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lender’s funds or documents. The lender also is protected for losses resulting from theunderwriter’s own actions or the actions of an independent escrow company. A CPLmay specify a time limit for the filing of a claim and cap the underwriter’s liability to theface amount of the title policy or some other predetermined amount.While it is common for a lender involved in a real estate transaction to require aCPL, a number of states have enacted statutes that allow or require, under certaincircumstances, an underwriter to issue a CPL. 37The majority of states, includingMaryland, do not require an underwriter to issue a CPL. New York’s Department ofInsurance has issued a bulletin that prohibits the issuance of a CPL that offers coveragefor acts that go beyond a title insurance producer’s duties. 38Vermont and Virginia areamong states that prohibit the use of a CPL to cover losses that are unrelated to thecondition of the title to the property. 39Approximately thirteen states permit the underwriter to charge a consumer orlender a fee for the cost of issuing the CPL. 40Fees range from $25 to $50 dependingupon the party paying the fee. 41Fidelity and Surety Bonding Requirements – Some states require a surety orfidelity bond or an irrevocable letter of credit to protect consumers in a real estatetransaction. However, the required amount of these bonds typically is so low as to be37 ALA. CODE, § 27-3-6.1(a) (2011); ARIZ. REV. STAT. ANN. § 6-841.2(A) (2011); CONN. GEN. STAT. § 38a-404 (2012); D.C. CODE § 31-5031.04(c)(1) (2012); FLA. ADMIN. CODE ANN. r. 69O-186.010 (2012); GA.CODE ANN. §§ 33-3-4 and 33-7-8.1 (2012); LA. REV. STAT. ANN. § 22:515(C)(1) (2009); MO. REV. STAT, §381.058(3)(1) (2000); NEB. REV. STAT. § 44-1984(2)(a) (1997); N.M. CODE R. § 13.14.7.26 (2012); OHIOREV. CODE ANN. § 3953.32 (2007); R.I. GEN LAWS § 27-2.6-6 (2010); S.C. CODE ANN. § 38-75-1010(2012); and TEX. CODE ANN. INS. ART., § 2702.001 (2005).38 N.Y. Ins. Dep’t Circular Letter No. 18 (Dec. 14, 1992).39 Vt. Ins. Div. Bulletin 108 (Jan. 10, 1996); Va. Bureau of Ins. Administrative Letter 1995-8 (Sept. 4,1995).40 NAIC Title Insurance Task Force, Survey of State Insurance Laws Regarding Title Data and TitleMatters (Mar. 22, 2010).41 See e.g. ALA. CODE § 27-3-6.1 (2011); D.C. CODE § 31-5031.04(c)(3) (2012).22
negligible when compared to the amounts of many defalcations. Surety bondrequirements range from a low of $10,000, required by Texas, to a high of $200,000required by Virginia. 42With respect to fidelity bonds, Florida has a $50,000 minimumrequirement for title insurance producers and the state of Washington has a $200,000requirement. 43Statutory or Common Law Assignment of Liability – Some states have passedlaws and others have common law that hold an underwriter liable under agency lawprinciples for a defalcation by a licensed title insurance producer or agency. 44Guaranty Funds – Texas has created a guaranty fund specifically for the titleinsurance industry. The Texas Title Insurance Guaranty Association (“TTIGA”) wasestablished because, unlike Maryland’s Property and Casualty Insurance GuarantyCorporation, the Texas Property and Casualty Insurance Guaranty Association does notcover title insurance underwriters. The purpose of the TTIGA is to protect consumersfrom insolvent underwriters and title insurance agencies and to cover losses from escrowaccounts. 45The TTIGA is funded through a $2.00 per policy fee placed on every titleinsurance policy sold in the state. 46The fees are assessed on each owner or lender policypurchased at closing and must be deposited into an escrow or trust account that cannot becommingled with producer or agency operating accounts. 4742 TEX. INS. CODE ANN. § 2651.101 (2012); VA. CODE ANN. § 55-525.20 (2012).43 FLA. STAT. § 626.84198(1)(a); WASH. REV. CODE § 48.29.155(1)(a) (2005).44 See, e.g. FLA. STAT. § 627.792 (2012).45 TEX. INS. CODE ANN. § 2602.002 (2012).46 TEX. INS. CODE ANN. § 2602.151 (2012). The amount of the fee is set at least annually by the TTIGA’sBoard of Directors (TEX. INS. CODE ANN. § 2602.152 (2012)) and the amount of the current fee is availableonline at http://www.ttiga.org/pgf.html.47 Id.23
Page 2 and 3: Report of the Study ofClosing or Se
Page 4 and 5: TABLE OF CONTENTSI. EXECUTIVE SUMMA
Page 6 and 7: Although in a minority of states an
Page 8 and 9: or misuse of closing or settlement
Page 10 and 11: (4) Division of Consumer Protection
Page 12 and 13: title insurance producer or agency
Page 14 and 15: As part of its Insurer Survey, the
Page 16 and 17: or dishonest practices, the underwr
Page 18 and 19: eported having a least one escrow a
Page 20 and 21: ond also may be purchased by an und
Page 22 and 23: 4. Other Protection Available to Un
Page 24 and 25: 1. Preventive MeasuresProducer Lice
Page 28 and 29: In the event of the insolvency of a
Page 30 and 31: insurance task force. The informati
Page 32 and 33: in excess of 20 cents in claims on
Page 34 and 35: create an environment vulnerable to
Page 36 and 37: Appendix 1MARTIN O'MALLEY, Governor
Page 44 and 45: AppendixAppendix22MARTIN O’MALLEY
Page 46 and 47: Appendix 2c. If you answered “No
Page 48 and 49: Appendix 2Certification of Informat
Page 50 and 51: Appendix 2QUESTION #3Schedule BStat
Page 52 and 53: Appendix 3
Page 54 and 55: Appendix 3SURVEYTitle Insurance - C
Page 56 and 57: Appendix 3a. Does your title insura
Page 58 and 59: Appendix 3QUESTION # 2Schedule ADor
Page 60: Appendix 3QUESTION # 10Schedule CMi

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