2014 -- H 7792 SUBSTITUTE A

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LC004763/SUB A

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO INSURANCE -- TITLE INSURERS ISSUING CLOSING OR SETTLEMENT

PROTECTION

     

     Introduced By: Representative Donald J.Lally

     Date Introduced: March 04, 2014

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

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     SECTION 1. Section 27-2.6-6 of the General Laws in Chapter 27-2.6 entitled "Rhode

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Island Title Insurers Act" is hereby amended to read as follows:

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     27-2.6-6. Limitations on powers. -- (a) No insurer that transacts any class, type, or kind

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of business other than title insurance shall be eligible for the issuance or renewal of a license to

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transact the business of title insurance in this state, nor shall title insurance be transacted,

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underwritten, or issued by any insurer transacting or licensed to transact any other class, type, or

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kind of business.

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      (b) A title insure shall not engage in the business of guaranteeing payment of the

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principal or the interest of bonds or mortgages.

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      (c)(1) Notwithstanding subsection (a) of this section, and to the extent such coverage is

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lawful within this state, a title insurer is expressly authorized to issue closing or settlement

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protection to a proposed insured upon request if the title insurer or its title agent issues a

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preliminary report, binder, or title insurance policy. Such closing or settlement protection must be

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provided in connection with the issuance of any loan policy insuring a lender's interest in

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residential property intended for residential occupancy containing four (4) or less units. Nothing

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in this section shall prohibit the title insurer from providing such closing or settlement protection

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in connection with the issuance of any loan policy insuring a lender's interest in any other type of

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residential or commercial property. Such The closing or settlement protection shall conform to

 

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the terms of coverage and form of instrument as approved by the commissioner and may

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indemnify a proposed insured solely against loss of settlement funds only because of the

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following acts of a title insurer's named title insurance agent:

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      (i) Theft of settlement funds; and

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      (ii) Failure to comply with written closing instructions by the proposed insured when

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agreed to by the title insurance agent relating to title insurance coverage.

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     (2) The fee charged by a title insurer for each party receiving closing protection coverage

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shall be filed with, and approved by, the commissioner pursuant to ยง 27-2.6-16. The fee shall not

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be subject to any agreement requiring a division of fees or premiums collected on behalf of the

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title insurer. The single fee shall be for the protection of all parties receiving the benefit of closing

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protection, to wit: The buyer(s) or borrower(s) and the lender(s) in connection with the real

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property transaction giving rise to the issuance of the closing or settlement protection.

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      (2)(3) A title insurer shall not provide any other coverage which that purports to

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indemnify against improper acts or omissions of a person with regard to escrow, settlement, or

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closing services, except for an insured closing letter in a form approved by the department.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO INSURANCE -- TITLE INSURERS ISSUING CLOSING OR SETTLEMENT

PROTECTION

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     This act would permit title insurance companies and their agents to issue closing funds

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protection insurance on residential property closings for property consisting of four (4) units or

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less.

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     This act would take effect upon passage.

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