SECTIONS 12340-12342 - California Statutes

INSURANCE CODE

SECTION 12340-12342

12340. 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.

12340.1. "Title insurance" means insuring, guaranteeing or
indemnifying owners of real or personal property or the holders of
liens or encumbrances thereon or others interested therein against
loss or damage suffered by reason of:
(a) Liens or encumbrances on, or defects in the title to said
property;
(b) Invalidity or unenforceability of any liens or encumbrances
thereon; or
(c) Incorrectness of searches relating to the title to real or
personal property.

12340.2. "Title policy" means any written instrument or contract by
means of which title insurance liability is assumed.

12340.3. "Business of title insurance" includes:
(a) Issuing or proposing to issue any title policy as insurer,
guarantor, or indemnitor;
(b) Transacting or proposing to transact any phase of title
insurance, including solicitation, negotiation preliminary to
execution, or execution of a title policy, insuring and transacting
matters subsequent to the execution of a title policy and arising out
of such policy, excluding reinsurance;
(c) The performance by a title insurer, an underwritten title
company or a controlled escrow company of any service in conjunction
with the issuance or contemplated issuance of a title policy
including but not limited to the handling of any escrow, settlement
or closing in connection therewith; or the doing of or proposing to
do any business, which is in substance the equivalent of any of the
above.
(d) The issuance, by a title insurer, of a letter of indemnity.
Any such letter of indemnity shall be limited to and issued solely
for the purpose of indemnifying the commissioner on behalf of any
member of the public who transacts an escrow with an underwritten
title company, with whom the title insurer has an underwriting
agreement. A title insurer may charge a reasonable fee in connection
with the issuance of any such letter. No rate or form filing shall be
required with respect to any such letter of indemnity.
(e) The act of an insurer in furnishing in writing to a
prospective purchaser of the insurer's title policy a statement which
assures, and assumes the liability for, the proper performance of
services necessary to the conduct of a real estate closing performed
by an underwritten title company with whom the insurer maintains an
underwriting agreement. A title insurer may charge a reasonable fee
in connection with the furnishing of any such statement. No rate or
form filing shall be required with respect to any such statement.

12340.4. "Title insurer" means any company issuing title policies
as insurer, guarantor or indemnitor.
"Domestic title insurer" means any title insurer organized under
the laws of this state.
"Foreign title insurer" means any title insurer organized under
the laws of any other jurisdiction.

12340.5. "Underwritten title company" means any corporation engaged
in the business of preparing title searches, title examinations,
title reports, certificates or abstracts of title upon the basis of
which a title insurer writes title policies.

12340.6. (a) "Controlled escrow company" means any person, other
than a title insurer or underwritten title company, whose principal
business is the handling of escrows of real property transactions in
connection with which title policies are issued, which person, if an
artificial person, directly or indirectly, is controlled by or
controls or is under common control with a title insurer, or controls
or is controlled by or is under common control with an underwritten
title company, or if a natural person, is employed by or controlled
by a title insurer or by an underwritten title company. As used in
this section, the term "control" shall have the meaning set forth in
subdivision (b) of Section 1215.
(b) Except for Article 6 (commencing with Section 12404) this
section does not apply to any person or entity doing business under
any law of this state or the United States relating to banks or
savings and loan associations.

12340.7. Except as provided in Section 12401.8, and excluding
miscellaneous charges, "rate" or "rates" means the charge or charges,
whether denominated premium or otherwise, made to the public by a
title insurer, an underwritten title company or a controlled escrow
company, for all services it performs in transacting the business of
title insurance. As used in this section miscellaneous charges means
conveyancing fees, notary fees, inspection fees, tax service contract
fees and such other fees as the commissioner by regulation may
prescribe.

12340.8. "Advisory organization" means every person or entity
(other than a title insurer, underwritten title company, or
controlled escrow company) which recommends or prepares policy forms
or endorsements, or procedural manuals (but not including the making
of rates, rating plans, or rating systems), or which collects and
furnishes to its members or insurance supervisory officials loss and
expense statistics or other statistical information and data relating
to the business of title insurance and who otherwise acts in an
advisory, as distinguished from a ratemaking, capacity. No duly
authorized attorney at law acting in the usual course of his
profession nor any entity engaging in the above activity on a
nationwide basis shall be deemed to be an advisory organization.

12340.9. "Willful" or "willfully" in relation to an act or omission
which constitutes a violation of this chapter means with actual
knowledge or belief that such act or omission constitutes such
violation and with specific intent to commit such violation.

12340.10. "Abstract of title" is a written representation, provided
pursuant to a contract, whether written or oral, intended to be
relied upon by the person who has contracted for the receipt of such
representation, listing all recorded conveyances, instruments or
documents which, under the laws of this state, impart constructive
notice with respect to the chain of title to the real property
described therein. An abstract of title is not a title policy as
defined in Section 12340.2.

12340.11. "Preliminary report", "commitment", or "binder" are
reports furnished in connection with an application for title
insurance and are offers to issue a title policy subject to the
stated exceptions set forth in the reports and such other matters as
may be incorporated by reference therein. The reports are not
abstracts of title, nor are any of the rights, duties or
responsibilities applicable to the preparation and issuance of an
abstract of title applicable to the issuance of any report. Any such
report shall not be construed as, nor constitute, a representation as
to the condition of title to real property, but shall constitute a
statement of the terms and conditions upon which the issuer is
willing to issue its title policy, if such offer is accepted.

12342. For purposes of this chapter, "holders of liens or
encumbrances" includes, but is not limited to, the institutional
third parties described in Sections 1452 and 1717 of Title 12 of the
United States Code.