Dear Associates:
This Bulletin updates Bulletins DC2010004 and DC2011001 concerning the status of the licensing and regulation of title insurance companies and producers in Washington, D.C.
On July 10, 2013, the District of Columbia Council passed the Title Insurance Clarification Amendment Act of 2013 (“Act”). This Act was signed by the Mayor on August 20, 2013, and is currently in the mandatory 30-day Congressional review period. We currently estimate that this review period will expire in October at which point in time the Act will become law.
Many of the changes in the Act were more in the nature of clarification or clean up. For example, the defined term “Residential Property” was deleted in order to clarify that the statute applies to all real property transactions in the District of Columbia and not just residential transactions.
Having said that, there are a number of significant changes included in the Act. Below is a summary of these changes.
INSURANCE AND BONDING REQUIREMENTS
These provisions were totally revised. The Act now differentiates between individuals and entities and does a much better job of dealing with the different kinds of insurance.
Each business entity with a title insurance producer license is now required to obtain an Errors and Omissions policy in an amount not less than $500,000 per occurrence or claim.
Individual producers have the same requirement. However this requirement can be met if the individuals are covered by their employer’s E&O.
Each business entity with a title insurance producer license is required to obtain a surety bond in an amount not less than $200,000 executed by the applicant as principal and by an insurance company as surety or obligor. The Bond shall run to the District of Columbia government as the obligee and benefit the District or any other aggrieved party, including consumers and title insurers. The form of the Bond has yet to be issued by DISB.
Individual producers have the same requirement. However this requirement can be met if the individuals are covered by their employer’s Bond.
Each business entity with a title insurance producer license is required to obtain a fidelity bond or similar insurance policy in an amount not less than $200,000 that covers all employees and contractors. A sole proprietor with no employees or a limited liability entity with no employees is exempt from this requirement.
CE REQUIREMENTS
These requirements were also totally re-written to bring the title insurance requirements more in line with the requirements of other lines of insurance in DC. For example, the CE requirements will now be based upon a biannual period as opposed to annually.
All District of Columbia barred attorneys that are licensed as title producers must obtain eight hours biennially in courses specific to District of Columbia real estate laws and related regulations, and any other continuing education courses approved by the Commissioner.
All other resident title producers must obtain sixteen hours biennially in instruction specific to District of Columbia real estate laws and related regulations. Not more than 8 hours may be completed through on-line or video-based courses.
Nonresident title insurance producers must obtain four hours of instruction biennially in instruction specific to District of Columbia real estate laws and related regulations.
AUDIT AND FINANCIAL STATEMENTS
The original audit requirement required that all annual audits be completed within 90 days of the end of the year. DCLTA was successful in convincing DISB that this was not workable so the time period requirement was deleted. However, an annual audit is still required.
In addition, the requirement that insurer’s have a copy of the current financial statements of all producers was deleted.
FORM AND RATE FILINGS
The time period for DISB to review form filings was extended to 60 days. The “deemed approved” provision was retained.
The $50.00 minimum charge for CPL’s was deleted. CPL rates are now treated like all other title insurance premiums.
CLOSING PROCEDURES
The original Act required producers to disclose their title insurer on all communications. This was changed to require this disclosure only on recorded documents.
The notice of availability of owner’s title insurance must now only be kept in a producer’s file for 3 years instead of 5 years.
Finally, a new provision was added which prohibits a seller of property from requiring, directly or indirectly, that the buyer purchase title insurance from any particular title producer or insurer.
NONRESDENT AGENTS
The Act deleted the provision that all nonresident title insurance producers have a registered agent in the District of Columbia at the time of application for a title insurance producer license and maintain a registered agent in the District of Columbia as a condition of licensing.
A new provision was added which provides that a nonresident producer license shall terminate at any time that the nonresident’s equivalent authority in his or her home state is terminated, suspended, or revoked.
REGULATIONS
We are still awaiting guidance from DISB as to what regulations will be needed to implement the Act and when they will be filed. For example, we do know that a form of surety bond will need to be issued along with a procedure as to when existing producers must obtain the bond. This Bulletin will be updated when we receive additional information regarding the regulations and implementation of the Act.
If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.
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