31A-23a-503 - Controlled business in title insurance.
31A-23a-503. Controlled business in title insurance.
(1) As used in this section:
(a) "Associate" means any:
(i) business organized for profit in which a person who refers title business is a director,officer, partner, or employee;
(ii) spouse or relative within the second degree by blood or marriage of a person whorefers title business, who is a natural person;
(iii) employee of a person who refers title business; or
(iv) person with whom a person who refers title business or any associate of thatproducer has any agreement, arrangement, or understanding, or pursues any course of conduct,designed to avoid the provisions of this chapter.
(b) "Controlled business" means that portion of the title insurance business of a titleinsurer or producer in this state that is referred to it by all those producers of title business whohave a financial interest in the title insurer or producer and by all associates of those producers. Business is referred if there is influence over the selection of the person with whom the businessis placed.
(c) "A person who refers title business" includes any person engaged in this state in abusiness of:
(i) buying or selling interests in real property;
(ii) making loans secured by interests in real property; or
(iii) acting as a representative or employee of a person who buys or sells any interest inreal property or who lends or borrows money with interest as security, other than acting as alicensed title insurer or producer doing the business of title insurance.
(d) "Financial interest" means any legal or beneficial interest that together with otherinterests entitles the holder to more than 1% of the net profits or net worth of the business inwhich the interest is held.
(2) A title insurer or producer or person having a financial interest in a title insurer orproducer may not knowingly be a party to or knowingly permit to continue in any arrangement inwhich the title insurer, producer, or person knows or has reason to believe that any person whorefers title business has or will have, directly or indirectly, a financial interest in the title insureror producer, if it reasonably appears that a substantial factor in the person who refers titlebusiness owning or acquiring the financial interest is the expected realization of financial profitor gain derived in whole or in part from controlled business.
(3) A title insurer may not appoint or knowingly continue its authorization of any titleinsurance producer in which the company knows or has reason to believe that any person whorefers title business has or will have, directly or indirectly, a financial interest, if it reasonablyappears that a substantial factor in the person who refers title business owning or acquiring thefinancial interest is the person's expected realization of financial profit or gain derived in wholeor part from controlled business.
(4) (a) If for any calendar quarter, the gross operating revenues of a title insurer orproducer derived from all sources of controlled business in this state amount to more than 1/3 ofits gross operating revenues from all other sources of its business of title insurance in this state, itis presumed that the expected realization of financial profit or gain derived in whole or in partfrom controlled business was a substantial factor in the ownership of financial interest in the titleinsurer or producer.
(b) The title insurer or producer has the burden of overcoming the presumption describedin Subsection (4)(a).
(c) This Subsection (4) does not authorize any controlled business if a violation of thestandards set forth in Subsection (2) or (3) exists.
(5) A title insurer or producer may not accept any order for the business of title insurancethat it knows or has reason to believe constitutes controlled business, unless it records andmaintains in its permanent records on forms prescribed by the commissioner the facts relating tothe transactions.
(6) An applicant for qualification as a title insurer or producer may not be granted alicense if it reasonably appears that the expected realization of financial profit or gain to bederived in whole or in part from controlled business is or will be a substantial factor in theapplicant's plan of operation or in the ownership or acquisition of financial interests in theapplicant by any person who refers title business.
(7) Each title insurer and producer shall maintain permanent records relating to itscontrolled business on forms prescribed by the commissioner.
(8) (a) Each title insurer and producer shall file annually with the commissioner, onforms prescribed by the commissioner, reports setting forth:
(i) the names and addresses of any persons owning a financial interest in the title insureror producer as of the last day of the calendar year, who are known or reasonably believed by thetitle insurer or producer to be a person who refers title business; and
(ii) a summary compiled from the title insurer's or producer's records of the controlledbusiness, sufficient to inform the commissioner and the Title and Escrow Commission as to theproportion of the title insurer's or producer's gross operating revenues attributable to controlledbusiness during the preceding calendar year.
(b) The reports shall be filed with the reports required under Section 31A-23a-413 andshall contain the certification of an officer of the title insurer or producer that the informationcontained in them is true to the best of the officer's knowledge, information, and belief. Uponfiling, the reports are public records.
(c) A report filed pursuant to Subsection (8)(a) is subject to review by the Title andEscrow Commission.
(9) An attorney who is also a licensed title insurance producer and who issues asproducer a policy of title insurance to a client on behalf of whom the attorney is also acting as anattorney and who, in so doing, acts consistently with the applicable ethical standards of the UtahState Bar pertaining to the billing and receipt of legal fees and the receipt of a commission on apolicy of title insurance is not, without more, considered to be engaged in controlled business.
Amended by Chapter 185, 2005 General Session