Rep. Norm Thurston — Voting Record

Bill

Number

H.B. 163 Second Substitute (2016GS)

Sponsor

Rep. Webb, R. C.

Final action

Governor Signed 3/28/2016

Outcome

Became law — signed by Gov. Gary R. Herbert

Summary

What it does

• This bill:
• addresses closing or settlement protection;
• addresses the liability of title insurers and title insurance producers under certain circumstances; and
• makes technical changes.

Every vote on this bill

Bill text

TITLE INSURANCE AMENDMENTS
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: R. Curt Webb
Senate Sponsor: 
Curtis S. Bramble
LONG TITLE
General Description:
This bill modifies the Insurance Code to address title insurance.
Highlighted Provisions:
This bill:
▸ addresses closing or settlement protection;
▸ addresses the liability of title insurers and title insurance producers under certain
circumstances; and
▸ makes technical changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
31A-4-117
, as enacted by Laws of Utah 2013, Chapter 319
31A-23a-407
, as last amended by Laws of Utah 2013, Chapter 319
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
31A-4-117
 is amended to read:
31A-4-117.
Closing or settlement protection.
(1) A title insurer may issue closing or settlement protection in the form of a closing
protection letter filed with the department to a person who is a party to a transaction in which a
title insurance policy is issued.
(2) Closing or settlement protection may indemnify a person who is a party to a
transaction referred to in Subsection (1) against loss that the title insurer approves for the
closing or settlement protection, under the terms and conditions of the closing protection letter
issued by the title insurer, because of one or more of the following acts of a title insurance
policy issuing individual title insurance producer or agency title insurance producer or other
settlement service provider:
(a) theft or misappropriation of settlement funds in connection with a transaction in
which one or more title insurance policies are issued by or on behalf of the title insurer issuing
the closing or settlement protection, but only to the extent that the theft or misappropriation
relates to the status of the title to that interest in land or to the validity, enforceability, and
priority of the lien of the mortgage on that interest in land; or
(b) failure to comply with the written closing instructions when agreed to by the
settlement agent, title agent, or employee of the title insurer, but only to the extent that the
failure to follow the written closing instructions relates to the status of the title to that interest
in land or the validity, enforceability, and priority of the lien of the mortgage on that interest in
land.
(3) A title insurer may not make the fee charged by a title insurer for each party
receiving closing or settlement protection coverage subject to any agreement requiring a
division of fees or premiums collected on behalf of the title insurer. The fee charged for a
closing or settlement coverage protection letter will be filed by the title insurer with the
department 30 days before use.
(4) A title insurer may not provide any other protection that purports to contractually
indemnify against improper acts or omissions of a person who is a party to a transaction
referred to in Subsection (1) with regard to settlement or closing services.
(5) Subject to Section 
31A-23a-407
, a title insurer that is represented by an individual
title insurance producer or an agency title insurance producer is liable for the acts or omissions
of the individual title insurance producer or agency title insurance producer for closing or
settlement only to the extent of the liability undertaken in the closing protection letter
according to terms and provisions in the closing protection letter issued pursuant to this
section. The liability to the title insurer, if any, of the individual title insurance producer or
agency title insurance producer that issues the title insurance policy for acts or omissions of the
individual title insurance producer or agency title insurance producer may not be limited or
modified because the title insurer has provided closing protection to one or more parties to a
real property transaction, escrow, settlement, or closing.
Section 2. Section 
31A-23a-407
 is amended to read:
31A-23a-407.
Liability for acts of title insurance producers.
[
Any title company, represented by one or more
]
(1) Subject to the other provisions in this section, a title insurer that appoints an
individual title insurance [
producers appointed by an insurer
] 
producer
 or 
an
 agency title
insurance [
producers, is directly and primarily
] 
producer is
 liable to [
others dealing with the
individual title insurance producers or agency title insurance producers
] 
 a buyer, seller,
borrower, lender, or third party that deposits money with the individual title insurance producer
or agency title insurance producer
 for the receipt and disbursement of [
funds
] 
money
 deposited
[
in escrows
] with the individual title insurance [
producers appointed by an insurer
] 
producer
 or
agency title insurance [
producers in all those transactions where
] 
producer for a transaction
when
 a commitment [
or binder
] for [
or
] 
a
 policy [
or contract
] of title insurance of that title
insurer [
has been
] 
is
 ordered, [
or a preliminary report of the title insurer has been
] issued
,
 or
distributed[
. This
] 
or a title insurance policy of that title insurer is issued, except that once a
title insurer is named in an issued commitment only that title insurer is liable as a title insurer
under this section.
(2) The liability of a title insurer under Subsection (1) and the liability of an individual
title insurance producer or agency title insurance producer for the receipt and disbursement of
money deposited with the individual title insurance producer or agency title insurance producer
is limited to the amount of money received and disbursed, not to exceed the amount of
proposed insurance set forth in the commitment or title insurance policy described in
Subsection (1) plus 10% of the amount of the proposed insurance.
(3) The
 liability 
described in Subsection (1)
 does not modify, mitigate, impair, or affect
the contractual obligations between [
the
] 
an
 individual title insurance [
producers
] 
producer
 or
agency title insurance [
producers
] 
producer
 and the title insurer.
(4) The liability of a title insurer with respect to the condition of title to the real
property that is the subject of a title insurance policy or a title insurance commitment for a title
insurance policy is limited to the terms, conditions, and stipulations contained in the title
insurance policy or title commitment.