CHAPTER 3. ABSTRACT AND TITLE INSURANCE
IC 27-7-3
Chapter 3. Abstract and Title Insurance
IC 27-7-3-1
Citation
Sec. 1. This chapter shall be known and may be cited as The
Indiana Abstract and Title Insurance Law.
(Formerly: Acts 1937, c.104, s.1.) As amended by P.L.252-1985,
SEC.247.
IC 27-7-3-2
Definitions
Sec. 2. As used in this chapter and unless a different meaning
appears from the context:
(a) The term "title insurance" means a contract of insurance
against loss or damage on account of encumbrances upon or defects
in the title to real estate.
(b) The term "company" shall mean and include any corporation,
domestic or foreign, to which this chapter is applicable.
(c) The term "department" shall mean the department of insurance
of the state of Indiana.
(d) The term "commissioner" shall mean the insurance
commissioner.
(e) The term "public record" has the meaning set forth in
IC 5-14-3-2.
(f) The term "title search" means a search and examination of the
public records sufficient to determine:
(1) ownership of;
(2) encumbrances on;
(3) liens on; and
(4) defects in the title to;
the real estate that is the subject of the search.
(Formerly: Acts 1937, c.104, s.2.) As amended by P.L.252-1985,
SEC.248; P.L.68-2002, SEC.1.
IC 27-7-3-3
Title insurance business; authorization of domestic and foreign
corporations; application of business corporation law
Sec. 3. Any domestic corporation having among its purposes the
insuring against loss or damage on account of encumbrances upon or
defects in the title to real estate, is hereby authorized to organize
under IC 23-1, and any foreign corporation, having among its
purposes the insuring against loss or damage on account of
encumbrances upon or defects in the title to real estate, is hereby
authorized to and may be admitted to do business in this state under
IC 23-1. Any domestic or foreign corporation, organized or admitted
to do business before or after June 7, 1937, as provided in this
section, may engage in business as a title insurance company by
complying with the provisions of this chapter.
(Formerly: Acts 1937, c.104, s.3.) As amended by P.L.252-1985,
SEC.249.
IC 27-7-3-4
Corporate rights; powers and privileges
Sec. 4. Every such company shall possess and may exercise all the
rights, powers, and privileges conferred upon domestic corporations
by IC 23-1 but only to the extent that the same may be necessary,
convenient or expedient to accomplish the purposes for which it is
organized, and in addition thereto, but subject to the restrictions and
limitations contained in this chapter, every such company shall
possess and may exercise the power of making insurance to insure
against the loss or damage on account of encumbrances upon or
defects in the title to real estate. In all things not specifically
provided for in this chapter, the provisions of IC 23-1 shall apply.
(Formerly: Acts 1937, c.104, s.4.) As amended by P.L.252-1985,
SEC.250.
IC 27-7-3-5
Capital stock
Sec. 5. The capital stock of any company engaged in business
under the provisions of this chapter shall be not less than one
hundred thousand dollars ($100,000), which shall be fully paid in.
(Formerly: Acts 1937, c.104, s.5.) As amended by P.L.252-1985,
SEC.251.
IC 27-7-3-6
Certificate of authority; requirements; issuance; necessity to do
business
Sec. 6. (a) Whenever any such company shall have shown to the
department by a sworn statement, verified by the oaths of the
president or a vice president and the secretary or an assistant
secretary of the company and bearing the corporate seal of such
company, that it has complied with all the requirements of this
chapter necessary for beginning business and that it has deposited the
amount as required in section 7 of this chapter, the commissioner
shall issue a certificate of authority reciting that such company has
complied with the provisions of this chapter and is authorized to
insure against the loss or damage on account of encumbrances upon
or defects in the title to real estate, which certificate shall expire as
of midnight of April 30 of each calendar year. The certificate shall
be issued under the seal of the department.
(b) No person, firm, partnership, corporation, association, or
company shall transact any business of insuring against loss or
damage on account of encumbrances upon or defects in the title to
real estate until it or they shall have received a certificate of authority
as provided for in this section.
(Formerly: Acts 1937, c.104, s.6.) As amended by P.L.252-1985,
SEC.252.
IC 27-7-3-7
Deposits; title insurance fund
Sec. 7. Every company described in section 3 of this chapter,
before engaging in business, shall deposit with the department the
sum of fifty thousand dollars ($50,000) either out of its capital or
surplus. The deposit shall be known as the title insurance fund and
must be deposited in securities of the kind and character designated
by IC 27-1-13-3(b).
(Formerly: Acts 1937, c.104, s.7.) As amended by P.L.252-1985,
SEC.253; P.L.159-1986, SEC.5; P.L.161-1986, SEC.2;
P.L.184-1996, SEC.3.
IC 27-7-3-8
Additional deposit to meet requirements of another state;
withdrawal
Sec. 8. In the event any such domestic company shall be required
by the laws of any other state, country, or province, as a requirement
prior to doing such business as defined in this chapter therein, to
deposit, with the duly appointed officer of such other state, country,
or province or with the department of this state, any securities or
cash in excess of the deposit required of the company by this chapter,
such company may deposit with the department securities of the
character authorized by this chapter sufficient to meet such
requirement. The department is hereby authorized and directed to
receive such deposit and to hold it exclusively for the protection of
all policyholders of the company. Any deposit so made to meet the
requirement of any such other state, country, or province shall not be
withdrawn by the company except upon filing with the department
evidence satisfactory to it that the company has withdrawn from
business, and has no unsecured liability outstanding in any such
other state, country, or province by which such additional deposit
was required, and upon the filing of such evidence, and the approval
of the department, the company may withdraw such additional
deposit. Upon the approval of the department, any such domestic
company may deposit and use the reserve fund, provided for in
section 9 of this chapter, for the purpose of complying with the
additional deposit requirement of any other state, country, or
province.
(Formerly: Acts 1937, c.104, s.8.) As amended by P.L.252-1985,
SEC.254.
IC 27-7-3-9
Title insurance reserve fund
Sec. 9. Every company described in section 3 of this chapter shall
annually set apart, accumulate, and maintain, in a fund to be known
as the title insurance reserve fund, securities of the kind and
character designated by IC 27-1-13-3(b) of the face amount equal to
ten percent (10%) of the actual premiums collected during the
preceding year by the company on account of such title insurance,
until the fund totals fifty thousand dollars ($50,000). The fund shall
be maintained in the treasury of the company as additional security
to the holders of policies issued by the company. However, at its
option, the company may deposit the title insurance reserve fund
with the department in the amount of ten thousand dollars ($10,000),
or any multiple thereof up to fifty thousand dollars ($50,000). This
deposit shall be known as the title insurance reserve fund deposit.
(Formerly: Acts 1937, c.104, s.9.) As amended by P.L.252-1985,
SEC.255; P.L.159-1986, SEC.6; P.L.161-1986, SEC.3;
P.L.184-1996, SEC.4.
IC 27-7-3-10
Deficiency in title insurance reserve fund
Sec. 10. Whenever the amount of the title insurance reserve fund
of any such company shall fall below the amount required in section
9 of this chapter, no further title insurance shall be made or issued by
such company until the deficiency has been supplied.
(Formerly: Acts 1937, c.104, s.10.) As amended by P.L.252-1985,
SEC.256.
IC 27-7-3-11
Interest on deposited securities
Sec. 11. The department shall permit such companies having on
deposit with it stocks or bonds as security to collect the interest
accruing on such deposits, delivering to their authorized agents,
respectively, the coupons or other evidences of interest as the same
become due.
(Formerly: Acts 1937, c.104, s.11.)
IC 27-7-3-12
Foreign corporations; capital and deposit requirements; certificate
of authority; rights and privileges
Sec. 12. Every foreign corporation duly authorized to do a title
insurance business in the state in which it is incorporated or
organized and admitted to do business in this state under IC 23-1
may be authorized by the department to transact a title insurance
business in this state upon filing with the department proof which
satisfies it that the corporation has complied with sections 5 and 9 of
this chapter and has deposited with the proper official of the state in
which it is incorporated or organized, or has deposited with the
department, the amount as required by section 7 of this chapter, and
that it has complied with the provisions of this chapter. Upon the
receipt of such proof, the commissioner may issue to such foreign
corporation a certificate of authority as provided for in section 6 of
this chapter. A foreign corporation admitted to do business under this
chapter shall have the same but no greater rights and privileges than
a domestic corporation under this chapter.
(Formerly: Acts 1937, c.104, s.12.) As amended by P.L.252-1985,
SEC.257.
IC 27-7-3-13
Examination of company; appointment of examiners; report of
examination
Sec. 13. (a) The department may examine into the affairs of any
such company doing business in this state under the provisions of
this chapter. For such purpose it may appoint as examiners
competent persons, and upon such examination the commissioner,
his deputy, or any examiner authorized by him may examine under
oath the officers and agents of such company and all persons deemed
to have material information regarding the company's property or
business. Every such company, its officers, and agents shall produce
at the office of the company where the same are kept, its books and
all papers in its or their possession relating to its business or affairs,
and any other person may be required to produce any book or paper
in his custody relevant to the examination for the inspection of the
commissioner, his deputy, or examiners whenever required, and the
officers and agents of such company shall facilitate such examination
and aid the examiners in making the same so far as it is within their
power to do so.
(b) Upon the conclusion of such examination a full, true, and
detailed report of such company shall be made to the department, by
the person or persons making the examination, in such form as the
department may prescribe.
(Formerly: Acts 1937, c.104, s.13.) As amended by P.L.252-1985,
SEC.258.
IC 27-7-3-14
Annual financial statement; effect of certification by certified
public accountant
Sec. 14. (a) Every such company doing business in this state shall
file with the department on or before March 15 in each year a
financial statement for the year ending December 31 immediately
preceding on forms furnished by the department. Such statement
shall include a showing that the sum of ten percent (10%) of all
actual premiums received by such company, on account of such title
insurance business, during the year ending on December 31 prior
thereto, as required by section 9 of this chapter, has been duly set
apart and is held by such company in said title insurance reserve fund
or is held on deposit by the department as provided in section 9 of
this chapter. Such statement shall be verified by the oaths of the
president or a vice president and the secretary or an assistant
secretary.
(b) If the annual statement, as required by this section, shall be
certified to by a certified public accountant, then such statement shall
be prima facie evidence of the facts stated therein, and the
department may in its discretion accept such certified statements in
lieu of an examination under this chapter.
(Formerly: Acts 1937, c.104, s.14.) As amended by P.L.252-1985,
SEC.259.
IC 27-7-3-15
Collection of charges, fees, and taxes; disposition
Sec. 15. The department shall collect the charges, fees and taxes
provided for in this section, and give proper acquittances therefor,
and on or before the end of every calendar month shall pay into the
state treasury the amounts collected by it during such month, as
hereinafter provided:
Fees. Domestic Companies: Every such domestic company shall
pay to the department the following stipulated fees: For filing annual
statement, twenty dollars ($20.00); for license to such company, and
for each renewal thereof, five dollars ($5.00); for affixing seal or
certifying to any paper, one dollar ($1.00). The department may
require payment of fees on or before the first day of the month next
after the same are chargeable.
Fees. Foreign Companies: Every such foreign company shall pay
to the department the following stipulated fees: For filing annual
statement, twenty dollars ($20.00); for license to such company, and
for each annual renewal thereof, five dollars ($5.00); for filing
withdrawal and cancellation of certificate, twenty dollars ($20.00);
for affixing seal or certifying to any paper, one dollar ($1.00).
(Formerly: Acts 1937, c.104, s.15.)
IC 27-7-3-15.5
Residential mortgage transactions; electronic storage of data on
persons involved; closing agents to input data and submit form;
duty to provide information; failure to comply; civil penalty;
access to data; rules; administrative fee
Sec. 15.5. (a) This section applies to a transaction that:
(1) is a single family residential:
(A) first lien purchase money mortgage transaction; or
(B) refinancing transaction; and
(2) is closed after December 31, 2009.
(b) Not later than September 1, 2009, the department shall
establish and maintain an electronic system for the collection and
storage of the following information concerning any of the following
persons that have participated in or assisted with a transaction to
which this section applies, or that will participate in or assist with a
transaction to which this section applies:
(1) The name and license number (under IC 23-2-5) of each
loan brokerage business involved in the transaction.
(2) The name and license or registration number of any
mortgage loan originator who is:
(A) either licensed or registered under state or federal law as
a mortgage loan originator consistent with the Secure and
Fair Enforcement for Mortgage Licensing Act of 2008 (H.R.
3221 Title V); and
(B) involved in the transaction.
(3) The name and license number (under IC 25-34.1) of each:
(A) principal broker; and
(B) salesperson or broker-salesperson, if any;
involved in the transaction.
(4) The:
(A) name of; and
(B) code assigned by the National Association of Insurance
Commissioners (NAIC) to;
each title insurance underwriter involved in the transaction.
(5) The name and license number (under IC 27-1-15.6) of each
title insurance agency and agent involved in the transaction as
a closing agent (as defined in IC 6-1.1-12-43(a)(2)).
(6) The name and:
(A) license or certificate number (under IC 25-34.1-3-8) of
each licensed or certified real estate appraiser; or
(B) license number (under IC 25-34.1) of each broker;
who appraises the property that is the subject of the transaction.
(7) The name of the mortgagee and, if the mortgagee is required
to be licensed under IC 24-4.4, the license number of the
mortgagee.
(8) In the case of a first lien purchase money mortgage
transaction, the name of the seller of the property that is the
subject of the transaction.
(9) In the case of a first lien purchase money mortgage
transaction, the name of the buyer of the property that is the
subject of the transaction.
(10) The:
(A) name; and
(B) license number, certificate number, registration number,
or other code, as appropriate;
of any other person that participates in or assists with a
transaction to which this section applies, as the department may
prescribe.
(c) The system established by the department under this section
must include a form that:
(1) is uniformly accessible in an electronic format to the closing
agent (as defined in IC 6-1.1-12-43(a)(2)) in the transaction;
and
(2) allows the closing agent to do the following:
(A) Input information identifying the property that is the
subject of the transaction by lot or parcel number, street
address, or some other means of identification that the
department determines:
(i) is sufficient to identify the property; and
(ii) is determinable by the closing agent.
(B) Subject to subsection (d) and to the extent determinable,
input the information described in subsection (b) with
respect to each person described in subsection (b) that
participates in or assists with the transaction.
(C) Respond to the following questions:
(i) "On what date did you receive the closing instructions
from the creditor in the transaction?".
(ii) "On what date did the transaction close?".
(D) Submit the form electronically to a data base maintained
by the department.
(d) Not later than the time of the closing, each person described
in subsection (b), other than a person described in subsection (b)(8)
or (b)(9), shall provide to the closing agent in the transaction the
person's:
(1) legal name; and
(2) license number, certificate number, registration number, or
NAIC code, as appropriate;
to allow the closing agent to comply with subsection (c)(2)(B). A
person described in subsection (b)(7) shall provide the information
required by this subsection for any person described in subsection
(b)(6) that appraises the property that is the subject of the transaction
on behalf of the person described in subsection (b)(7). A person
described in subsection (b)(3)(B) who is involved in the transaction
may provide the information required by this subsection for a person
described in subsection (b)(3)(A) that serves as the principal broker
for the person described in subsection (b)(3)(B). In the case of a first
lien purchase money mortgage transaction, the closing agent shall
determine the information described in subsection (b)(8) and (b)(9)
from the HUD-1 settlement statement.
(e) Except for a person described in subsection (b)(8) or (b)(9), a
person described in subsection (b) who fails to comply with
subsection (d) is subject to a civil penalty of one hundred dollars
($100) for each closing with respect to which the person fails to
comply with subsection (d). The penalty:
(1) may be enforced by the state agency that has administrative
jurisdiction over the person in the same manner that the agency
enforces the payment of fees or other penalties payable to the
agency; and
(2) shall be paid into the home ownership education account
established by IC 5-20-1-27.
(f) Subject to subsection (g), the department shall make the
information stored in the data base described in subsection (c)(2)(D)
accessible to:
(1) each entity described in IC 4-6-12-4; and
(2) the homeowner protection unit established under
IC 4-6-12-2.
(g) The department, a closing agent who submits a form under
subsection (c), each entity described in IC 4-6-12-4, and the
homeowner protection unit established under IC 4-6-12-2 shall
exercise all necessary caution to avoid disclosure of any information:
(1) concerning a person described in subsection (b), including
the person's license, registration, or certificate number; and
(2) contained in the data base described in subsection (c)(2)(D);
except to the extent required or authorized by state or federal law.
(h) The department may adopt rules under IC 4-22-2 to implement
this section. Rules adopted by the department under this subsection
may establish procedures for the department to:
(1) establish;
(2) collect; and
(3) change as necessary;
an administrative fee to cover the department's expenses in
establishing and maintaining the electronic system required by this
section.
(i) If the department adopts a rule under IC 4-22-2 to establish an
administrative fee to cover the department's expenses in establishing
and maintaining the electronic system required by this section, as
allowed under subsection (h), the department may:
(1) require the fee to be paid:
(A) to the closing agent responsible for inputting the
information and submitting the form described in subsection
(c)(2); and
(B) by the borrower in the transaction;
(2) allow the closing agent described in subdivision (1)(A) to
retain a part of the fee collected to cover the closing agent's
costs in inputting the information and submitting the form
described in subsection (c)(2); and
(3) require the closing agent to pay the remainder of the fee
collected to the department for deposit in the title insurance
enforcement fund established by IC 27-7-3.6-1, for the
department's use in establishing and maintaining the electronic
system required by this section.
As added by P.L.145-2008, SEC.31. Amended by P.L.105-2009,
SEC.16; P.L.35-2010, SEC.96.
IC 27-7-3-16
Retirement or withdrawal from business; reinsurance; cancellation
of certificate of authority; return of deposit
Sec. 16. (a) Whenever any domestic company desires to retire
from the business provided for in this chapter, it shall furnish to the
department satisfactory evidence that it no longer has outstanding
any liability upon any policy of insurance made by it in the conduct
of its business as a title insurance company, or that it has reinsured
its outstanding policies with a solvent company, authorized to do
business under this chapter in this state, or with a company approved
by the department. At the same time the company shall surrender to
the department its certificate of authority. If the department is
satisfied that there is no outstanding liability upon any policy issued
by such company, or, that its outstanding policies have been properly
reinsured, then the department shall cancel the surrendered certificate
of authority and shall return to the company any and all deposits
made by such company under the provisions of this chapter.
(b) Whenever any foreign company desires to withdraw from
doing a title insurance business in this state, it shall furnish to the
department satisfactory evidence that it no longer has outstanding
any liability upon any policy of title insurance made by it in the
conduct of its business in this state, or that it has reinsured its
outstanding policies with a solvent company, authorized to do
business in this state, or with a company approved by the department.
At the same time such company shall surrender to the department its
certificate of authority. If the department is satisfied that there is no
outstanding liability upon any policy issued by such company in the
conduct of its business in this state, or that its outstanding policies
have been properly reinsured, then the department shall cancel the
surrendered certificate of authority and shall return to the company
any and all deposits made with it by such company under the
provisions of this chapter.
(Formerly: Acts 1937, c.104, s.16.) As amended by P.L.252-1985,
SEC.260.
IC 27-7-3-17
Violations
Sec. 17. A person who recklessly violates this chapter or fails to
fulfill any of the requirements of this chapter commits a Class B
misdemeanor.
(Formerly: Acts 1937, c.104, s.17.) As amended by Acts 1978, P.L.2,
SEC.2724.
IC 27-7-3-18
Exemptions from chapter
Sec. 18. The provisions of this chapter shall not apply to any
insurance company organized or desiring to organize under and
pursuant to IC 27-1 nor to any person, firm, partnership, corporation,
limited liability company, association, or company whose business
is the making of abstracts of title to real estate and attaching their
certificate thereto and not engaging in the business of making title
insurance, nor to any person, firm, partnership, corporation, limited
liability company, or association acting as an authorized agent for a
duly qualified title insurance company.
(Formerly: Acts 1937, c.104, s.18.) As amended by P.L.252-1985,
SEC.261; P.L.8-1993, SEC.425.
IC 27-7-3-19
Construction of chapter
Sec. 19. This chapter shall be deemed to create an additional and
separate method for engaging in the business of title insurance, as
defined in this chapter, and providing for the incorporation of such
companies and their licensing to do such business. This chapter shall
not be deemed to alter, amend, or repeal any other statutes of the
state of Indiana. No requirements or proceedings shall be necessary
for the incorporation and licensing of a title insurance company
under this chapter except such as are prescribed in this chapter, any
provision of the laws of the state of Indiana or IC 27-1 to the contrary
notwithstanding.
(Formerly: Acts 1937, c.104, s.20.) As amended by P.L.252-1985,
SEC.262.
IC 27-7-3-20
Limitation on risks
Sec. 20. (a) As used in this section, "any one (1) risk" means a
risk or hazard that arises in connection with any one (1) piece or
parcel of property, whether or not the policy insures other property.
(b) Any company organized to issue title insurance in Indiana may
not expose itself to any one (1) risk in an amount exceeding fifty
percent (50%) of the aggregate amount of its total capital and surplus
and its reserves other than its loss of claim reserves.
(c) Any risk or portion of any risk that has been reinsured as
authorized under IC 27-7, must be deducted in determining the
limitation of risk prescribed in this section.
As added by Acts 1982, P.L.162, SEC.2.
IC 27-7-3-21
Requirement of title search
Sec. 21. A company described in section 3 of this chapter that
issues a title insurance policy shall perform or cause to be performed
a title search for the real estate in conjunction with a mortgage
secured by the real estate unless the mortgage meets all of the
following requirements:
(1) The principal amount of the mortgage is not more than fifty
thousand dollars ($50,000).
(2) The mortgage is subordinate to a prior mortgage where a
title search was conducted and a title policy was issued.
(3) The mortgage is not a reverse mortgage.
As added by P.L.68-2002, SEC.2.