CHAPTER 2652. ESCROW OFFICERS - Texas Statutes

INSURANCE CODE

TITLE 11. TITLE INSURANCE

SUBTITLE D. TITLE INSURANCE PROFESSIONALS

CHAPTER 2652. ESCROW OFFICERS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 2652.001. LICENSE AND BOND OR DEPOSIT REQUIRED. An

individual may not act as an escrow officer unless the

individual:

(1) holds a license issued by the department; and

(2) maintains a surety bond or deposit required under Subchapter

C.

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

2005.

Sec. 2652.002. EMPLOYMENT OF ESCROW OFFICER. (a) A title

insurance agent or direct operation may not employ an individual

as an escrow officer unless the individual holds a license and

maintains a surety bond or deposit as required by this chapter.

(b) A title insurance agent or direct operation may not permit

an individual to act as an escrow officer in this state before

the agent or direct operation has complied with Sections 2652.151

and 2652.152 with respect to the individual.

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

2005.

Sec. 2652.003. ATTORNEY ACTING AS ESCROW OFFICER. (a)

Notwithstanding Section 2652.001, an attorney is not required to

be licensed as an escrow officer to perform the duties of an

escrow officer as defined by Section 2501.003.

(b) An attorney may hold a license to act as an escrow officer.

An employee of an attorney licensed as an escrow officer also may

hold a license to act as an escrow officer. An attorney licensed

as an escrow officer shall comply with the provisions of this

code that apply to escrow officers and trust funds as if the

attorney were a title insurance agent.

(c) Notwithstanding any other provision of this chapter, a title

insurance company or title insurance agent may not permit an

attorney to conduct the attorney's business in the name of the

company or agent unless the attorney and the attorney's bona fide

employees who close transactions are licensed escrow officers.

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

2005.

Sec. 2652.004. TRUST FUND ACCOUNT DISBURSEMENTS. (a) An escrow

officer may not disburse funds from a trust fund account until

good funds related to the transaction have been received and

deposited in the account in amounts sufficient to fund any

disbursements from the transaction.

(b) An escrow officer is not liable for a violation of this

section if the violation:

(1) was not intentional; and

(2) resulted from a bona fide error despite the maintenance of

procedures reasonably adopted to avoid the error.

(c) The commissioner shall adopt rules and definitions to

implement this section.

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

2005.

Sec. 2652.005. ESCROW ACCOUNT AUDIT. Each escrow account used

by a licensed escrow officer for closing a transaction is subject

to the audit requirements of Subchapter D, Chapter 2651.

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

2005.

Sec. 2652.006. RECORD OF ESCROW OFFICERS. The department shall

maintain a record of the name and address of each escrow officer

licensed by the department in a manner that ensures that the

escrow officers employed by any title insurance agent or direct

operation in this state may be conveniently determined.

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

2005.

SUBCHAPTER B. LICENSE APPLICATION AND RENEWAL

Sec. 2652.051. LICENSE APPLICATION. (a) Before an initial

license is issued to an individual to act as an escrow officer in

this state for a title insurance agent or direct operation, the

title insurance agent or direct operation must file an

application for an escrow officer's license with the department

on forms provided by the department.

(b) The application must be:

(1) accompanied by a nonrefundable license fee; and

(2) signed and sworn to by the title insurance agent or direct

operation and by the proposed escrow officer.

(c) The completed application must state that:

(1) the proposed escrow officer is an individual who is a bona

fide resident of:

(A) this state; or

(B) a state adjacent to this state;

(2) the proposed escrow officer is an attorney or is a bona fide

employee of:

(A) an attorney licensed as an escrow officer; or

(B) a title insurance agent or direct operation;

(3) the proposed escrow officer has reasonable experience or

instruction in the field of title insurance;

(4) the title insurance agent or direct operation does not know

of any fact or condition that disqualifies the proposed escrow

officer from receiving a license; and

(5) the proposed escrow officer is a bona fide employee of a

title insurance agent or direct operation with an office in this

state.

(d) Notwithstanding Sections 406.004 and 406.020, Government

Code, a person qualified under this section as an escrow officer

may hold a license and operate as a notary public under Chapter

406, Government Code.

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

2005.

Amended by:

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

155, Sec. 1, eff. September 1, 2009.

Sec. 2652.052. LICENSE AND RENEWAL FEES. (a) The department

shall prescribe the license fee in an amount not to exceed $50.

(b) License fees, and renewal fees collected under Section

2652.152, shall be deposited to the credit of the Texas

Department of Insurance operating account to be used by the

department to enforce this chapter and any other law of this

state that regulates escrow officers for title insurance agents

or direct operations.

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

2005.

Sec. 2652.053. LICENSE ISSUANCE. The department shall issue a

license if the department determines, based on the application

and the department's investigation, that the requirements of

Section 2652.051 are satisfied.

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

2005.

Sec. 2652.054. DUPLICATE LICENSE. (a) The department shall

collect in advance a fee from a title insurance agent or direct

operation that requests a duplicate license.

(b) The department shall prescribe the fee in an amount not to

exceed $20.

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

2005.

Sec. 2652.055. LICENSE TERM. Unless a system of staggered

license renewal is adopted under Section 4003.002, a license

expires on the second June 1 following the date of issuance.

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

2005.

Sec. 2652.056. AUTOMATIC TERMINATION OF LICENSE. The license of

each escrow officer employed by a title insurance agent or direct

operation that surrenders its license or has its license revoked

by the department is automatically terminated without notice.

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

2005.

Sec. 2652.057. LICENSE SURRENDER OR FORFEITURE. (a) An escrow

officer may voluntarily surrender the escrow officer's license at

any time by giving notice to the department.

(b) An escrow officer automatically forfeits the escrow

officer's license if the officer is not employed as an escrow

officer.

(c) A surrender or forfeiture of a license under this section

does not affect the culpability of the license holder for conduct

committed before the effective date of the surrender or

forfeiture. The department may institute a disciplinary

proceeding against the former license holder for conduct

committed before the effective date of the surrender or

forfeiture.

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

2005.

Sec. 2652.058. CONTINUING EDUCATION. (a) To protect the public

and to preserve and improve the competence of license holders,

the department shall require as a condition of holding an escrow

officer license that the license holder enroll in and attend or

teach continuing education consisting of class instruction,

lectures, seminars, or other forms of education approved by the

department for escrow officers.

(b) The department shall prescribe the required number of hours

of continuing education, not to exceed 15 hours in each two-year

license period.

(c) Continuing education instruction must be designed to refresh

the license holder's understanding of:

(1) basic principles and coverages relating to title insurance;

(2) recent and prospective changes in those principles and

coverages;

(3) applicable rules of the commissioner and laws;

(4) the proper conduct of the license holder's business; and

(5) the duties and responsibilities of the license holder.

(d) The department may permit a license holder to complete an

equivalent course of study and instruction by mail if, because of

the remote location of the license holder's residence or

business, the license holder is unable to attend educational

sessions with reasonable convenience.

(e) On written request by the license holder, the department may

extend the time for the license holder to comply with the

requirements of this section or may exempt the license holder

from all or part of the requirements for a license period if the

department determines that the license holder is unable to comply

with the requirements because of illness, medical disability, or

another extenuating circumstance beyond the control of the

license holder. The commissioner shall prescribe the criteria for

an extension or exemption by rule.

(f) The commissioner shall adopt rules to administer this

section.

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

2005.

SUBCHAPTER C. BOND AND DEPOSIT REQUIREMENTS

Sec. 2652.101. BOND REQUIRED. (a) A title insurance agent or

direct operation shall obtain, at its own expense, a bond for its

escrow officers payable to the department. The bond shall

obligate the principal and surety to pay for any pecuniary loss

sustained by the title insurance agent or direct operation

through an act of fraud, dishonesty, forgery, theft,

embezzlement, or wilful misapplication by an escrow officer,

either directly and alone or in conspiracy with another person.

(b) The bond must be:

(1) of a type approved by the department; and

(2) issued by a surety licensed by the department to do business

in this state.

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

2005.

Sec. 2652.102. ALTERNATIVE TO BOND. (a) Instead of the bond

required by Section 2652.101, a title insurance agent or direct

operation may deposit with the department:

(1) cash;

(2) irrevocable letters of credit issued by a financial

institution insured by an agency of the United States; or

(3) securities approved by the department.

(b) The cash, letters of credit, or securities deposited under

this section are subject to the conditions required for a bond

under Section 2652.101.

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

2005.

Sec. 2652.103. AMOUNT OF BOND OR DEPOSIT. (a) The amount of

the bond or deposit required under this subchapter is determined

by multiplying the number of escrow officers employed by the

title insurance agent or direct operation by:

(1) $5,000 for an application of an individual who is a bona

fide resident of this state; or

(2) $10,000 for an application of an individual who is a bona

fide resident of a state adjacent to this state.

(b) Notwithstanding Subsection (a), the maximum amount of the

bond or deposit required under this subchapter is $50,000.

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

2005.

Amended by:

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

155, Sec. 2, eff. September 1, 2009.

Sec. 2652.104. EXAMINATION OF LOSS COVERED BY BOND OR DEPOSIT.

(a) At any time it appears that a loss covered by a bond or

deposit has occurred, the department may require the escrow

officer to appear in Travis County, with records the department

determines to be proper, for an examination.

(b) The department shall specify a date for the examination that

is not earlier than the 10th day or later than the 15th day after

the date of service of notice of the requirement to appear.

Copies of the notice shall be sent to any title insurance agent

or direct operation concerned.

(c) If after the examination the department determines that a

loss covered by the bond or deposit has occurred, the department

shall immediately notify the appropriate title insurance agent or

direct operation and the surety on the bond, if applicable, and

prepare a written statement of the facts of the loss and deliver

the statement to the attorney general.

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

2005.

Sec. 2652.105. INVESTIGATION BY ATTORNEY GENERAL. (a) On

receipt of a written statement under Section 2652.104, the

attorney general shall investigate the charges and, on

determining that a loss covered by the bond or deposit has

occurred, shall enforce the liability by collecting against the

deposited cash or securities or by filing suit on the bond.

(b) A suit brought under this section shall be filed in the name

of the department in Travis County for the benefit of all parties

who have suffered any loss covered by the bond or deposit.

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

2005.

SUBCHAPTER D. DUTIES OF TITLE INSURANCE AGENTS AND DIRECT

OPERATIONS REGARDING ESCROW OFFICERS

Sec. 2652.151. LIST OF ESCROW OFFICERS. (a) A title insurance

agent or direct operation shall certify to the department, not

later than the expiration date of the title insurance agent's or

direct operation's license, the name and address of each

individual employed by the title insurance agent or direct

operation to serve as an escrow officer in this state.

(b) The certification required by this section must be on a form

provided by the department.

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

2005.

Sec. 2652.152. RENEWAL. A title insurance agent or direct

operation shall apply for renewal and pay a nonrefundable license

renewal fee prescribed by the department in an amount not to

exceed $50 for each escrow officer listed by the title insurance

agent or direct operation under Section 2652.151.

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

2005.

Sec. 2652.153. NOTICE OF TERMINATION. A title insurance agent

or direct operation that terminates the employment of a licensed

escrow officer shall:

(1) immediately notify the department in writing of the

termination and request cancellation of the license; and

(2) notify the escrow officer of the action by the title

insurance agent or direct operation.

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

2005.

SUBCHAPTER E. LICENSE DENIAL AND DISCIPLINARY ACTION

Sec. 2652.201. GROUNDS FOR LICENSE DENIAL OR DISCIPLINARY

ACTION. (a) The department may deny an application for a

license or discipline an escrow officer under Sections 4005.102,

4005.103, and 4005.104 if the department determines that the

applicant or license holder has:

(1) wilfully violated this title;

(2) intentionally made a material misstatement in the license

application;

(3) obtained or attempted to obtain the license by fraud or

misrepresentation;

(4) misappropriated or converted to the escrow officer's own use

or illegally withheld money belonging to a title insurance agent,

direct operation, or another person;

(5) been guilty of fraudulent or dishonest practices;

(6) materially misrepresented the terms and conditions of a

title insurance policy or contract; or

(7) failed to complete all educational requirements.

(b) The department may not deny an application for a license or

discipline an escrow officer under Section 4005.102, 4005.103, or

4005.104 solely because the individual resides in an adjacent

state and acts as an escrow officer in this state as a bona fide

employee of a title insurance agent or direct operation in this

state.

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

2005.

Amended by:

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

155, Sec. 3, eff. September 1, 2009.

Sec. 2652.202. LICENSE APPLICATION AFTER DENIAL, REFUSAL, OR

REVOCATION. (a) An applicant whose license application has been

denied or refused or a license holder whose license has been

revoked under this subchapter may not file another application

for a license as an escrow officer before the first anniversary

of:

(1) the effective date of the denial, refusal, or revocation; or

(2) the date of a final court order affirming the denial,

refusal, or revocation if judicial review is sought.

(b) A license application filed after the time required by this

section may be denied by the department unless the applicant

shows good cause why the denial, refusal, or revocation should

not be a bar to the issuance of a license.

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

2005.