Bulletin: CO2016002

Dear Associates:

The Colorado Division of Insurance has issued a new Regulation 8-1-3 regarding title insurance standards of conduct. The new Regulation replaces several provisions that were found in Regulation 3-5-1. Most of the provisions in Regulation 8-1-3 became effective August 15, 2016. However, the provisions discussed below regarding closing protection letters will become effective January 1, 2017. This Bulletin summarizes Section 5 in Regulation 8-1-3, the provisions regarding standards of conduct for title insurance entities, but please refer to the regulations for specifics.

Most of the provisions in the new Regulation are similar to old provisions in 3-5-1 regarding permissible standards of conduct and regarding unlawful inducements that were not permitted under 3-5-1 or under C.R.S. Section 10-11-108. Of particular concern for title agents are the provisions found in Section 5(C)(1-19), which describe permissible standards of conduct. The permissible activities include providing a TBD commitment for a reasonable charge, providing a copy of the last recorded vesting deed to a settlement producer, providing a quote for title insurance premiums, providing normal promotional activities that are not conditioned on the referral of business of title insurance, and expenses for providing coffee, bagels, or other similar refreshments for a settlement producer, provided at least one title insurance producer is present to promote the title entity’s business.

Section 5(C)(11) will become effective January 1, 2017, and contains new provisions regarding the issuance of a closing protection letter (CPL). The provisions include standards requiring the CPL to conform to an ALTA promulgated form, and requiring that all fees charged for a CPL are not included in the rate charged for the title insurance product, and requiring that fees have been properly filed by the title insurance company providing title insurance for the transaction, and requiring that all fees charged for a CPL are remitted to the title insurance company providing title insurance for the transaction.  

Also, the title insurance company must include a notice to the consumer in the Disclosure statement of the title commitment regarding the availability of the issuance of a CPL. Although the provisions in 8-1-3 do not include specific language for the disclosure, the following language can be used for the disclosure in the commitment:

“Pursuant to Colorado Insurance Regulation 8-1-3, this is notification of the availability of Title Closing Protection Letters written by Stewart Title Guaranty Company.”

Appendix A attached to 8-1-3 provides that a CPL can be issued to lenders, buyers and sellers.  A copy of Appendix A must be provided to all individuals taking an educational course presented by a title entity. At this time, Stewart Title Guaranty Company does not charge for the issuance of a CPL.

Several new provisions concern business meals and attendance or participation in sporting events as a method to promote a title entity’s business. Section 5(C)(15) provides that expenses for business meals are allowed as long as at least one title insurance producer attends the business meal for every four settlement producers that attend the business meal. The same rule applies to attendance or participation in local sporting events, as at least one title insurance producer must attend or participate in the event for every four settlement producers that attend or that participate.

Section 5(D)(1-21) contains provisions that describe per se unlawful inducements that are not allowed under C.R.S. Section 10-11-108. These provisions include furnishing a title commitment without charge, paying a settlement producer except for services actually rendered, charging less that filed rates or fees, furnishing farm packages or O & E reports without charge, providing promotional materials to a settlement producer without charge, or subsidizing or paying for settlement producers’ recreational activities (including all types of trips and all types of parties).  In addition, Marketing Services Agreements between a title entity and a settlement producer are prohibited.

Regulation 8-1-3 and Appendix A can be viewed by clicking on the following link: 

Regulation 8-1-3

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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