taxes upon the real and personal property of the company, including the tax imposed by subsections (c) and (d) of Section 201 of the Illinois Income Tax Act. This Section 15.1 is declared to be a denial and limitation of the powers of home rule units pursuant to paragraph (g) of Section 6 of Article VII of the Illinois Constitution of 1970. (Source: P.A. 90‑317, eff. 8‑1‑97.)

    (215 ILCS 155/16)(from Ch. 73, par. 1416)
    Sec. 16. Title insurance agents.
    (a) No person, firm, partnership, association, corporation or other legal entity shall act as or hold itself out to be a title insurance agent unless duly registered by a title insurance company with the Secretary.
    (b) Each application for registration shall be made on a form specified by the Secretary and prepared in duplicate by each title insurance company which the agent represents. The title insurance company shall retain the copy of the application and forward the original to the Secretary with the appropriate fee.
    (c) Every applicant for registration, except a firm, partnership, association or corporation, must be 18 years or more of age.
    (d) Registration shall be made annually by a filing with the Secretary; supplemental registrations for new title insurance agents to be added between annual filings shall be made from time to time in the manner provided by the Secretary; registrations shall remain in effect unless revoked or suspended by the Secretary or voluntarily withdrawn by the registrant or the title insurance company.
    (e) Funds deposited in connection with any escrows, settlements, or closings shall be deposited in a separate fiduciary trust account or accounts in a bank or other financial institution insured by an agency of the federal government unless the instructions provide otherwise. The funds shall be the property of the person or persons entitled thereto under the provisions of the escrow, settlement, or closing and shall be segregated by escrow, settlement, or closing in the records of the escrow agent. The funds shall not be subject to any debts of the escrowee and shall be used only in accordance with the terms of the individual escrow, settlement, or closing under which the funds were accepted.
    Interest received on funds deposited with the escrow agent in connection with any escrow, settlement, or closing shall be paid to the depositing party unless the instructions provide otherwise.
    The escrow agent shall maintain separate records of all receipts and disbursements of escrow, settlement, or closing funds.
    The escrow agent shall comply with any rules adopted by the Secretary pertaining to escrow, settlement, or closing transactions.
(Source: P.A. 94‑893, eff. 6‑20‑06.)