Bulletin: MO2008001

Dear Associates:

The "Missouri Title Insurance Act" is now in effect.  It includes new provisions as well as some previously enacted sections of RSMo 381.011 to 381.412.

The following link is the text of the new law: http://www.moga.mo.gov/statutes/chapters/chap381.htm.

The following link is the text of previously enacted sections which remain in effect: Missouri Title Insurance Laws in effect in addition to those laws enacted by L. 2007 S.B. 66 Effective 1-1-08 (Click Here)

The DIFP (Department of Insurance, Financial Institutions and Professional Registration) will adopt Rules and Forms for implementation of the Act.  The Rules and Forms are Proposed and subject to revision.  The most current versions of Proposed Rules and Forms as of the date of this Bulletin can be found at the following link:   Proposed Rules and Forms (Click Here). 

See the DIFP issued Bulletin 07-04:  Title Insurance Price Disclosure, November 9, 2007.  See  SLS Bulletin MO2007002: Title Insurance Price Disclosure (Click Here).  You should comply with the DIFP Bulletin as to Price Disclosure effective January 1, 2008.  The Premium to be disclosed will be calculated based on the Risk Rate which Stewart Title Guaranty Company has filed with DIFP.  If you do not have the Missouri Risk Rate Calculator program, please contact your Agency Services Manager. 

Effective January 1, 2008, the law requires Closing Protection Letters pursuant to  Section 381.022, Subsections 5 and 6, which provide that the title insurer, title agency or title agent are not authorized to provide escrow or settlement services in residential real estate transactions unless a commitment or policy is issued and unless a closing protection letter is issued protecting the buyer’s and seller’s interests, or a written notice is given to the affected person that the person’s interest is not protected.   

Stewart Title Guaranty Company filed Closing Protection Letters with the DIFP with a rate of $25.00 per letter.  This rate applies only to residential transactions.   Both a Seller Letter and a Lender/Purchaser/Lessee Letter were filed. These letters are now available in the STGC system.  The law requires a rate be charged for each letter issued and the rate collected be paid to the insurer.  

Please post the fees for the Closing Protection Letters with the posted Risk Rate in your office.  Print and Post the following link: (Click Here) 

The following is a synopsis of other new provisions which are applicable to all issuing agents and offices.  It is not a comprehensive statement of all provisions of the law.  Each title agent or agency should review the law and implement those practices necessary to ensure compliance.   As additional information becomes available, we will advise you.   

Section 381.015-2  When no owner’s policy has been requested with the issuance of a policy to a lender in conjunction with a mortgage loan made simultaneously with the purchase of all or part of the real estate securing the loan, a written notice must be provided to a purchaser-mortgagor. The notice must explain that the purchaser-mortgagor may obtain an owner’s policy within 60 days of closing at a specified or approximate cost.  

See Proposed Rule 20 CSR 500-7.060 Disclosure of Coverage Limitation in the Proposed Rules and Forms link above

 See Proposed Form T-2 Notice of Availability of Owner’s Title Insurance form in the Proposed Rules and Forms link above 

Section 381.018-5 If an insurer terminates its contract with an agent, the insurer must notify the DIFP within 7 days and include the reasons for termination, including any information that is required under Section 375.022 (acts of a producer including intentional misrepresentation, violation of insurance law, conviction of a felony, unfair trade practice, or fraud). 

Section 381.019-1 A title insurer, title agency or title agent participating in a settlement or closing of a residential real estate transaction shall provide clear, conspicuous, and distinct disclosure of premiums and charges.  The Director shall adopt rules not in conflict with provisions of RESPA to implement disclosure of the following:  (1) Premium; (2) Abstract or title search and examination fee and any other associated charges or fees; and (3) Settlement, escrow, or closing fees.  Proposed Rule 500-7.050 prohibits use of the terms "rate", "card rate", or "premium" in marketing materials,  or other terms which might describe an all-inclusive title insurance price which aggregates both (A) premium, and (B) charges that may be negotiable.

NOTE:  The Premium to be disclosed is the Risk Rate filed by Stewart Title Guaranty Company.  The $25.00 fee for Closing Protection Letter disclosed on Form T- 1 is filed by Stewart Title Guaranty Company.. 

See Proposed Rule 500-7.020 Scope and Definitions in the Proposed Rules and Forms link above

 See Proposed Rule 500-7.050 Disclosure of Premiums and Charges in the Proposed Rules and Forms link above 

See Proposed Form T-1 Title Insurance Premium and Title Service Charge Disclosure Statement in the Proposed Rules and Forms link above 

Section 381.022  Subsection 2:  Funds for closings must be deposited no later than the second business day after receipt; escrow funds must be segregated for each depository by escrow, settlement or security deposit in the records of the insurer, agency or agent in a manner that permits the funds to be identified on an individual basis in accordance with the terms of the individual written instructions or agreements.   

Subsection 3:  It is unlawful to commingle personal or any other moneys with escrow funds or use or disburse escrow funds for any purpose other than to fulfill the terms of the individual escrow and only under written instruction specifying conditions as to disbursement. 

Subsection 4:  Bank credits, bank services, interest, or similar consideration received on funds deposited in connection with escrow may be retained by the title insurer, title agency, or title agent not affiliated with a title agency as compensation for administration of the escrow, unless the specific written instructions for the funds provide otherwise. 

Subsections 5 and 6 provide that the title insurer, title agency or title agent are not authorized to provide escrow or settlement services in residential real estate transactions unless a commitment or policy is issued and unless a closing protection letter is issued protecting the buyer’s and seller’s interests, or a written notice is given to the affected person that the person’s interest is not protected. 

 See Proposed Rule 500-7.130 Form Filings in the Proposed Rules and Forms link above 

Proposed Forms T-8 and T-9 Closing Protection Letters  NOTE: the DIFP form is not attached

 See Proposed Rule 500-7.030 General Instructions in the Proposed Rules and Forms link above

 See Proposed Rule 500-7.060 Disclosure of Coverage Limitation in the Proposed Rules and Forms link above 

See Proposed Form T-3 Notice of Unprotected Closing or Settlement in the Proposed Rules and Forms link above 

Section 381.023-1    Insurers shall, at least annually, conduct an onsite review of the underwriting, claims and escrow practices of the agency or agent with which it has a contract.  If the title agency or agent does not maintain separate fiduciary trust accounts for each title insurer it represents, the insurer shall verify that the funds held on its behalf are reasonably ascertainable from the books and records of the agent. Subsection 2 lists the standards of the review including:  An annual statement of financial condition of the title agency, certified by the agent or agency under oath to be a true and accurate representation of financial condition; a review of affiliated business arrangements and regulatory compliance; review of reconciliation of orders with commitments, title searches, title policies, and collection of premium; review of procedures for tracking issued commitment and practices to cancel commitments on transactions that do not close; tracking of open escrow, security, settlement or closing files; review of issued policy reports to the insurer; review of three-way reconciliation of bank balance, book balance and escrow trial balance for each individual escrow bank account. 

See Proposed Rule 500-7.080 Insurer’s Annual Onsite Review in the Proposed Rules and Forms link above 

Proposed Form T-6 Insurer’s Onsite Review Report Form NOTE: not included; form not yet available.

 Section 381.024  It is unlawful for a title agent or agency to unreasonably deny access or fail to cooperate with its underwriters in the reviews of the agent’s escrow, settlement, closing or security deposit accounts. 

 Section 381.026 -1  The settlement agent shall record all deeds and security instruments within five business days after completion of all conditions unless otherwise instructed by all of the parties to the transaction. 

Section 381.029. Subsections 2-5     Whenever the business to be written constitutes affiliated business, prior to commencing the transaction, the insurer, agency or agent shall ensure that its customer has been provided with the disclosure of the affiliated business arrangement and a written estimate of the charge or range of charges generally made for the title services provided by the title insurer, title agency, or title agent.  The Director shall require each title insurer, agency and agent to file reports setting forth the names and addresses of those persons that have a financial interest in the insurer, agency or agent and who the insurer, agency, or agent knows or has reason to believe are producers of title insurance business or associates of producers. 

("Affiliated Business"-any portion of a title insurance agency’s business written in this state that was referred to it by a producer of title insurance business or by an associate of the producer, where the producer or associate, or both, have a financial interest in the tile agency. 

 "Associate", any (a) Business organized for profit in which a producer of title business is a director, officer, partner, employee, or an owner of a financial interest; (b) Employee or a producer of title business; (c) Franchisor or franchisee of a producer of title business; (d) Spouse, parent, or child of a producer of title insurance business who is a natural person; (e) Person, other than a natural person, that controls, is controlled by, or is under common control with, a producer of title business; (f) Person with whom a producer of title insurance business or any associate of the producer has an agreement, arrangement, or understanding, or pursues a course of conduct, the purpose or effect of which is to provide financial benefits to that producer or associate for the referral of business.) 

See Proposed Rule 500-7.070 Affiliated Business Arrangements in the Proposed Rules and Forms link above 

See Proposed Form T-4 Affiliated Business Disclosure Statement Format in the Proposed Rules and Forms link above

 See Proposed Form T-5 Affiliated Business Arrangement Report in the Proposed Rules and Forms link above 

Section 381.038.3   You must issue policies within forty-five days after compliance with the requirements of the commitment.  The DIFP will adopt a Rule as to special circumstances for failure to issue a policy within 45 days.   

You must remit under the terms of the issuing underwriting agreement, but in no event later than within sixty days of receipt of an invoice from the insurer.  

See Proposed Rule 500-7.090 Special Circumstances for Policy Delay in the Proposed Rules and Forms link above 

Section 381.058.3   A title insurer is authorized to issue closing protection letters and collect a fee for such issuance in all transactions where its title insurance policies are issued and where its issuing agent or agency is performing settlement services and shall do so in favor of and upon request by the buyer, lender or seller.  The closing protection letter form shall be filed with the director.  The rate for issuance of a closing protection letter in a residential transaction to the purchaser, borrower, or lender shall be filed as a rate; the rate for a closing protection letter in a residential transaction to a seller shall be filed as a separate rate.  The entire rate for the closing protection letter shall be retained by the title insurer. 

Section 381.115-3   Functions that require Title Insurance Producer’s License:  (1) Sell, solicit, or negotiate a title insurance policy or closing protection letter; (2) Calculate premiums for a title insurance policy or closing protection letter; (3) Determine insurability; (4) Establish, calculate, or negotiate title charges; (5) Conduct title search or examinations; (6) Execute title insurance policies, commitments, binders or endorsements; or (7) Handle escrows, settlements, or closings.  It is unlawful for a title insurer to contract with any person to act as title agency or title agent unless the person is licensed.  If a title insurer, title agency, or title agent delegates the title search to a third party, such as an abstract company, the insurer, agency, or agent must first obtain proof that the third party is operating in compliance with rules and regulations established by the director and the third party shall provide access to all accounts and records maintained by the third party.  Proof from the third party may consist of a signed statement indicating compliance and shall be effective for a three-year period. 

Section 381.118  Each title agency shall designate an individual as a Qualified Principal who, as a condition of licensure, shall successfully pass an examination.  Each title agent shall also successfully pass an examination.  The examination requirement shall be waived for all title agents and qualified principals who are licensed in Missouri as of January 1, 2008 .  Each licensed title agent shall attend the equivalent of eight hours of course or program study every two years.  The Director shall approve courses or programs of study.  Provisions of continuing education requirements shall not apply to persons holding a Missouri license as a title agent who reside in a state that has implemented mandatory continuing education law.  

See Proposed Rule 20 CSR 700-8.100 Application for License in the Proposed Rules and Forms link above

 Form UA-IP NAIC, Form UA-BEP NAIC 

See Proposed Rule CSR 700-8.150 Examination Requirements in the Proposed Rules and Forms link above 

See Proposed Rule CSR 700-8.160 Continuing Education in the Proposed Rules and Forms link above

 Additional Rules

 See 20 CSR 500-7.200 Standards for Policy Issuance   (45 Year Search) in the Proposed Rules and Forms link above 

See Proposed Form T-10 Verification of Examination of Title in the Proposed Rules and Forms link above

 See Proposed Form T-11 Examination Location Affidavit in the Proposed Rules and Forms link above 

See Proposed Form T-12 Title Plant Registration in the Proposed Rules and Forms link above