- April 07, 2014
- All New York State Agents and Examining Counsel
- New York State Agent Licensing Is Now Law
For many years the title industry has discussed title agent licensing. The 2014 New York State Budget includes legislation that would require title insurance agents, to be licensed by the State’s Department of Financial Services (DFS).
New York will join 47 other States that license title insurance agents. The legislation was passed on April 1, 2014 and will take effect on October 1, 2014. The legislation will require title agents to pay a licensing fee, take a test to become licensed and maintain continuing education requirements. The legislation also strengthens enforcement and penalties for illegal inducements. This bulletin is to alert you to the legislation and to give you some key information. I recommend reviewing the following attachments:
Regulations have not yet been promulgated. The legislation defines a title agent as “any authorized or acknowledged agent of a title insurance corporation, and any sub-agent or other representative of such an agent, who or which for commission, compensation, or any other thing of value, performs the following acts in conjunction with the issuance of a title insurance policy”:
1: Sells or negotiates the sale of a title insurance policy;
2: Evaluates the insurability of title, based upon the performance or review of a title search and who performs one or more of the following functions:
A: Collects remits or disburses title insurance premiums, escrows or other related funds;
B: Prepares amends, marks up or delivers a title insurance commitment or certificate of title for the purposes of the issuance of a title insurance policy by a title insurance corporation;
C: Prepares, amends or delivers a title insurance policy on behalf of a title insurance corporation; or
D: Negotiates the clearance of title exceptions in connection with the issuance of a title insurance policy.
This legislation will require title insurance agents and underwriters to provide at the time of application, a written good faith estimate of the premium on the policy(s) to be issued, a “breakdown of all fees and service costs, including filing fees, closing costs, any other ancillary or discretionary charges to be incurred and the amount of any commission of other compensation to be paid to such agent by the title insurance corporation”. The “good faith estimate” may be given to the actual insured or their attorney. The legislation prohibits title insurance agent or underwriters from receiving any compensation or fee, direct or indirect, for or on account of services performed in connection with the issuance of a title insurance policy, unless such compensation is included in the disclosure and based upon a written memorandum signed by the party to be charged. A copy of every such memorandum shall be retained by the licensee for no less than three years after such services have been fully performed.
The legislation also prohibits a title insurance agent from paying a commission to any party unless that party is a licensed New York Title Agent and requires disclosures where a person, agent, attorney, employee of the lender or of the prospective insured owns any interest in a title insurance agent. In addition, the legislation expands Section 6409(d) of the insurance law, which prohibits the rebating of a premium as an inducement for the title insurance. Section 6409(d) will now include additional penalties for both the payer and the receiver.
The license fee is $40. The license is good for a period of (2) two years and an agent must pass a written exam, have (20) hours of continuing education credit and a certificate of appointment from Stewart. New York admitted lawyers are exempt from the continuing education and testing requirements but must maintain a license. Also, any title agent or sub agent, who can show continuous and regular operation in a competent and trustworthy fashion, as a title agent in the (5) five years preceding the filing of a license application will be exempt from the testing and continuing education requirements to become licensed. A “grandfather” application must be made within (1) one year from the enactment of the legislation.
Bulletins Replaced: None
Related Bulletins: None
Underwriting Manual: None
Exceptions Manual: None
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THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.