CHAPTER 2501. GENERAL PROVISIONS - Texas Statutes

INSURANCE CODE

TITLE 11. TITLE INSURANCE

SUBTITLE A. GENERAL PROVISIONS

CHAPTER 2501. GENERAL PROVISIONS

Sec. 2501.001. SHORT TITLE. This title may be cited as the

Texas Title Insurance Act.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1,

2005.

Sec. 2501.002. PURPOSE; LEGISLATIVE INTENT. (a) The purpose of

this title is to completely regulate the business of title

insurance on real property and, as described by Subtitle F, on

personal property, including the direct issuance of policies and

the reinsurance of any assumed risks, to:

(1) protect consumers and purchasers of title insurance

policies; and

(2) provide adequate and reasonable rates of return for title

insurance companies and title insurance agents.

(b) It is the express legislative intent that this title

accomplish the purpose described by Subsection (a).

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1,

2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

543, Sec. 2, eff. September 1, 2007.

Sec. 2501.003. DEFINITIONS. In this title:

(1) "Abstract plant" means an abstract plant as defined by the

department under Section 2501.004.

(2) "Attorney" means:

(A) a person who is licensed to practice law and is a member of

the State Bar of Texas; or

(B) a Texas professional corporation organized to provide

professional legal services.

(3) "Direct operation" means the operations of a title insurance

company under a license issued to the company under Subchapter B,

Chapter 2651. A reference in this title to a title insurance

agent shall be construed to include a direct operation unless the

context indicates otherwise.

(4) "Escrow officer" means an attorney, a bona fide employee of

an attorney licensed as an escrow officer, a bona fide employee

of a direct operation, or a bona fide employee of a title

insurance agent whose responsibilities include:

(A) countersigning title insurance forms;

(B) supervising the preparation and delivery of title insurance

forms;

(C) signing escrow checks; or

(D) closing the transaction, as described by Section 2501.006.

(5) "Foreign title insurance company" means a title insurance

company organized under the laws of a jurisdiction other than

this state.

(6) "Joint abstract plant operation" means a joint abstract

plant operation as defined by the department under Section

2501.004.

(7) "Person" includes an individual, corporation, association,

partnership, or trust.

(8) "Premium" means the premium rates promulgated by the

commissioner under Subchapters D and E, Chapter 2703, and

includes a charge for:

(A) title examination and closing the transaction, regardless of

whether the examination or closing is performed by an attorney;

and

(B) issuing the policy.

(9) "Residential real property" means real property that is

improved and is designed principally for occupancy by one to four

families. The term includes an individual unit of a condominium

or cooperative.

(10) "Thing of value" includes any payment, advance, funds,

loan, service, or other consideration.

(11) "Title examination" means the search and examination of a

title to determine the conditions of the title to be insured and

to evaluate the risk to be undertaken in the issuance of a title

insurance policy or other title insurance form.

(12) "Title insurance" means:

(A) insurance that insures, guarantees, or indemnifies an owner

of real property, or another interested in the real property,

against loss or damage resulting from:

(i) a lien or encumbrance on or defect in the title to the real

property; or

(ii) the invalidity or impairment of a lien on the real

property;

(B) personal property title insurance, as defined by Chapter

2751; or

(C) any business that is substantially equivalent to the

insurance described by Paragraphs (A) and (B) and is conducted in

a manner designed to evade the provisions of this title.

(13) "Title insurance agent" means a person owning or leasing

and controlling an abstract plant or as a participant in a bona

fide joint abstract plant operation and authorized in writing by

a title insurance company to solicit insurance and collect

premiums and to issue or countersign policies on the company's

behalf.

(14) "Title insurance company" means:

(A) a domestic company organized under this title to engage in

the business of title insurance, as described by Section

2501.005;

(B) a foreign title insurance company that:

(i) meets the requirements of this title; and

(ii) holds a certificate of authority to engage in business in

this state; or

(C) any other domestic or foreign company that:

(i) meets the requirements of this title; and

(ii) holds a certificate of authority to insure a title to real

property in this state.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1,

2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

543, Sec. 3, eff. September 1, 2007.

Sec. 2501.004. ABSTRACT PLANT; JOINT ABSTRACT PLANT OPERATION.

(a) For purposes of this title, the department shall define

"abstract plant" and "joint abstract plant operation."

(b) To provide for the safety and protection of policyholders,

the department shall require that an abstract plant:

(1) be geographically arranged;

(2) cover a period beginning not later than January 1, 1979, and

be kept current; and

(3) be adequate for use in insuring titles, as determined by the

department.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1,

2005.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1025, Sec. 1, eff. September 1, 2009.

Sec. 2501.005. BUSINESS OF TITLE INSURANCE. (a) For purposes

of this title, a person engages in the business of title

insurance if the person:

(1) as insurer, guarantor, or surety, makes or proposes to make

a contract or policy of title insurance or its equivalent;

(2) transacts or proposes to transact any phase of title

insurance, including:

(A) soliciting;

(B) title examination other than an examination conducted by an

attorney;

(C) closing the transaction other than a closing conducted by an

attorney;

(D) executing a contract of title insurance; and

(E) insuring and transacting matters arising out of the contract

after the contract is executed, including reinsurance; or

(3) makes a guaranty or warranty of a title search or a title

examination, or any component of a title search or title

examination, if the person is not the person who performs the

search or examination.

(b) A person engages in the business of title insurance if the

person engages in or proposes to engage in any business that is

substantially equivalent to the business of title insurance as

described by this section, regardless of whether that conduct is

performed in a manner designed to evade the provisions of this

title.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1,

2005.

Sec. 2501.006. CLOSING THE TRANSACTION. (a) For purposes of

this title, "closing the transaction" describes the investigation

that is made:

(1) on behalf of a title insurance company, title insurance

agent, or direct operation before the title insurance policy is

issued; and

(2) to determine proper execution, acknowledgment, and delivery

of all conveyances, mortgage papers, and other title instruments

necessary to consummate a transaction.

(b) Closing the transaction includes a determination that:

(1) all delinquent taxes have been paid;

(2) in the case of an owner title insurance policy, all current

taxes, based on the latest available information, have been

properly prorated between the purchaser and seller;

(3) the consideration has been passed;

(4) all proceeds have been properly disbursed;

(5) a final search of the title has been made; and

(6) all necessary papers have been filed for record.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1,

2005.

Sec. 2501.007. REFERENCES TO TITLE. In this title, a reference

to this title includes a reference to:

(1) Chapter 223;

(2) Chapter 271; and

(3) Subchapter U, Chapter 171, Tax Code.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 6, eff. April 1,

2005.

Amended by:

Acts 2005, 79th Leg., Ch.

728, Sec. 11.077, eff. September 1, 2005.

Sec. 2501.008. THIRD-PARTY CHARGES. A title insurance company,

title insurance agent, or direct operation may charge, separate

from the title insurance premium, actual costs or a reasonable

estimate of costs incurred in connection with a closing and

settlement, including:

(1) a charge by a third party for an electronic filing fee; or

(2) a fee of a third party for the provision of an ad valorem

tax report.

Added by Acts 2009, 81st Leg., R.S., Ch.

1159, Sec. 1, eff. January 1, 2010.