Public Act 098-0387
 
HB1335 EnrolledLRB098 06252 RPM 39633 b


  
    AN ACT concerning insurance.
  
 
    Be it enacted by the People of the State of Illinois,
 
represented in the General Assembly:
  


 
    Section 5. The Title Insurance Act is amended  by changing 
Sections 3 and 26 as follows:
 



    (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 by such 
title insurance company in addition to do any
of the following:  
act as an escrow agent pursuant to subsections (f), (g), and 
(h) of Section 16 of this Act, solicit title insurance, collect

premiums, or issue title insurance commitments,
policies, and 
endorsements of the title insurance company; 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 property transaction, from
a principal such as a title 
insurance company, setting forth
in writing the extent of the 
principal's responsibility for intentional
misconduct or 
errors in closing the real property transaction on the part of 
a
settlement agent, such as a title insurance agent or other 
settlement service
provider, and includes protection afforded 
pursuant to subsections (f), (g), and (h) of Section 16 and 
Section 16.1 of this Act even if such protection is afforded by 
contract.

    (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.

    (15) "Financial institution" means any bank subject to the 
Illinois Banking Act, any savings and loan association subject 
to the Illinois Savings and Loan Act of 1985, any savings bank 
subject to the Savings Bank Act, any credit union subject to 
the Illinois Credit Union Act, and any federally chartered 
commercial bank, savings and loan association, savings bank, or 
credit union organized and operated in this State pursuant to 
the laws of the United States. 
(Source: P.A. 95-570, eff. 8-31-07; 96-1454, eff. 1-1-11.)

 
    (215 ILCS 155/26)
    Sec. 26. Settlement funds.
    (a) A title insurance company, title insurance agent, or 
independent escrowee shall not make disbursements in 
connection with any escrows, settlements, or closings out of a 
fiduciary trust account or accounts unless the funds in the 
aggregate amount of $50,000 or greater received from any single 
party to the transaction are good funds as defined in 
paragraphs (2), (6), or (7) of subsection (c) of this Section; 
or are collected funds as defined in subsection (d) of this 
Section.
    For the purposes of this subsection (a), where funds in the 
aggregate amount of $50,000 or greater are received from any 
purchaser of residential real property, as defined in paragraph 
(14) of Section 3 of this Act, the aggregate amount may consist 
of good funds of less than $50,000 per paragraph, as defined in 
paragraphs (3) and (5) of subsection (c) of this Section and of 
up to $5,000 in good funds, as defined in paragraph (4) of 
subsection (c) of this Section. 
    (a-5) In addition to the good funds disbursement 
authorization set forth in subsection (a) of this Section, a 
title insurance company, title insurance agent, or independent 
escrowee is authorized to make disbursements in connection with 
any escrows, settlements, or closings out of a fiduciary trust 
account or accounts where the funds in the aggregate amount of 
$50,000 or greater are received from any single party to the 
transaction if: 
        (1) the funds are transferred by a cashier's check, 
    teller's check, or certified check, as defined in the 
    Uniform Commercial Code, that is drawn on or issued by a 
    financial institution, as defined in this Act;
        (2) the title insurance company, title insurance 
    agent, or independent escrowee and the financial 
    institution, as defined in this Act, are known to each 
    other and agree to the use of cashier's checks, teller's 
    checks, or certified checks as good funds under item (3) of 
    subsection (c) of this Section; and 
        (3) the cashier's check, teller's check, or certified 
    check is delivered to the title insurance company, title 
    insurance agent, or independent escrowee in sufficient 
    time for the check to be deposited into the title insurance 
    company's, title insurance agent's, or independent 
    escrowee's fiduciary trust account prior to disbursement 
    from the fiduciary trust account of the title insurance 
    company, title insurance agent, or independent escrowee.
    The provisions of this subsection (a-5) are inoperative on 
and after January 1, 2015. 
    (b) A title insurance company or title insurance agent 
shall not make disbursements in connection with any escrows, 
settlements, or closings out of a fiduciary trust account or 
accounts unless the funds in the amount of less than $50,000 
received from any single party to the transaction are collected 
funds or good funds as defined in subsection (c) of this 
Section.
    (c) "Good funds" means funds in one of the following forms:
        (1) lawful money of the United States;
        (2) wired funds unconditionally held by and credited to 
    the fiduciary trust account of the title insurance company, 
    the title insurance agent, or independent escrowee;
        (3) cashier's checks, certified checks, bank money

    orders, official bank checks, or teller's checks drawn on

    or issued by a financial institution chartered under the

    laws of any state or the United States and unconditionally

    held by the title insurance company, title insurance agent,

    or independent escrowee;
        (4) a personal check or checks in an aggregate amount 
    not exceeding $5,000 per closing, provided that the title 
    insurance company, title insurance agent, or independent 
    escrowee has reasonable grounds to believe that sufficient 
    funds are available for withdrawal in the account upon 
    which the check is drawn at the time of disbursement;
        (5) a check drawn on the trust account of any lawyer or 
    real estate broker licensed under the laws of any state, 
    provided that the title insurance company, title insurance 
    agent, or independent escrowee has reasonable grounds to 
    believe that sufficient funds are available for withdrawal 
    in the account upon which the check is drawn at the time of 
    disbursement;
        (6) a check issued by this State, the United States, or 
    a political subdivision of this State or the United States; 
    or
        (7) a check drawn on the fiduciary trust account of a 
    title insurance company or title insurance agent, provided 
    that the title insurance company, title insurance agent, or 
    independent escrowee has reasonable grounds to believe 
    that sufficient funds are available for withdrawal in the 
    account upon which the check is drawn at the time of 
    disbursement.
    (d) "Collected funds" means funds deposited, finally 
settled, and credited to the title insurance company, title 
insurance agent, or independent escrowee's fiduciary trust 
account.

    (e) A purchaser, a seller, or a lender is each considered a 
single party to the transaction for the purposes of this 
Section, regardless of the number of people or entities making 
up the purchaser, seller, or lender. 
(Source: P.A. 96-645, eff. 1-1-10; 96-1457, eff. 1-1-11.)

 
    Section 99. Effective date. This Act takes effect upon 
becoming law.