text:
Every domestic title insurer may issue title policies and may also insure:

(a) The identity, due execution, and validity of any note or bond secured by mortgage.

(b) The identity, due execution, validity and recording of any such mortgage.

(c) The identity, due execution and validity of evidences of indebtedness issued by this State, or by any political subdivision or district therein, or by any private or public corporation.

article: 4. General Powers

path: 2. CLASSES OF INSURANCE > 6. INSURANCE COVERING LAND > 1. Title Insurance > 4. General Powers


kind: section

code: INS

text:
Such insurer also may:

(a) Act as registrar or transfer agent of this State, or of any political subdivision or district therein, or of any private or public corporation.

(b) Transfer or countersign any evidences of indebtedness which it may insure.

(c) Transfer or countersign certificates of stock of any private or public corporation.

history: (History: Enacted by Stats. 1935, Ch. 145.)

division: 2. CLASSES OF INSURANCE

part: 6. INSURANCE COVERING LAND

chapter: 1. Title Insurance

article: 4. General Powers


text: A title insurer, as to its title insurance department, shall be subject to and shall comply with all the requirements of the insurance laws and the rules and regulations of the commissioner. It may invest its assets apportioned to its title insurance department, and the accumulations therefrom, in the manner in which the assets of title insurers are allowed by the laws of this state to be invested.

history: (History: Amended by Stats. 1999, Ch. 187, Sec. 2. Effective January 1, 2000.)

article: 4. General Powers


text:
(a) For purposes of this article, “controlled business source” means an affiliate, as defined in subdivision (a) of Section 1215, of any title insurer, controlled escrow company, or underwritten title company.

(b) For purposes of this article:

(1) “License” means a securities permit issued to a title insurance entity, a license to operate as an underwritten title company, or a certificate of authority to act as a title insurer.

(2) “Licensee” means the holder of a license.

(c) For purposes of this article, a title order shall be deemed to emanate from a controlled business source if the controlled business source is acting in the capacity of a principal, lender, representative, or agent of any of the parties to the transaction, or any other person or entity with which the reporting entity has an agreement, written or otherwise, whereby title orders are traded or otherwise exchanged in order to achieve compliance with this article.

history: (History: Added by Stats. 1989, Ch. 344, Sec. 1.)

article: 4.5. Business Plans

path: 2. CLASSES OF INSURANCE > 6. INSURANCE COVERING LAND > 1. Title Insurance > 4.5. Business Plans


text: Any applicant for a license shall indicate the applicant’s intent to actively compete in the marketplace for title insurance in each county in which the applicant seeks to or does conduct the business of title insurance. The failure to so indicate shall constitute grounds for denial of the license. Each applicant for a license shall also demonstrate that its plan of operation and intended course of business conduct will not involve reliance for more than 50 percent of its closed title orders from controlled business sources.

article: 4.5. Business Plans


text:
(a) Each licensee shall make submissions as are required by the Department of Insurance to enable the department to determine the nature and extent of the licensee’s efforts to actively compete in each county in which it transacts its business. The licensee shall maintain records of its title orders sufficient to indicate the source of the title orders.

(b) Competitive behavior shall be measured by the source of closed title orders in each county in which the licensee engages in the title business and by the entity’s progress toward meeting the 50 percent objective specified in Section 12397, as indicated in the annual, verified report filed pursuant to subdivision (c).

(c) Within 90 days following the end of each business year, as established by the licensee, each licensee shall file with the commissioner, and any title insurer with which the licensee maintains an underwriting agreement, a verified report executed by the licensee’s chief executive officer or his or her designee under penalty of perjury, stating the percent of closed title orders for each county originating from controlled and noncontrolled business sources. Each title insurer that maintains an underwriting agreement with another licensee shall, within 30 days after receipt of this report, file with the commissioner a verified statement, signed by the licensee’s chief executive officer or by his or her designee under penalty of perjury, that the report is substantially correct or that insufficient information is contained in the report to enable an opinion to be formed concerning the correctness of the report.

(d) Upon receipt by the department of a verified statement, signed under penalty of perjury, that less than 5 percent of the business a licensee transacts emanates from controlled business sources, the licensee shall be relieved of further reporting under this article, but shall be subject to reporting under subdivision (c) at any time that 5 percent or more of the business which the licensee transacts emanates from controlled business sources.

article: 4.5. Business Plans


text: The failure of an applicant or licensee to comply with any of the requirements of this article shall be grounds for the denial of an application for a license, the suspension or revocation of an issued license, or other disciplinary action determined by the commissioner, in accordance with procedures prescribed by law therefor.

article: 4.5. Business Plans


text: Nothing in this article shall limit or preclude the consideration or approval of an application for a license, except as expressly provided in this article.

article: 4.5. Business Plans


text: The provisions of subdivision (f) of Section 381, and the provisions of Sections 382, 383, 383.5, 386, 481, 750, 751, 752, 755, 755.5, 756, 757, 758, 759, 760, 760.5, 763, 763.5, 766, 800, 801, 802, 803, and 804, shall not apply to title insurers.

history: (History: Amended by Stats. 1976, Ch. 1152.)

article: 5. Exemptions

path: 2. CLASSES OF INSURANCE > 6. INSURANCE COVERING LAND > 1. Title Insurance > 5. Exemptions


text: Article 5.6 (commencing with Section 1875.20) of Chapter 12 of Part 2 of Division 1 does not apply to title insurers.

history: (History: Added by Stats. 1994, Ch. 131, Sec. 1. Effective January 1, 1995.)

article: 5. Exemptions


text: A title insurance company or underwritten title company engaged in the business of title insurance, as defined in Section 12340.3, shall not be deemed to have participated in any acts prohibited by Division 1 (commencing with Section 25000) of Title 4 of the Corporations Code solely by reason of engaging in the business of title insurance as authorized pursuant to this chapter.

history: (History: Added by Stats. 1993, Ch. 314, Sec. 1. Effective January 1, 1994.)

article: 5. Exemptions


text: The purpose of this article is to promote the public welfare by regulating rates for the business of title insurance as herein provided to the end that they shall not be excessive, inadequate or unfairly discriminatory. It is the express intent of this article to permit and encourage competition between persons or entities engaged in the business of title insurance on a sound financial basis, and nothing in this article is intended to give the commissioner power to fix and determine a rate level by classification or otherwise.

history: (History: Repealed and added by Stats. 1973, Ch. 1130.)

article: 5.5. Rate Filing and Regulation

path: 2. CLASSES OF INSURANCE > 6. INSURANCE COVERING LAND > 1. Title Insurance > 5.5. Rate Filing and Regulation


text: Every title insurer, underwritten title company, and controlled escrow company shall file with the commissioner its schedules of rates, all regularly issued forms of title policies to which such rates apply, and every modification thereof which it proposes to use in this state. Every schedule of rates filed by a title insurer shall set forth the entire charge to the public for each type of title policy included within such schedule and shall include without separate statement thereof that portion of the charge, if any, which is based upon work performed by an underwritten title company; there shall be no separate filing by an underwritten title company for such work. Every filing shall set forth its effective date, which shall be not earlier than the 30th day following its receipt by the commissioner, and shall indicate the character and extent of the coverages and services contemplated.

history: (History: Added by Stats. 1973, Ch. 1130.)

article: 5.5. Rate Filing and Regulation


text: Every title insurer, underwritten title company and controlled escrow company shall establish basic classifications of coverages and services to be used as the basis for determining rates.

article: 5.5. Rate Filing and Regulation


text:
The following standards shall apply to the making and use of rates pertaining to all the business of title insurance to which the provisions of this article are applicable:

(a) Rates shall not be excessive or inadequate, as herein defined, nor shall they be unfairly discriminatory.

No rate shall be held excessive unless (1) the rate is unreasonably high for the insurance or other services provided, and (2) a reasonable degree of competition does not exist in the particular phase of the business of title insurance to which the rate is applicable.

No rate shall be held to be inadequate unless (1) the rate is unreasonably low for the insurance or other services provided and (2) the continued use of the rate endangers the solvency of the person or entity using it, or unless (3) the rate is unreasonably low for the insurance or other services provided and the use of the rate by the person or entity using it has, or if continued will have, the effect of destroying competition or creating a monopoly. However, no rate or rate classification shall be held to be inadequate for the reason that a rate within a rating classification is less than the cost of the risk and expense elements assigned to smaller insurances within that classification, and the excess of the costs may be charged against larger insurances within the classification without rendering the rate or rate classification unfairly discriminatory.

(b) Consideration shall be given, to the extent applicable, to past and prospective loss experience within and outside this state, to a reasonable margin for profit and contingencies, to past and prospective expenses both countrywide and those specially applicable to this state, and to all other factors, including judgment factors, deemed relevant within and outside this state.

(c) The systems of expense provisions included in the rates for use by any title insurer, underwritten title company, or controlled escrow company may differ from those of other title insurers, underwritten title companies, or controlled escrow companies to reflect the operating methods of the person or entity with respect to any kind of insurance, or other service, or with respect to any combination thereof.

(d) For the establishment of rates, risks, and services in the business of title insurance may be grouped by classifications into the various types of title policies or services offered. The classifications may be further divided to produce rates for individual risks or services within a classification. Those classifications or further divisions thereof may be established based upon any one or more of the following: (1) the size of a transaction and its effect upon the continuing solvency of the person or entity using the rate in question if a loss should occur; (2) expense elements, including the management time that would ordinarily be expended in a typical transaction of a particular size; (3) the geographic location of a transaction, including variations in risk and expense elements attributable thereto; (4) the individual experience of the person or entity using the rate in question; and (5) any other reasonable considerations. Those classifications or further divisions thereof shall apply to all risks and services in the business of title insurance under the same or under substantially the same circumstances or conditions.

history: (History: Amended by Stats. 1981, Ch. 714, Sec. 311.)

article: 5.5. Rate Filing and Regulation


text: In order to further uniform administration of rate regulatory laws, the commissioner and every person or entity in the business of title insurance and every advisory organization in this state may exchange information and experience data with insurance supervisory officials of this and other states and rating organizations in other states and may consult with them with respect to such information and data.

article: 5.5. Rate Filing and Regulation


text:
As a further aid to uniform administration of rate regulatory laws of this state, the commissioner may prescribe by reasonable rules and regulations:

(a) For the annual reporting of financial data relating to the aggregate economic performance of all title insurance entities conducting the business of title insurance in this state. That data, if required, shall be for the purpose of determining the industry financial experience for the reporting year and shall reflect the after-tax rate of return on total capital, including investment income and realized and unrealized capital gains, from whatever source attributable to operations in this state.

(b) A statistical plan, reasonably adapted to each of the rating systems in use within the state. Any plan may be modified from time to time by the commissioner and shall be used thereafter by each title insurer in the reporting of data required by the plan, so that the experience of all title insurers is available to the commissioner on an annual basis. The commissioner, through regulations, shall prescribe the form and detail of the financial data to be submitted and the time period the data shall cover. In promulgating the plan, the commissioner may give due consideration to the rating systems in use and, in order that the plan may be as uniform as is practicable among the several states, to the rules and to the form of the plan used for these rating systems in other states. Every licensed title insurer in the state shall be required to record and report data directly to the commissioner. The commissioner shall designate one or more advisory organizations to assist in the development of the statistical plan and to further assist in gathering data and making compilations thereof, and these compilations shall be made available, subject to reasonable rules adopted by the commissioner, to title insurers and advisory organizations.

(c) No statistical plan or modifications thereto, or rules or regulations pertaining thereto, shall be adopted or implemented absent compliance with the provisions of Article 5 (commencing with Section 11346) of Chapter 3.5 of Part 1 of Division 3 of Title 2 of the Government Code, except that any plan, rule, or regulation shall not become effective for a period of 120 days following its adoption, and any plan, rule, or regulation shall be deemed to be a regulation required to be filed with the Secretary of State for purposes of Article 5 (commencing with Section 11346) of Chapter 3.5 of Part 1 of Division 3 of Title 2 of the Government Code.

(d) Data gathered under the statistical plan may be used in conjunction with analytical input from an industry advisory organization to generate statistical information for use in reviewing and evaluating individual rate filings by title insurers pursuant to the standards set forth in Section 12401.3. However, no statistical plan or modifications thereto, or rules or regulations pertaining thereto, shall do any of the following:

(1) Serve as the basis for an assessment not otherwise authorized by law.

(2) Conflict with the purpose and express intent of Section 12401.

(3) Fix, determine, or in any way impair competitive rating or the free market.

(e) This section shall not require a title insurer to refile an existing rate. However, this section shall apply to the filing of a changed or otherwise modified rate, pursuant to the regulations adopted to implement this chapter.

history: (History: Amended by Stats. 1998, Ch. 919, Sec. 1. Effective January 1, 1999.)

article: 5.5. Rate Filing and Regulation


text: Nothing in this article shall be construed to prohibit concert of action between entities under the same general management and control.

article: 5.5. Rate Filing and Regulation


text: No title insurer, underwritten title company or controlled escrow company shall use any rate in the business of title insurance prior to its effective date nor prior to the filing with respect to such rate having been publicly displayed and made readily available to the public for a period of no less than 30 days in each office of the title insurer, underwritten title company, or controlled escrow company in the county to which such rate applies, and no rate increase shall apply to title policies or services which have been contracted for prior to such effective date.

article: 5.5. Rate Filing and Regulation


text: Charges in excess of those set forth in a rate filing which has become effective may be made when such filing includes a statement that such charges may be made in the event unusual insurance risks are assumed or unusual services performed in the transaction of the business of title insurance; provided, that such charges are reasonably commensurate with the risks assumed or the costs of the services performed and provided further that each person or entity obligated to pay all or any part of such charges consents thereto in writing in advance.

article: 5.5. Rate Filing and Regulation


text: The schedules of rates which are required to be filed with the commissioner under the provisions of Section 12401.1 shall be printed or typed in type not smaller than 10-point and, so long as they are effective, full copies thereof, showing their effective date or dates, shall be kept at all times available to the public and prominently displayed in a public place in each office of a title insurer, an underwritten title company and a controlled escrow company in the county to which such rates apply. On request, copies of such schedules or adequate summaries of the pertinent part or parts thereof shall be furnished to the public.

article: 5.5. Rate Filing and Regulation


text: Nothing in this article shall require the filing of rates by title insurers for reinsurance contracts or agreements or policies of excess coinsurance.

article: 5.5. Rate Filing and Regulation


text:
(a) Notwithstanding Sections 12401.1 and 12401.7, a title insurer, underwritten title company, or controlled escrow company may use a new rate prior to 30 days after the filing if the new rate results in a reduction from an existing rate, the earlier effective date is set forth in the filing, and the new rate has been publicly displayed and made readily available to the public prior to its effective date.

(b) Any rate reduction filed by a title insurer, underwritten title company, or controlled escrow company pursuant to subdivision (a) shall be subject to the authority of the commissioner as set forth in this article and Article 6.7 (commencing with Section 12414.13).

(c) Five years from the effective date of this section, and within existing resources, the department shall review the reduced rates authorized by this section to determine if they are inadequate or if they increase the possibility of title insurers becoming insolvent. This review shall be in addition to any other authorized by statute.

history: (History: Added by Stats. 2003, Ch. 440, Sec. 1. Effective January 1, 2004.)

article: 5.5. Rate Filing and Regulation


text: No advisory organization shall conduct its operations in this state without first filing with the commissioner: (a) a copy of its constitution, articles of agreement or association or certificate of incorporation, and of its bylaws, rules, and regulations governing the conduct of its business; (b) a list of its members; (c) the name and address of a resident of this state upon whom notices or orders of the commissioner or process affecting such advisory organization may be served.

article: 5.7. Advisory Organizations

path: 2. CLASSES OF INSURANCE > 6. INSURANCE COVERING LAND > 1. Title Insurance > 5.7. Advisory Organizations


text:
Every advisory organization shall adopt bylaws or rules and regulations which will:

(a) Permit any person or entity in the business of title insurance in this state to become a member at a reasonable cost and without discrimination;

(b) Permit any member to withdraw at any time upon written notice;

(c) Prohibit any act or agreement by which any person or entity is restrained from lawfully engaging in the business of title insurance in this state;

(d) Require that the commissioner be given prompt notification of every change in any of the items described in subdivisions (a), (b), and (c) of Section 12402.

article: 5.7. Advisory Organizations


text: No bylaw or rule or regulation required by Section 12402.1 shall be effective until filed with the commissioner.

article: 5.7. Advisory Organizations


text:
(a) It is unlawful for any title insurer, underwritten title company or controlled escrow company to pay, directly or indirectly, any commission, compensation, or other consideration to any person as an inducement for the placement or referral of title business. Actual placement or referral of title business is not a precondition to a violation of this section, whether the violation is or is not a per se violation pursuant to subdivision (c).

(b) For purposes of this section, the following definitions are applicable:

(1) “Compensating balance” is a balance maintained in a lending institution by any title insurer, underwritten title company, or controlled escrow company for the express or implied purpose of influencing the extension of credit to a third party or the provision of goods, services, or benefits to a third party as an inducement for the placement or referral of title business by a third party.

(2) “Person” means any individual or entity who is any owner or prospective owner, lessee or prospective lessee of real property or any interest therein, any obligee or prospective obligee of an obligation secured or to be secured either in whole or in part by real property or any interest therein, or any person who is acting or who is in the business of acting as agent, representative, attorney, or employee of those persons.

(3) “Title business” means the “business of title insurance” as defined in Section 12340.3, and includes, but is not limited to, the offering of title insurance, escrow, or other services by a title insurer, underwritten title company, or controlled escrow company.

(c) The following activities, whether performed directly or indirectly, are deemed per se inducements for the placement or referral of title insurance business by any person and are unlawful:

(1) Paying or offering to pay, furnishing or offering to furnish, or providing or offering to provide assistance with the business expenses of any person, including, but not limited to, rent, employee salaries, furniture, copiers, facsimile machines, automobiles, telephone services or equipment, or computers.

(2) Providing or offering to provide any form of consideration intended for the benefit of any person, including cash, below market rate loans, automobile charges, or merchandise or merchandise credits.

(3) Placing or offering to place on behalf of any person, compensating balances.

(4) Advancing or paying or offering to advance or pay money on behalf of any person into an escrow to facilitate the closing thereof, other than any sum which represents the proceeds of a loan made in the ordinary course of business; or an advance not to exceed 2 percent of the sales price of the real property being sold or exchanged through the escrow or the amount of any loan secured by real property involved in the escrow, whichever is greater; or the extension of credit or an advance for the costs, fees and expenses of the escrow or of the title insurance issued or to be issued in connection therewith.

(5) Disbursing or offering to disburse on behalf of any person escrow funds held by a title insurer, underwritten title company or controlled escrow company before the conditions of the escrow applicable to that disbursement have been met, or in a manner which does not conform to Section 12413.1, including disbursing or offering to disburse before the expiration of the appropriate period established in Section 12413.1.

(6) Furnishing or offering to furnish all or any part of the time or productive effort of any employee of the title insurer, underwritten title company, or controlled escrow company to any person for any service unrelated to the title business.

(7) Advertising or paying for the advertising in any newspaper, newsletter, magazine, or publication that is produced by, or on behalf of, a person, or that results in a direct, or indirect, subsidy to a person.

(8) Expenditures for food, beverages, and entertainment for a person.

(d) Expenditures for the following are not deemed to be unlawful or in violation of this section:

(1) Promotional items with a permanently affixed company logo of the underwritten title company, title insurer, or controlled escrow company, with a value of not more than ten dollars ($10) each. “Promotional item” does not include a gift certificate, gift card, or other item that has a specific monetary value on its face, or that may be exchanged for any other item having a specific monetary value.

(2) Furnishing education or educational materials exclusively related to the business of title insurance for a person if continuing education credits are not provided.

(3) Other expenditures for a person, as permitted by the Department of Insurance by regulation.

(e) The provision or payment of any form of consideration as an inducement for the placement or referral of title business not specifically set forth in this section shall not be presumed lawful merely because they are not specifically prohibited.

(f) The Insurance Commissioner may determine compliance and enforce the provisions of this section by written order, regulation or written consent which may take into consideration standards, conditions, guidelines, principles, or definitions utilized by other states or federal agencies but those standards, conditions, guidelines, principles, or definitions shall not be determinative.

(g) It is the intent of the Legislature that the enactment of this section shall have no effect on the applicability of other sections of the Insurance Code that are in existence prior to the enactment of this section and which specifically, or by implication, refer to this section. The Legislature hereby intends that this section, including the specific terms employed within it, shall be liberally construed for the purpose of protecting consumers of title business.

history: (History: Amended by Stats. 2008, Ch. 280, Sec. 1. Effective January 1, 2009.)

article: 6. Rebates and Commissions

path: 2. CLASSES OF INSURANCE > 6. INSURANCE COVERING LAND > 1. Title Insurance > 6. Rebates and Commissions


text:
The furnishing of a preliminary report by any title insurer, controlled escrow company or underwritten title company, without charge to any person, shall constitute a violation of Section 12404. The charge for a preliminary report shall have a reasonable relation to the cost of production of the report but in no event shall it be less than the rate for a standard owners policy, minimum liability, as set forth in the company’s rate schedule. After billing any person for a preliminary report the title insurer, controlled escrow company or underwritten title company shall promptly make a good faith attempt to collect; provided, however, that notwithstanding Section 12404, but without limiting the applicability of that section to other transactions, this charge may be waived or canceled, if the company follows uniform practices as to all customers under like circumstances.

(a) After the issuance of the preliminary report, but before the charge is waived or canceled, the files of the issuing company contain a copy of a bona fide sales or exchange agreement, or loan commitment executed by the party or parties in interest relating to the property described in the report, and the sale, exchange, or loan is not consummated.

(b) When the preliminary report so furnished contains a lien or encumbrance or other title defect which the issuing company has refused to eliminate from its policy of title insurance or to provide insurance against loss by reason thereof, and another title insurance company has eliminated the lien or encumbrance or other title defect from its policy of title insurance or provided insurance against loss resulting therefrom within a reasonable period of time from the date of the issuance of the preliminary report.

The furnishing of the names of owners of record, descriptions of real property, and property characteristics, as defined in Section 408.3 of the Revenue and Taxation Code, shall not be deemed to be a violation of Section 12404, whether provided on individual or multiple properties and whether provided in printed form or by electronic media.

history: (History: Amended by Stats. 1992, Ch. 551, Sec. 1. Effective January 1, 1993.)

article: 6. Rebates and Commissions


text:
As used in this section “personal or controlled insurance” means a policy of title insurance, or insurance as to the identity, due execution and validity of any note or bond secured by mortage, or the identity, due execution, validity and recording of any such mortgage, or any other service afforded by title insurers the rate for which is required to be filed by Article 5.5 (commencing with Section 12401) of this chapter, where the insured or one of the insured under such policy is, or the loss thereunder is payable to, an underwritten title company, a controlled escrow company, or an issuing agent, or

(a) If such underwritten or controlled company or issuing agent is a natural person: (1) his spouse, his employer or his employer’s spouse, or (2) any person related to him or the persons mentioned in (1) of this paragraph within the second degree by blood or marriage, or (3) if his employer is a corporation, any person directly or indirectly owning or controlling a majority of the voting stock or controlling interest in such corporation, or (4) if his employer is a partnership or association, any person owning any interest in such partnership or association.

(b) If such underwritten or controlled company or issuing agent is a corporation: (1) any person directly or indirectly owning or controlling a majority of the voting stock or controlling interest in such corporation, or (2) any corporation which is directly or indirectly controlled by a person who also controls the underwritten title company, controlled escrow company, or issuing agent, as described in (1), or (3) any corporation making consolidated returns for United States income tax purposes with any corporation described in (1) or (2) of this paragraph.

If the fees and charges for personal or controlled insurance so issued in any one calendar year received by an underwritten title company, a controlled escrow company or an issuing agent exceed the fees and charges received for other title insurance issued at the instance or request of such underwritten title company, controlled escrow company or issuing agent in the same year, the excess is an unlawful rebate. Violation of this section by a title insurer shall not be subject to the penalty provided for in Section 12409.

history: (History: Amended by Stats. 1973, Ch. 1130.)

article: 6. Rebates and Commissions


text: No title insurer, no controlled escrow company, and no underwritten title company shall make any rebate of any portion of the fee or charge shown by the schedule required by Section 12401.1. No title insurer, no controlled escrow company and no underwritten title company shall quote any fee or make any charge for a title policy to any person which is less than that currently available to others for the same type of title policy in a like amount covering property in the same county and involving the same factors as set forth in its then currently effective schedule of fees and charges. The amount by which any fee or charge is less than that called for by the then currently effective schedule of fees and charges of the title insurer is an unlawful rebate; provided, that nothing contained in this article shall prohibit bulk rates or special rates for customers of prescribed classes if such bulk or special rates are provided for in such schedule.

history: (History: Amended by Stats. 1976, Ch. 1079.)

article: 6. Rebates and Commissions


text:
In addition to other acts prohibited by this article, no controlled escrow company or title insurer or other person engaged in the business of selling or furnishing to the public, directly or indirectly, evidence to title to real property shall:

(a) Pay for or furnish or offer to pay for or furnish any part of the advertising or promotional material of the customer in connection with the sale or encumbrance of real property.

(b) Pay or offer to pay for any evidence of title or copy or contents thereof not produced or issued by such person or company if such evidence of title relates to a current real property transaction, except as provided in Section 12412.

history: (History: Added by Stats. 1965, Ch. 360.)

article: 6. Rebates and Commissions


text: No title insurer shall issue any title policy in any transaction in connection with which it or any person which is a controlled escrow company or underwritten title company by reason of its relationship with such title insurer has paid or contemplates paying any commission in violation of Section 12404 or in connection with which it or any such controlled escrow company or underwritten title company has made or contemplates making any unlawful rebate in violation of Section 12405.

history: (History: Added by Stats. 1949, Ch. 891.)

article: 6. Rebates and Commissions


text:
(a) The commissioner shall develop, publish, and disseminate a brochure for consumers who are required to buy title insurance as part of a residential real estate transaction. The brochure shall inform consumers that competing title insurers and underwritten title companies may offer different costs or services for the title insurance required in the transaction. The brochure shall also inform consumers about the potential availability of discounts in cases involving first-time buyers, short-term rates if a home is resold in less than a five-year period, concurrent rates if the company is providing both the homeowners’ and the lenders’ title insurance policies in the transaction, subdivision bulk rates if the property being purchased is in a new subdivision, refinancing discounts, short-term financing rates, and discounts that may be available in other special cases. The brochure shall encourage consumers to contact more than one title insurer or underwritten title company in order to compare costs and services.

(b) The brochure developed pursuant to subdivision (a) shall include the department’s toll-free consumer assistance telephone number and shall invite consumers to call the department if they need assistance.

(c) The department shall display the brochure developed pursuant to subdivision (a) on its Internet Web site, and the brochure shall include the department’s Internet address.

(d) The brochure developed pursuant to subdivision (a) shall also educate consumers about laws involving unlawful commissions and rebates associated with the placement or referral of title insurance and shall encourage consumers to report to the department, to the Bureau of Real Estate, and to any other appropriate government agencies any suspected incidents of probable unlawful commissions or rebates subject to Article 6.5 (commencing with Section 12414).

(e) One copy of the brochure developed pursuant to this section shall be made available to a member of the public at no cost, and the department may charge its actual cost for providing additional copies. The brochure shall be made available for reproduction at no cost to any vendor who wishes to publish the brochure as written, provided any vendor who wishes to publish the brochure agrees to submit any documents containing the brochure to the department prior to publication.

history: (History: Amended by Stats. 2013, Ch. 352, Sec. 396. (AB 1317) Effective September 26, 2013. Operative July 1, 2013, by Sec. 543 of Ch. 352.)

article: 6. Rebates and Commissions


text: The commissioner, if he has reason to believe that any controlled escrow company or any underwritten title company has violated or is violating any of the provisions of this article, has the power and it is his duty to forthwith examine its books, records and accounts and in making any such examination he has all the power set forth in Article 4, Chapter 1 of Part 2 of Division 1 of this code and any company so examined shall pay to the commissioner the cost of such examination on demand. Whenever the commissioner examines a title insurer, he shall make such examination of its books, records, and files as may be necessary in his judgment to determine whether or not it has violated or is violating any of the provisions of this article.

article: 6. Rebates and Commissions


text: Every title insurer shall include in its annual statement furnished the commissioner pursuant to Article 10 (commencing with Section 900), Chapter 1, Part 2, Division 1 of this code, the name of each person which is a controlled escrow company or underwritten title company by reason of its relationship with such title insurer.

history: (History: Amended by Stats. 1967, Ch. 689.)

article: 6. Rebates and Commissions


text: Whenever a title insurer terminates its underwriting agreement with any underwritten title company, it shall at the same time give notice of the termination to the commissioner.

history: (History: Added by Stats. 1972, Ch. 578.)

article: 6. Rebates and Commissions


text:
(a) Notwithstanding any other provision of this article no title insurer, no controlled escrow company, and no underwritten title company shall pay any commission for the solicitation or negotiation of any services constituting the business of title insurance.

(b) The provisions of subdivision (a) notwithstanding, a title insurer, controlled escrow company, or underwritten title company may pay to full-time salaried employees a commission, incentive compensation or bonuses based on any such employees’ level of production of any services constituting the business of title insurance. Any title insurer, controlled escrow company, or underwritten title company and, where applicable their affiliates, which makes such payments shall maintain adequate records detailing the conditions to receipt of any commission, incentive compensation or bonus, the recipient thereof and the amount paid.

(c) Any employee of a title insurer, underwritten title company, or controlled escrow company shall not, directly or indirectly, pay or offer to pay, either directly or indirectly, any part of his or her compensation, whether denominated salary, incentive compensation, or bonuses to any person or entity defined in Section 12404, as an inducement for, or as compensation for, any title insurance business or any escrow or other title business, and any payment or offer to pay this consideration is an unlawful rebate.

history: (History: Added by Stats. 1982, Ch. 972, Sec. 2.)

article: 6. Rebates and Commissions


text:
(a) Every title insurer, controlled escrow company, and underwritten title company which pays any commission or which makes any unlawful rebate in violation of this article shall be liable to the people of California for five times the amount of that commission or unlawful rebate, the amount thereof to be recovered by the commissioner pursuant to Section 12976. In addition to, or in lieu of, any other penalty that may be imposed under this code, the commissioner may, after a hearing, issue an order to restrict or suspend the certificate of authority of any title insurer or controlled escrow company or the license of any underwritten title company. The commissioner may restrict or suspend the certificate of authority or license on a statewide basis or in specified counties.

(b) In no event shall the total or aggregate amount recovered by the commissioner from a title insurer, controlled escrow company, or underwritten title company pursuant to this section be less than five thousand dollars ($5,000).

history: (History: Amended by Stats. 1998, Ch. 919, Sec. 2. Effective January 1, 1999.)

article: 6. Rebates and Commissions


text: In enforcing any of the provisions of this article, the commissioner shall be entitled to the remedies provided for in Section 12928.6 of this code.

article: 6. Rebates and Commissions


text: The commissioner may after a hearing suspend or revoke the certificate of authority of any title insurer or the license of any underwritten title company licensed pursuant to the provisions of Section 12389, which, after 10 days’ written notice from the commissioner requiring it to comply with the provisions of this article willfully fails to do so.

history: (History: Amended by Stats. 1974, Ch. 436.)

article: 6. Rebates and Commissions


text: Nothing in this article prohibits the division of fees or charges, for work and services actually performed, between title insurers or between title insurers and underwritten title companies or between underwritten title companies, if such division does not constitute an unlawful rebate as defined by Section 12404.5, or is prohibited by Section 12405.7 or 12408.5. The entire charge made to obtain a title policy shall be set forth on the title policy.

history: (History: Amended by Stats. 1985, Ch. 443, Sec. 1.)

article: 6. Rebates and Commissions


text:
No title insurance company, controlled escrow company, or underwritten title company shall disburse funds from an escrow account until the day established by the following:

(a) Except for funds deposited by cash or by electronic payment, deposits accorded next day availability pursuant to Part 229 of Title 12 of the Code of Federal Regulations may not be disbursed until the business day following the business day of deposit.

(b) Except for drafts, deposits not accorded next day availability pursuant to Part 229 of Title 12 of the Code of Federal Regulations shall not be disbursed until the day on which these funds must be made available to depositors under the federal regulation specified in this subdivision.

(c) Funds deposited by cash or by electronic payment may be disbursed following deposit on the same business day as the business day of deposit.

(d) Notwithstanding the provisions of subdivision (b), deposits other than drafts may be disbursed on the business day following the business day of deposit if the financial institution to which the funds have been deposited informs the title insurance company, controlled escrow company, or underwritten title company in writing that final settlement has occurred on the deposited item. For the purposes of this subdivision, an electronically transmitted document that specifies that final settlement has occurred constitutes written notice as to an individual item.

(e) Where a draft, other than a share draft, has been received and submitted for collection, no title insurance company, controlled escrow company, or underwritten title company shall disburse funds from an escrow account with respect to the draft until the proceeds of the draft have become available for withdrawal from the financial institution to which the draft has been submitted for collection. For purposes of this subdivision, “available for withdrawal” means when the draft has been submitted for collection and payment received. Notwithstanding this subdivision, disbursement of funds represented by share drafts shall be governed by subdivisions (b) and (d), if applicable.

(f) For purposes of this section, “escrow account” means any depository account with a financial institution to which funds are deposited with respect to any transaction wherein one person, for the purpose of effecting the sale, transfer, encumbering or leasing of real or personal property to another person, delivers any written instrument, money, evidence of title to real or personal property, or other thing of value to a third person to be held by that third person until the happening of a specified event or the performance of a prescribed condition, when it is then to be delivered by that third person to a grantee, grantor, promisee, promisor, obligee, obligor, bailee, bailor, or any agency or employee of the latter.

(g) Except as provided in subdivision (h), for purposes of this section, any word or term used herein or relevant to interpretation of this section, including, but not limited to, “available for withdrawal,” “check,” “electronic payment,” and “business day,” which is defined in Part 229 of Title 12 of the Code of Federal Regulations on January 1, 1990, shall have the meaning there given as the regulations existed on January 1, 1990.

(h) For purposes of this section, “financial institution” means any financial institution specified in Section 12413.5.

(i) No title insurance company, controlled escrow company, or underwritten title company shall be liable for a violation of this section if the violation was not intentional or resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid that error. Examples of bona fide errors include, but are not limited to, clerical, calculation, computer malfunction and programming, and printing errors.

(j) Nothing in this section shall be deemed to prohibit the recordation of documents prior to the time funds are available for disbursement with respect to a transaction provided the parties to the transaction consent in writing prior thereto.

(k) Nothing in this section is intended to amend, alter, or supersede other sections of this code, or other laws of this state or the United States, regarding an escrow holder’s duties and obligations.

history: (History: Amended by Stats. 1990, Ch. 872, Sec. 2.)

article: 6. Rebates and Commissions


text:
Any item or draft received by a title insurance company, controlled escrow company, or underwritten title company in connection with any escrow shall be deposited in, or submitted for collection to, a financial institution as defined in Section 12413 no later than the close of the next business day following receipt.

For purposes of this section, “item” means any check, including a cashier’s check, negotiable order of withdrawal, share draft, traveler’s check, or money order.

history: (History: Added by Stats. 1988, Ch. 389, Sec. 1.)

article: 6. Rebates and Commissions


text:
All funds received in connection with any escrow conducted by a title insurance company, controlled escrow company, or underwritten title company shall be deposited in a separate depository account in a bank or savings and loan association or in an account in an industrial loan company insured by the Federal Deposit Insurance Corporation, and the funds so deposited shall be the property of the person or persons entitled thereto under the provisions of the escrow and segregated escrow by escrow in the records of the title insurance company, controlled escrow company, or underwritten title company. The funds shall not be subject to any debts of the title insurance company, controlled escrow company, or underwritten title company and shall be used only to fulfill the terms of the individual escrow for which the funds were accepted and none of the funds shall be utilized until the conditions of the escrow have been met.

Any interest received on funds deposited in connection with any escrow which are deposited in a bank, savings and loan association, or industrial loan company shall be paid over by the escrow to the depositing party to the escrow unless the escrow is otherwise instructed by the depositing party, and shall not be transferred to the account of the title insurance company, controlled escrow company, or underwritten title company.

history: (History: Amended by Stats. 1989, Ch. 328, Sec. 2.)

article: 6. Rebates and Commissions


text: Any person aggrieved by any rate charged, rating plan or rating system followed or adopted by a title insurer, underwritten title company, or controlled escrow company may request such person or entity to review the manner in which the rate, plan, system, or rule has been applied with respect to insurance or services afforded him. Such request may be made by his authorized representative, and shall be written. If the request is not granted within 30 days after it is made, the requestor may treat it as rejected. Any person aggrieved by the action of any such person or entity in refusing the review requested, or in failing or refusing to grant all or part of the relief requested, may file a written complaint and request for hearing with the commissioner, specifying the grounds relied upon. If the commissioner has information concerning a similar complaint he may deny the hearing. If he believes that probable cause for the complaint does not exist or that the complaint is not made in good faith he shall deny the hearing. Otherwise, and if he finds that the complaint charges a violation of Article 5.5 (commencing with Section 12401) and that the complainant would be aggrieved if the violation is proved, he shall proceed as provided in Section 12414.14.

history: (History: Added by Stats. 1973, Ch. 1130.)

path: 2. CLASSES OF INSURANCE > 6. INSURANCE COVERING LAND > 1. Title Insurance > 6.7. Hearings, Procedure, and Judicial Review


text: If after examination of a title insurer, an underwritten title company, or a controlled escrow company, or upon the basis of other information, or upon sufficient complaint as provided in Section 12414.13, the commissioner has good cause to believe that such person or entity, or any rate, rating plan or rating system made or used by any such person or entity does not comply with the requirements and standards of Article 5.5 (commencing with Section 12401) he shall, unless he has good cause to believe such noncompliance is willful, give notice in writing stating therein in what manner and to what extent such noncompliance is alleged to exist and specifying therein a reasonable time, not less than 10 days nor more than 30 days thereafter, in which such noncompliance may be corrected. Notices under this section shall be confidential as between the commissioner and the parties unless a hearing is held under Section 12414.15.

article: 6.7. Hearings, Procedure, and Judicial Review


text: If the commissioner has good cause to believe such noncompliance to be willful, or if within the period prescribed by the commissioner in the notice required by Section 12414.14 the title insurer, underwritten title company, or controlled escrow company does not make such changes as may be necessary to correct the noncompliance specified by the commissioner or establish to the satisfaction of the commissioner that such specified noncompliance does not exist, then the commissioner may hold a public hearing in connection therewith, provided that within a reasonable period of time, which shall be not less than 10 days before the date of such hearing, he shall mail written notice specifying the matters to be considered at such hearing to such title insurer, underwritten title company, or controlled escrow company. Such notice shall conform to the requirements for an accusation as prescribed by Section 11503 of the Government Code. If no notice has been given as provided in Section 12414.14, such notice shall state therein in what manner and to what extent noncompliance is alleged to exist. The hearing shall not include any additional subjects not specified in the notices required by Section 12414.14 or this section.


text:
If after a hearing pursuant to Section 12414.15 the commissioner finds:

(a) That any rate, rating plan or rating system violates the provisions of Article 5.5 (commencing with Section 12401), he may issue an order to the person or entity which has been the subject of the hearing specifying in what respects such violation exists and stating when, within a reasonable period of time, the further use of such rate or rating system by such person or entity in the business of title insurance made thereafter shall be prohibited.

(b) That the violation which has been the subject of hearing was willful, he may suspend or revoke, in whole or in part, the certificate of authority of such title insurer or the license of such underwritten title company or controlled escrow company with respect to the transaction of the business of title insurance which has been the subject matter of the hearing.


text: In addition to other penalties provided in this code, the commissioner may suspend or revoke, in whole or in part, the authority of any person or entity to engage in the business of title insurance upon the failure of any such person or entity to comply within the time limited by such order or any extension thereof which the commissioner may grant, with an order of the commissioner lawfully made by him pursuant to Section 12414.16 and effective pursuant to Section 12414.19.


text: Except as otherwise provided in this chapter, all proceedings in connection with the denial, suspension, or revocation of a license or certificate of authority under this chapter shall be conducted in accordance with the provisions of Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the commissioner shall have all the powers granted to him therein.


text:
Any finding, determination, rule, ruling, or order made by the commissioner under Article 5.5 (commencing with Section 12401), Article 5.7 (commencing with Section 12402), Article 6.7 (commencing with Section 12414.13), and Article 6.9 (commencing with Section 12414.20) of this chapter shall be subject to review by the courts of the state and proceedings on review shall be in accordance with the provisions of the Code of Civil Procedure. In such proceedings on review, the court is authorized and directed to exercise its independent judgment on the evidence and unless the weight of the evidence supports the findings, determination, rule, ruling, or order of the commissioner, the same shall be annulled.

Notwithstanding any other provision of law to the contrary, a petition for review of any such finding, determination, rule or order, may be filed at any time before the effective date thereof. No such finding, determination, rule, or order shall become effective before the expiration of 20 days after notice and a copy thereof are mailed or delivered to the person or entity affected, and any finding, determination, rule, or order of the commissioner so submitted for review shall not become effective for a further period of 15 days after the petition for review is filed with the court. The court may stay the effectiveness thereof for a longer period.


text: The commissioner may, as often as may be reasonable and necessary, make or cause to be made an examination of any advisory organization for the business of title insurance in this state.

path: 2. CLASSES OF INSURANCE > 6. INSURANCE COVERING LAND > 1. Title Insurance > 6.9. Examinations, Penalties and Miscellaneous


text: The commissioner may, pursuant to reasonable rules and regulations which he shall prescribe, make or cause to be made an examination of every title insurer, underwritten title company or controlled escrow company engaged in the business of title insurance to ascertain whether such person or entity and every rate and rating system used in the business of title insurance complies with the requirements and standards of Article 5.5 (commencing with Section 12401) of this chapter. Such examination shall not be a part of a periodic general examination participated in by a representative of more than one state.

article: 6.9. Examinations, Penalties and Miscellaneous


text: The officers, managers, agents, and employees of any advisory organization, title insurer, underwritten title company, or controlled escrow company may be examined at any time under oath and shall exhibit all books, records, accounts, documents, or agreements governing their method of operation, together with all data, statistics, and information of every kind and character collected or considered by such persons or entities in the conduct of the operations to which such examination relates.


text:
The reasonable cost of any examination authorized by this article shall be paid by the advisory organization, title insurer, underwritten title company, or controlled escrow company to be examined. A copy of any written report which is prepared as a result of a full balance sheet financial examination conducted pursuant to Section 12389, shall be provided to the entity examined within 30 days following the production of the report.

In the event any examination or review of financial statements has resulted in a requirement of, or directive to, the entity to make changes in its conduct or the business of title insurance, those requirements or directives shall be in writing, and provided to the entity.

history: (History: Amended by Stats. 1990, Ch. 370, Sec. 1.)


text: No person, title insurer, underwritten title company, controlled escrow company, or advisory organization shall willfully withhold information from, or knowingly give false or misleading information to, the commissioner or to any advisory organization which will affect rates for the business of title insurance to which the provisions of this chapter are applicable.


text:
(a) Any person, title insurer, underwritten title company, or controlled escrow company who fails to comply with a final order of the commissioner under this chapter shall be liable to the state in an amount not exceeding one hundred dollars ($100), but if that failure is willful he, she, or it shall be liable to the state in an amount not exceeding five thousand dollars ($5,000) for that failure. The commissioner shall collect the amount so payable and may bring an action in the name of the people of the State of California to enforce collection. Those penalties may be in addition to any other penalties provided by law.

(b) (1) A willful violation of the provisions of this chapter is a misdemeanor.

(2) This subdivision is not applicable to Section 12389.7.

history: (History: Amended by Stats. 2013, Ch. 321, Sec. 27. (AB 1391) Effective January 1, 2014.)


text: No act done, action taken, or agreement made pursuant to the authority conferred by Article 5.5 (commencing with Section 12401) or Article 5.7 (commencing with Section 12402) of this chapter shall constitute a violation of or grounds for prosecution or civil proceedings under any other law of this state heretofore or hereafter enacted which does not specifically refer to insurance.


text: Commencing 120 days following January 1, 1974, no title insurer, underwritten title company or controlled escrow company shall charge for any title policy or service in connection with the business of title insurance, except in accordance with rate filings which have become effective pursuant to Article 5.5 (commencing with Section 12401) of this chapter or as otherwise authorized by such article; provided, however, where a rate is on file with the commissioner and in effect immediately prior to such date, such rate shall continue in effect until a new rate filing is thereafter made and becomes effective in the manner provided in Article 5.5 (commencing with Section 12401) of this chapter.


text: All title policies issued by title insurers shall be subscribed by the president or a vice president and by the secretary or an assistant secretary of the corporation. All such title policies are as binding and obligatory upon the corporation as if executed over the corporate seal. The signatures of such officers, or any one of them, may be in their own handwriting or engraved, lithographed, printed, stamped, or otherwise affixed to such title policies. Any title policy so signed shall be presumed to be duly subscribed, and if the title policy provides for an additional signature and such signature appears thereon a like presumption shall apply.


text: The administration and enforcement of Article 5.5 (commencing with Section 12401) and Article 5.7 (commencing with Section 12402) of this chapter shall be governed solely by the provisions of this chapter. Except as provided in this chapter, no other law relating to insurance and no other provisions in this code heretofore or hereafter enacted shall apply to or be construed as supplementing or modifying the provisions of such articles unless such other law or other provision expressly so provides and specifically refers to the sections of such articles which it intends to supplement or modify. The provisions of this chapter and regulations adopted pursuant thereto shall constitute the exclusive regulation of the conduct of escrow and title transactions by entities engaged in the business of title insurance as defined in Section 12340.3, notwithstanding any local regulation or ordinance.

history: (History: Amended by Stats. 1981, Ch. 479, Sec. 5.)


text:
(a) When constituting an offer to issue an owner’s policy of title insurance, a preliminary report shall incorporate the following statement, in bold print on front of the preliminary report:

“Please read the exceptions shown or referred to below and the exceptions and exclusions set forth in Exhibit A of this report carefully. The exceptions and exclusions are meant to provide you with notice of matters which are not covered under the terms of the title insurance policy and should be carefully considered.

It is important to note that this preliminary report is not a written representation as to the condition of title and may not list all liens, defects, and encumbrances affecting title to the land.”

(b) Upon request, a title insurance company may provide coverage against loss or damage under the terms, conditions, and stipulations of the title insurance policy for any monetary lien set forth in the preliminary report.

(c) This section does not modify any of the provisions of Section 12340.11.

history: (History: Added by Stats. 1994, Ch. 1125, Sec. 1. Effective January 1, 1995.)


text:
(a) (1) Whenever the commissioner takes any formal enforcement or disciplinary action directly against an employee of a title insurer, underwritten title company, or controlled escrow company, for malfeasance or misconduct committed by the employee in their performance of escrow-related services, upon the action becoming final the commissioner shall notify the Real Estate Commissioner and the Commissioner of Financial Protection and Innovation of the action or actions taken. The purpose of this notification is to alert the departments that enforcement or disciplinary action has been taken, if the employee seeks or obtains employment with entities regulated by the departments.

(2) The commissioner shall provide the Real Estate Commissioner and the Commissioner of Financial Protection and Innovation, in addition to the notification of the action taken, with a copy of the written accusation, statement of issues, or order issued or filed in the matter and, at the request of the Real Estate Commissioner or Commissioner of Financial Protection and Innovation, with any underlying factual material relevant to the enforcement or disciplinary action. Any confidential information provided by the commissioner to the Commissioner of Financial Protection and Innovation or the Real Estate Commissioner shall not be made public pursuant to this section. Notwithstanding any other law, the disclosure of any underlying factual material to the Commissioner of Financial Protection and Innovation or the Real Estate Commissioner shall not operate as a waiver of confidentiality or any privilege that the commissioner may assert.

(b) The commissioner shall establish and maintain, on the internet website maintained by the Department of Insurance, a separate and readily identifiable database of all persons who have been subject to any enforcement or disciplinary action that triggers the notification requirements of this section. The database shall also contain a direct link to the databases, described in Section 10176.1 of the Business and Professions Code and Section 17423.1 of the Financial Code and required to be maintained on the internet websites of the Bureau of Real Estate and the Department of Financial Protection and Innovation, respectively, of persons who have been subject to enforcement or disciplinary action for malfeasance or misconduct related to the escrow industry by the Commissioner of Financial Protection and Innovation and the Real Estate Commissioner.

(c) There shall be no liability on the part of, and no cause of action of any nature shall arise against, the State of California, the Department of Insurance, the Insurance Commissioner, any other state agency, or any officer, agent, employee, consultant, or contractor of the state, for the release of any false or unauthorized information pursuant to this section, unless the release of that information was done with knowledge and malice, or for the failure to release any information pursuant to this section.

history: (History: Amended by Stats. 2022, Ch. 452, Sec. 198. (SB 1498) Effective January 1, 2023.)


text: It is the intent of the Legislature that certificated title insurers and licensed underwritten title companies, as defined in Section 12340.5 shall pay to the commissioner an annual renewal fee, as provided in Section 12416, in addition to that provided as to title insurers by Section 705 to cover the costs to the commissioner for administering and enforcing Article 3.7 (commencing with Section 12389), Article 5.5 (commencing with Section 12401), and Article 6 (commencing with Section 12404) of Chapter 1, Part 6, Division 2 of this code and other provisions of this code as may be subsequently incorporated by reference in this article by legislative enactment. Such fee shall be in lieu of all fees provided for in Article 6 (commencing with Section 12404) of Chapter 1, Part 6, Division 2.

history: (History: Amended by Stats. 1973, Ch. 1130.)

article: 7. Annual Renewal Fees

path: 2. CLASSES OF INSURANCE > 6. INSURANCE COVERING LAND > 1. Title Insurance > 7. Annual Renewal Fees


text: Each certificated title insurer possessing a certificate of authority of indefinite term pursuant to Section 701 shall owe and pay an annual renewal fee of nine hundred eighty-eight dollars ($988). Each underwritten title company possessing a license of indefinite term pursuant to Section 12389 shall owe and pay an annual renewal fee of five hundred sixty-seven dollars ($567), except that: (a) when the aggregate number of documents recorded and documents filed in the offices of the county recorders in the preceding calendar year in all counties where the company is licensed to transact business is less than 50,000, that company shall owe and pay an annual renewal fee of two hundred eighty-three dollars ($283), or (b) when the aggregate number of documents recorded and documents filed in the offices of the county recorders in the preceding calendar year in all counties where the company is licensed to transact business is more than 50,000 but less than 100,000, that company shall owe and pay an annual renewal fee of three hundred sixty dollars ($360). Those fees shall be for annual periods commencing on July 1 of each year and ending on June 30 of each year, and shall be due on March 1 preceding the annual period for which those fees are charged, and shall be delinquent on and after April 1 next following the date when due.

history: (History: Amended by Stats. 2017, Ch. 534, Sec. 80. (AB 1699) Effective January 1, 2018.)

article: 7. Annual Renewal Fees


text: The annual renewal fee provided by this article is not a tax but a charge for services to be rendered.

history: (History: Added by Stats. 1967, Ch. 1415.)

article: 7. Annual Renewal Fees


text:
(a) No person shall be employed as a title marketing representative in this state unless the person holds a valid “certificate of registration” as a title marketing representative issued by the commissioner pursuant to Section 12418.1.

(b) For purposes of this article, “title marketing representative” means a natural person employed by a title insurer, underwritten title company, or controlled escrow company whose primary duty is to market, offer, solicit, negotiate, or sell title insurance, as defined in Section 12340.1. A title marketing representative does not include a person whose primary duties directly involve the creation, production, or issuance of the title policy or the performance of escrow services.

(c) If any person knowingly markets title insurance without having applied for or obtained a certificate of registration pursuant to Section 12418.1, the commissioner may issue a cease and desist order pursuant to Section 12921.8.

history: (History: Added by Stats. 2008, Ch. 280, Sec. 2. Effective January 1, 2009.)

article: 8. Title Insurance Representatives

path: 2. CLASSES OF INSURANCE > 6. INSURANCE COVERING LAND > 1. Title Insurance > 8. Title Insurance Representatives


text:
(a) A certificate of registration as a title marketing representative shall be applied for and renewed by filing with the commissioner a written application. The application shall be on a form prescribed by the commissioner, and shall prescribe the disclosure of information that will aid the commissioner in determining whether the prerequisites for the certificate have been met. The applicant shall certify that the contents of the application are true and correct under penalty of perjury.

(b) Each application for a certificate of registration shall contain the following information:

(1) The residence address, the principal business address, and the mailing address of the applicant.

(2) A statement, signed by an officer of the business by whom the applicant is or will be employed, certifying that the applicant will be provided training regarding Article 6 (commencing with Section 12404) within 60 days of the hiring date or date of application.

(3) A statement, signed by the applicant, as to whether he or she has previously had a certificate of registration revoked, suspended, or otherwise limited under Section 12418.4.

(c) Each application to obtain or renew a certificate of registration shall be accompanied by a filing fee in an amount determined by the department to be sufficient to defray the department’s actual costs of processing the application, not to exceed two hundred thirty-seven dollars ($237). An application shall not be deemed filed unless it has been delivered to the department accompanied by the proper filing fee.

(d) The commissioner may decline to act on an incomplete or defective application until an amended application that completes the prescribed form has been filed with the department. In the event that the application is found to be defective or incomplete, the department shall notify the applicant and his or her employer in writing that the application needs to be modified and resubmitted within 15 days of receipt of this written notification.

(e) An applicant submitting an application filed with the department for a certificate of registration as a title marketing representative may solicit, sell, or market title insurance, as defined in Section 12340.1, in the interim time period preceding the formal approval or rejection of the application, but shall be subject to the same compliance requirements as a holder of an approved certificate of registration. An applicant with a pending application shall be deemed to be operating on a provisional basis.

(f) In the event that the title marketing representative’s employment with a title company is terminated, the title company formerly employing the title marketing representative shall notify the department within 30 days of the termination. If the title marketing representative becomes employed by another title company as a title marketing representative, the new employer shall notify the department of the title marketing representative’s new employment within 30 days of the commencement of that employment.

(g) An applicant who has previously had a certificate of registration revoked, suspended, or otherwise limited under subdivision (d) of Section 12418.4 may not sell, solicit, or market title insurance during the interim period described in subdivision (e).

history: (History: Amended by Stats. 2017, Ch. 534, Sec. 81. (AB 1699) Effective January 1, 2018.)

article: 8. Title Insurance Representatives


text:
(a) An applicant or holder of a certificate of registration as a title marketing representative is not required to pass a qualifying examination, and is exempt from prelicensing and continuing education requirements, except as specified in paragraph (2) of subdivision (b) of Section 12418.1.

(b) Upon the filing of an application for the issuance or renewal of a certificate of registration, the commissioner may conduct an investigation, during the interim period set forth in subdivision (e) of Section 12418.1, to determine if the applicant shall be granted the certificate of registration by virtue of prior conduct in the marketing of policies of title insurance and to verify the accuracy of the information submitted by the applicant to the department and may require the filing of any supplementary documents, affidavits, and statements that may be necessary to determine whether training specified in paragraph (2) of subdivision (b) of Section 12418.1 has been, or will be, provided to the applicant within the time period set forth in Section 12418.1. Should the commissioner decline to approve the granting of a certificate of registration, the procedure set forth in subdivision (c) of Section 12418.4 shall apply.

article: 8. Title Insurance Representatives


text:
(a) Each certificate of registration issued under this article shall be for a three-year period beginning on the date the certificate is issued.

(b) Not less than 60 days before a certificate of registration will expire, the commissioner may mail or use an electronic delivery method, including email or other similar electronic method, to deliver an application to renew the certificate to the latest email or mailing address appearing on the registrant’s records. It shall be the responsibility of the registrant to renew his or her certificate, whether or not a renewal notice is received.

(c) The application for renewal of an expired certificate of registration may be filed after the expiration date and until the same month and day of the next succeeding year. In addition to the fee for a renewal application, a delinquent application fee in the amount of fifty-eight dollars ($58) shall be assessed for each application for renewal filed after the expiration date. Each registrant shall be subject to payment of delinquent application fees under this subdivision. The commissioner may waive the delinquent application fee, or accept a renewal filed after the date specified in this subdivision, if the registrant’s failure to comply is due to clerical or other inadvertent error on the part of the department.

history: (History: Amended by Stats. 2017, Ch. 534, Sec. 82. (AB 1699) Effective January 1, 2018.)

article: 8. Title Insurance Representatives


text:
(a) Sections 1667, 1668, 1669, 1670, 1729, 1729.2, 1738, 1738.5, 1742, 1743, and Article 6 (commencing with Section 12404), shall apply to all applicants or holders of a certificate of registration issued pursuant to this article.

(b) The department may revoke, suspend, restrict, or decline to issue a certificate of registration if it determines that the title marketing representative or applicant has violated provisions of Article 6 (commencing with Section 12404) pursuant to the due process and hearing requirements set forth in subdivision (c).

(c) Except as provided in Section 1669, a certificate of registration shall not be denied, restricted, suspended, or revoked without a hearing conducted in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code.

(d) In addition to, or in lieu of, any other penalty that may be imposed under this article against a title marketing representative, the commissioner may bring an administrative action against a title marketing representative for any violation of the provisions of Article 6 (commencing with Section 12404). If a title marketing representative charged with a violation of Article 6 (commencing with Section 12404) is determined by the commissioner to have committed the violation, the commissioner may require the surrender of, temporarily suspend or revoke either permanently or temporarily the title marketing representative’s certificate of registration, and, in addition, may impose a monetary penalty. Any payment of a monetary penalty pursuant to a settlement or final adjudication shall be made from the title marketing representative’s personal funds and not by their employer either directly or through the title marketing representative. This article shall not preclude an action against a company that had actual knowledge of the violation by the title marketing representative. A title marketing representative who is issued a certificate of registration under this article may not engage in any activity that is otherwise prohibited through a separate entity controlled by the title marketing representative or by the company or entity that employs the title marketing representative.

(e) A title marketing representative who has their certificate of registration revoked by the department shall not be permitted to reapply for another certificate of registration with the department for five years from the date of revocation.

history: (History: Amended by Stats. 2024, Ch. 444, Sec. 7. (SB 577) Effective January 1, 2025.)

article: 8. Title Insurance Representatives


text: This chapter may be cited as the Mortgage Guaranty Insurance Act.

history: (History: Added by Stats. 1961, Ch. 719.)

chapter: 2A. Mortgage Guaranty Insurance

article: 1. Definitions

path: 2. CLASSES OF INSURANCE > 6. INSURANCE COVERING LAND > 2A. Mortgage Guaranty Insurance > 1. Definitions


text:
The definitions set forth in this article shall govern the construction of the terms used in this chapter but shall not affect any other provisions of this code.

(a) “Mortgage guaranty insurance” means:

(1) Insurance against financial loss by reason of nonpayment of principal, interest, and other sums agreed to be paid under the terms of any note or bond or other evidence of indebtedness secured by a mortgage, deed of trust, or other instrument constituting a first lien or charge on real estate, provided the improvement on the real estate is a residential building or a condominium unit or buildings designed for occupancy by not more than four families.

(2) Insurance against financial loss by reason of nonpayment of principal, interest, and other sums agreed to be paid under the terms of any note or bond or other evidence of indebtedness secured by a mortgage, deed of trust, or other instrument constituting a junior lien or charge on real estate, provided the improvement on the real estate is a residential building or a condominium unit or building designed for occupancy by not more than four families.

(3) Insurance against financial loss by reason of nonpayment of principal, interest, and other sums agreed to be paid under the terms of any note or bond or other evidence of indebtedness secured by a mortgage, deed of trust, or other instrument constituting a lien or charge on real estate, provided the improvement on the real estate is a building or buildings designed for occupancy by five or more families or designed to be occupied for industrial or commercial purposes.

(4) Insurance against financial loss by reason of nonpayment of rent and other sums agreed to be paid under the terms of a written lease for the possession, use, or occupancy of real estate, provided the improvement on the real estate is a building or buildings designed to be occupied for industrial or commercial purposes.

(b) (1) “Authorized real estate security” for the purposes of this chapter means either (A) real estate, plus the balance of any pledged cash account, pledged borrower retirement account, or collateralized guaranty agreement contracted for by parents, blood relatives, employers, or nonprofit corporations for the benefit of the borrower; or (B) real estate securing a note, bond, or other evidence of indebtedness by a junior mortgage, deed of trust, or other instrument constituting a junior lien or charge on the real estate, which, when combined with all existing mortgage loan amounts, does not exceed a total indebtedness equal to 103 percent of the fair market value of the real estate at the time the junior loan is made, provided that, in determining the foregoing 103-percent limitation, if the loan securing the junior lien is an equity line of credit loan, the full amount of the line of credit to be secured by the junior lien shall be considered the amount of the loan, and further provided, in all cases that both of the following are true:

(i) The real estate loan secured in this manner is any type of loan that a bank, savings association, mortgage banker, credit union, mortgage loan broker, or insurance company, which is supervised and regulated by a department of this state or an agency of the federal government, is authorized to make or arrange, or would be authorized to make or arrange, disregarding any requirement applicable to an institution that the amount of the loan not exceed a certain percentage of the value of the real estate.

(ii) The improvement on the real estate is a building or buildings designed for occupancy as specified by paragraphs (1), (2), and (3) of subdivision (a).

(2) The lien on the real estate may be subject and subordinate to the following:

(A) The lien of any public bond, assessment, or tax, when no installment, call, or payment of or under the bond, assessment, or tax is delinquent.

(B) Outstanding mineral, oil or timber rights, rights-of-way, easements or rights-of-way or support, sewer rights, building restrictions or other restrictions or covenants, conditions or regulations of use, or outstanding leases upon the real property under which rents or profits are reserved to the owner thereof.

(3) “Authorized real estate security” also means a stock or membership certificate issued to a tenant-stockholder or resident-member by a completed fee simple cooperative housing corporation, as defined in Section 17265 of the Revenue and Taxation Code and Section 216 of the United States Internal Revenue Code.

(c) “Contingency reserve” means an additional premium reserve established for the protection of policyholders against the effect of adverse economic cycles.

(d) “Policyholders surplus” means the aggregate of capital, surplus, and contingency reserve.

history: (History: Amended by Stats. 2006, Ch. 538, Sec. 473. Effective January 1, 2007.)

article: 1. Definitions


text: An insurer shall not transact the business of mortgage guaranty insurance unless it has paid-in capital of at least one million dollars ($1,000,000) and paid-in surplus of at least one million dollars ($1,000,000).

path: 2. CLASSES OF INSURANCE > 6. INSURANCE COVERING LAND > 2A. Mortgage Guaranty Insurance > 2. Capital, Surplus and Contingency Reserve Requirements


text:
(a) In addition to the paid-in capital and surplus provided in Section 12640.03, each mortgage guaranty insurer shall establish a contingency reserve after establishment of the unearned premium reserve. There shall be an annual calculation of and contribution to the contingency reserve. The aggregate annual contribution shall be the greater of either 50 percent of the net earned premium or the policyholders surplus required to be established under Section 12640.05 divided by 10. There shall be provisional contributions, made on a quarterly basis, equal to 50 percent of the net earned premium for the preceding quarter.

(b) The contributions to the contingency reserve made during each calendar year shall be maintained for a period of 120 months. That portion of the contingency reserve established and maintained for more than 120 months shall be released and shall no longer constitute part of the contingency reserve.

(c) With the approval of the commissioner, withdrawals may be made from the contingency reserve when incurred losses exceed 35 percent of the total year-to-date net earned premium. Provisional withdrawals may be made on a quarterly basis from the contingency reserve in an amount not to exceed 75 percent of the withdrawal calculated in accordance with this subdivision.

(d) With the approval of the commissioner, a mortgage guaranty insurer may withdraw from the contingency reserve any amounts which are in excess of the policyholders surplus required to be established under Section 12640.05 as indicated on the most recent annual statement filed pursuant to Section 923. In reviewing a request for withdrawal, the commissioner may consider those records that may be necessary to evaluate the request, including, but not limited to, records relating to loss development and trends. If any portion of the contingency reserve for which withdrawal is requested is maintained by a reinsurer, the commissioner may also consider the financial condition of the reinsurer. If any portion of the contingency reserve for which withdrawal is requested is maintained in a segregated account or segregated trust and withdrawal would result in funds being removed from the segregated account or segregated trust, the commissioner may also consider the financial condition of the reinsurer.

(e) Releases and withdrawals from the contingency reserve shall be accounted for on a first-in-first-out basis.

(f) The calculations to develop the contingency reserve shall be made in the following sequence:

(1) The additions required by subdivision (a).

(2) The releases required by subdivision (b).

(3) The withdrawals permitted by subdivision (c).

(4) The withdrawals permitted by subdivision (d).

(g) The commissioner’s review of a request for withdrawal under subdivision (d) shall be conducted pursuant to his or her examination authority under Section 730 and at the expense of the insurer pursuant to Section 736. The commissioner shall make a finding, set forth within the documents approving any withdrawal, that the withdrawal, and any reduction in total assets that may follow the withdrawal of which the commissioner is aware at the time of his or her approval, will not reduce the cash or securities of the insurer in a manner that will materially, adversely impair the ability of the insurer to maintain its credit rating or meet future obligations.

history: (History: Amended by Stats. 2003, Ch. 392, Sec. 1. Effective January 1, 2004.)

article: 2. Capital, Surplus and Contingency Reserve Requirements


text:
(a) A mortgage guaranty insurer shall maintain a policyholders surplus in an amount not less than the amount required by this section. The policyholders surplus shall be the calculated net of reinsurance ceded, but shall include reinsurance assumed. “Face amount of an insured mortgage” means the outstanding principal balance computed without any reduction because of an insurer’s option limiting its coverage, but shall exclude the outstanding principal balance of any loan that is in default and for which the insurer has established a loss reserve, provided that the loss reserve established for that loan is equal to or greater than the policyholders surplus the insurer would otherwise be required to establish with respect to that loan, pursuant to this section. Nothing in this subdivision limits the commissioner’s authority under Section 12640.04.

(b) If a policy of mortgage guaranty insurance insures individual loans with a percentage claim settlement option on such loans, the insurer shall maintain a policyholders surplus based on each one hundred dollars ($100) of the face amount of the mortgage, the percentage coverage or claim settlement option, and the loan-to-value category.

The required amount of policyholders surplus shall be calculated in the following manner:

(1) If the total indebtedness is greater than 75 percent of the value of the collateral property at the date of the insurance:PolicyholdersPolicyholdersSurplus per $100Surplus per $100of the Faceof the FacePercentAmount of thePercentAmount of theCoverageMortgageCoverageMortgage5%$ .20 55%$1.50 10 .40601.5515 .60651.6020 .80701.65251.00751.75301.10801.80351.20851.85401.30901.90451.35951.95501.40100 2.00If the percent coverage is between any five-point increment, then the factor for policyholders surplus per one hundred dollars ($100) of the face amount of the mortgage shall be prorated.

(2) If the total indebtedness is at least 50 percent and not more than 75 percent of the value of the collateral property at the date of insurance, the required amount of policyholders surplus shall be 50 percent of the amount required by paragraph (1) of subdivision (b).

(3) If the total indebtedness is less than 50 percent of the value of the collateral property at the date of insurance, the required amount of policyholders surplus shall be 25 percent of the amount required by paragraph (1) of subdivision (b).

(c) If a policy of mortgage guaranty insurance provides coverage on a group of loans subject to an aggregate loss limit, the policyholders surplus shall be:

(1) If the equity is not more than 50 percent and is at least 20 percent, or equity plus prior insurance or a deductible equals 25 percent of the value of the collateral property at the date of insurance, the required amount of policyholders surplus shall be calculated as follows:PolicyholdersPolicyholdersSurplus per $100Surplus per $100of the Faceof the FacePercentAmount of thePercentAmount of theCoverageMortgageCoverageMortgage 1%$ .30 50%$ .825 5 .5060 .8510 .6070 .87515 .6575 .9020 .7080 .92525 .7590 .9530 .775100 1.0040 .80If the percent coverage is between any specified increment, then the factor for policyholders surplus per one hundred dollars ($100) of the face amount of the mortgage shall be prorated.

(2) If the equity is less than 20 percent or the equity plus prior insurance or a deductible is less than 25 percent of the value of the collateral property at the date of insurance, the required amount of policyholders surplus shall be 200 percent of the amount required by paragraph (1) of subdivision (c).

(3) If the equity is more than 50 percent or the equity plus prior insurance or a deductible is more than 55 percent of the value of the collateral property at the date of insurance, the required amount of policyholders surplus shall be 50 percent of the amount of policyholders surplus required by paragraph (1) of subdivision (c).

(d) If a policy of mortgage guaranty insurance provides for layers of coverage, deductibles or excess reinsurance, the required amount of policyholders surplus may be computed by subtraction of the required policyholders surplus for the lower percentage coverage limits from the required policyholders surplus for the upper or greater coverage limit.

(e) If a policy of mortgage guaranty insurance provides for coverage on loans secured by second liens, the policyholders surplus shall be:

(1) If the policy provides coverage on individual loans, the required amount of policyholders surplus shall be calculated according to subdivision (b) after the percent of coverage and the loan-to-value ratios have been determined as follows:

(A) Divide the insured portion of the second loan by the entire loan indebtedness on the collateral property to determine the percent coverage.

(B) Divide the entire loan indebtedness on the property by the value of the collateral property at the date of insurance to determine loan-to-value percent.

(C) The face amount of insured mortgage shall mean the entire loan indebtedness on the property.

(D) Equity shall mean the complement of the loan-to-value percent.

(2) If the policy provides coverage on a group of loans subject to an aggregate loss limit, the policyholders surplus shall be calculated according to subdivision (c) after the percent of coverage and the loan-to-value ratios have been determined in accordance with paragraph (1).

(f) If a policy of mortgage guaranty insurance provides for coverage on leases, the policyholders surplus shall be four dollars ($4) for each one hundred dollars ($100) of the insured amount of the lease.

(g) (1) If a mortgage guaranty insurer will not have the amount of policyholders surplus required by this section, it shall cease transacting new business until such time that its policyholders surplus is in compliance with this section. At least 60 days prior to the time the policyholders surplus is estimated to fall below the amount required by this section, the insurer shall notify the commissioner and may request a waiver of the requirements of this subdivision. If the commissioner fails to issue an order in response to the waiver request within 60 days after the insurer requests a waiver, the insurer may continue transacting new business in California until the commissioner issues an order. The commissioner may retain consultants, including accountants, actuaries, or other experts, to assist the commissioner in the review of the information reasonably necessary to evaluate the waiver request made pursuant to this subdivision, and the insurer shall bear the commissioner’s cost of retaining those consultants. The insurer shall reimburse the commissioner for the cost of a hearing held pursuant to this subdivision unless the insurer has expressly waived the right to a hearing. Nothing in this subdivision is intended to limit the commissioner’s authority under any other provision of this code.

(2) An insurer who notifies the commissioner within 10 business days following the effective date of this section that its policyholders surplus is estimated to fall below the amount required by this section shall be deemed to have complied with the 60-day notice required by subdivision (1).

history: (History: Amended by Stats. 2009, Ch. 574, Sec. 1. (SB 291) Effective January 1, 2010.)


text: A mortgage guaranty insurer shall not declare any dividends except from undivided profits remaining on hand over and above the aggregate of its paid-in capital, paid-in surplus and contingency reserve.


text:
(a) Mortgage guaranty insurance may be transacted in this state only by a stock or mutual casualty insurer holding a certificate of authority for the transaction of the insurance pursuant to this chapter, and shall be written only to insure either of the following:

(1) Loans secured by first liens on authorized real estate securities not exceeding, at the time the loan is made, 103 percent of the fair market value of the authorized real estate security, as defined in subparagraph (A) of paragraph (1) of subdivision (b) of Section 12640.02.

(2) Loans secured by junior liens, as defined in subparagraph (B) of paragraph (1) of subdivision (b) of Section 12640.02.

(b) Any reciprocal insurer engaging in this type of business shall be bound by all provisions of this chapter, including the requirements as to paid-in capital and paid-in surplus.

history: (History: Amended by Stats. 2002, Ch. 429, Sec. 2. Effective January 1, 2003.)

path: 2. CLASSES OF INSURANCE > 6. INSURANCE COVERING LAND > 2A. Mortgage Guaranty Insurance > 4. Limitations and Restrictions for Transacting Business


text: A mortgage guaranty insurer shall not insure loans secured by properties in a single housing tract or a contiguous tract in excess of ten (10) percent of the insurer’s policyholders surplus. In determining the amount of such risk, applicable reinsurance in any assuming insurer authorized to transact mortgage guaranty insurance in this State shall be deducted from the total direct risk insured. “Contiguous,” for the purposes of this section, means not separated by more than one-half mile.

article: 4. Limitations and Restrictions for Transacting Business