SF 278

as introduced - 87th Legislature (2011 - 2012) Posted on 02/23/2012 08:37am

A bill for an act
relating to commerce; imposing requirements on title insurers and title insurance
agents; increasing regulatory requirements for real estate closing agents;
amending Minnesota Statutes 2010, section 82.641, subdivisions 1, 2, 3, by
adding a subdivision; proposing coding for new law in Minnesota Statutes,
chapter 68A; repealing Minnesota Statutes 2010, section 82.641, subdivisions
4, 6.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [68A.05] TITLE INSURANCE AGENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Contract required. new text end

new text begin A title insurer shall not accept business from a
title insurance agent unless there is in force a written contract between the parties that sets
forth the responsibilities of each party and, where both parties share responsibility for a
particular function, specifies the division of responsibilities.
new text end

new text begin Subd. 2. new text end

new text begin Statement of financial condition of agent. new text end

new text begin For each title insurance agent
under contract with the insurer, the title insurer shall have on file a statement of financial
condition of each title insurance agent as of the end of the previous calendar year, setting
forth an income statement of business done during the preceding year and a balance sheet
showing the condition of its affairs as of the prior December 31, certified by the agent as
being a true and accurate representation of the agent's financial condition.
new text end

new text begin Subd. 3. new text end

new text begin Annual review. new text end

new text begin The title insurer shall, at least annually, conduct a review
of the underwriting, claims, and escrow practices of the agent that includes a review of
the agent's policy blank inventory and processing operations. If the title agent does not
maintain separate bank or trust accounts for each title insurer it represents, the title insurer
shall verify that the funds held on its behalf are reasonably ascertainable from the books of
the account and records of the title agent.
new text end

new text begin Subd. 4. new text end

new text begin Misappropriation. new text end

new text begin A title insurer is liable for the defalcation, conversion,
or misappropriation by a title insurance agent appointed by or under written contract
with such title insurer of escrow, settlement, closing, or security deposit funds handled
by such title insurance agent in contemplation of or in conjunction with the issuance of
a title insurance commitment or title insurance policy by such title insurer. However, if
no title insurance commitment or title insurance policy was issued, each title insurer that
appointed or maintained a written contract with the title insurance agent at the time of
the discovery of the defalcation, conversion, or misappropriation shares in the liability
for the defalcation, conversion, or misappropriation in the same proportion that the
premium remitted to the title insurer by the title insurance agent during the 12-month
period immediately preceding the date of the discovery of the defalcation, conversion,
or misappropriation bears to the total premium remitted to all title insurers by the title
insurance agent during the 12-month period immediately preceding the date of the
discovery of the defalcation, conversion, or misappropriation.
new text end

new text begin Subd. 5. new text end

new text begin Record retention. new text end

new text begin A title insurance agent shall maintain sufficient records
of its affairs for a minimum of five years, including its escrow operations and escrow trust
accounts, so that the commissioner of commerce may adequately ensure that the title
insurance agent is in compliance with all provisions of this chapter.
new text end

new text begin Subd. 6. new text end

new text begin Definition. new text end

new text begin For purposes of this section, title insurance agent includes:
new text end

new text begin (1) a person with whom a title insurer maintains a title insurance agency agreement;
and
new text end

new text begin (2) an employer or employee of a title insurance agent or of a person with whom a
title insurer maintains a title insurance agency agreement.
new text end

Sec. 2.

Minnesota Statutes 2010, section 82.641, subdivision 1, is amended to read:

Subdivision 1.

Generally.

new text begin (a) No person shall act as a closing agent in this state
unless the person is licensed under this section.
new text end

new text begin (b) new text end The commissioner shall issue a license as a closing agent to a person who
qualifies for the license under the terms of this chapter.

Sec. 3.

Minnesota Statutes 2010, section 82.641, subdivision 2, is amended to read:

Subd. 2.

Qualification of applicants.

deleted text begin An applicant for a real estate closing agent
license deleted text end new text begin A licensee new text end must be deleted text begin at least 18 years of age at the time of making application for
the license deleted text end new text begin either a partnership, limited liability partnership, associate, limited liability
company, corporation, or other form of business organization, and must have and maintain
a surety bond in the amount prescribed under subdivision 3a new text end .

Sec. 4.

Minnesota Statutes 2010, section 82.641, subdivision 3, is amended to read:

Subd. 3.

Application for license; contents.

(a) An applicant for a real estate closing
agent license shall make an application in the format prescribed by the commissioner. The
application must be accompanied by the license fee required by this chapter.

(b) An application for a real estate closing agent license must contain the information
required by the commissioner consistent with this chapter.

(c) An application for a real estate closing agent license shall give the applicant's
legal name, age, residence address, and the name and place of business of the closing agent.

(d) The commissioner may require further information the commissioner considers
appropriate to administer this chapter.

new text begin (e) An applicant for a real estate closing agent license must include an affidavit
under oath that the applicant will maintain at all times:
new text end

new text begin (1) net worth, net of intangibles, of at least $250,000;
new text end

new text begin (2) a surety bond in an amount of at least $100,000; and
new text end

new text begin (3) an errors and omissions insurance policy, which includes coverage for not less
than $500,000.
new text end

Sec. 5.

Minnesota Statutes 2010, section 82.641, is amended by adding a subdivision
to read:

new text begin Subd. 3a. new text end

new text begin Surety bond. new text end

new text begin (a) An applicant for a real estate closing agent license
must file and maintain with the commissioner a surety bond in the amount of $100,000,
issued by an insurance company authorized to do so in this state. The bond must cover all
persons who are employees or independent agents of the applicant. The bond must be
available for the recovery of expenses, fines, and fees levied by the commissioner under
this chapter and for losses incurred by persons as a result of a licensee's noncompliance
with the requirements of this chapter or breach of contract relating to activities regulated
by this chapter.
new text end

new text begin (b) The bond must be submitted with the license application, and evidence of
continued coverage must be submitted with each renewal. Any change in the bond must
be submitted for approval by the commissioner, within ten days of its execution. The bond
or a substitute bond shall remain in effect during all periods of licensing.
new text end

Sec. 6. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2010, section 82.641, subdivisions 4 and 6, new text end new text begin are repealed.
new text end

Sec. 7. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 6 are effective January 1, 2012.
new text end