senate Bill S4920

Requires disclosure of title service charges by a title insurance provider to the customer upon receipt of an application for a title insurance policy

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Sponsor

Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 29 / Apr / 2011
    • REFERRED TO INSURANCE
  • 04 / Jan / 2012
    • REFERRED TO INSURANCE
  • 04 / Jun / 2012
    • 1ST REPORT CAL.995
  • 05 / Jun / 2012
    • 2ND REPORT CAL.
  • 06 / Jun / 2012
    • ADVANCED TO THIRD READING
  • 21 / Jun / 2012
    • COMMITTED TO RULES

Summary

Requires disclosure of title service charges by a title insurance provider to the customer upon receipt of an application for a title insurance policy.

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Bill Details

See Assembly Version of this Bill:
A8361
Versions:
S4920
Legislative Cycle:
2011-2012
Current Committee:
Senate Rules
Law Section:
Insurance Law
Laws Affected:
Add ยง6412, Ins L
Versions Introduced in 2009-2010 Legislative Cycle:
A8404, A8404

Votes

17
0
17
Aye
0
Nay
0
aye with reservations
0
absent
1
excused
0
abstained
show Insurance committee vote details

Sponsor Memo

BILL NUMBER:S4920

TITLE OF BILL:
An act
to amend the insurance law, in relation to disclosing title service
charges by a title insurance provider to the customer upon receipt of an
application for a title

PURPOSE:
This legislation requires that a title insurance provider, upon
receipt of an application for a title insurance policy for real
property improved by a one-to-four family residence, provide to the
applicant a list of service charges for title services to be
rendered. This bill also requires that an invoice issued to a
customer by a title insurance provider clearly differentiate, on
separate lines, between the amount that the title insurance provider
is collecting to remit to a third party for services it has rendered
and the amount that the title insurance provider is collecting for
services that the provider rendered directly.

SUMMARY OF PROVISIONS:
Section one amends the insurance law by adding a new section 6412.
Section 6412(a) provides definitions of "title insurance provider,"
"title service" and "title services," "service charge" and "service
charges," "applicant" and "customer." "Title insurance provider" is
defined as a title insurance corporation, as defined in subsection
(a) of section 6401 of this article, and any agent, approved attorney
or examining counsel which is issuing a title insurance policy on
behalf of a title insurance corporation. "Title service" and "title
services" mean every service actually rendered by a title insurance
provider, or obtained by a title insurance provider through a third
party, the charge for which is imposed on a customer and is not
regulated by the department of insurance.

"Service charge" and "service charges" are defined as an amount
charged to a customer by a title insurance provider for providing one
or more title services; provided, however, that "service charge" or
"service charges" shall not include a charge for the search and
examination of title. "Applicant" means the person or entity ordering
title insurance or title services or their duly authorized
representative. "Customer" is defined as any person or entity paying
a title insurance provider title insurance premiums and service
charges for title services for real property improved by a
one-to-four family residence or their duly authorized representative.

Section 6412(b) provides that upon receipt of an application for a
title insurance policy for real property improved by a one-to-four
family residence, a title insurance provider shall issue to the
applicant a list of its service charges for title services.

Section 6412(c) requires that the statement of charges issued by a
title insurance provider to a customer shall clearly and separately
itemize (1) each service charge being paid by the title insurance
provider to a third party with respect to title services rendered by
such third party; (2) each service charge of the title insurance
provider with respect to title services rendered by such title


insurance provider; and (3) any other service charges incurred by the
title insurance provider in connection with any other title service.

Section 6412(d) provides that in the event of a willful failure to
comply with this section, a customer shall be entitled to recover
from the title insurance provider rendering title services the lesser
of (1) $1,500.00 or (2) three times the amount of each service charge
billed to the customer in violation of this section.

Section 6412(e) provides that nothing contained in this section shall
be construed as permitting any practice or conduct otherwise
prohibited by law.

JUSTIFICATION:
In typical residential real estate transactions, title insurance
companies and their agents are requested by sellers, purchasers or
lenders to arrange for various services.
Frequently, these services are obtained from third parties and the
customer is billed by the title insurance provider for ordering,
coordinating and delivering these services. For example, a title
insurance provider may be requested to arrange for the following
services: for a survey to be done by ,a licensed surveyor; to have an
existing survey updated; to have the property shown on an existing
survey inspected; to obtain copies of certificates of occupancy and
other similar municipal records; and/or to submit for recording
documents executed in connection with the closing, accompanied by all
required forms.

Other times, these services are provided directly by the title
insurance provider itself. However, unlike title insurance premiums,
charges for title services are not regulated by the state insurance
department. Accordingly, whether these services are provided by the
title insurance provider directly or indirectly, there is no legal
requirement that charges for title services to be rendered be clearly
and separately disclosed to an applicant in a manner and at a time
which would allow the applicant to select a title insurance provider
with knowledge of the service charges that will be assessed. As a
consequence, customers of title insurance providers are often unaware
of service charges to be imposed until the time of closing (or
cancellation of an order for title insurance). Even at the time of
closing (or cancellation of an order, if applicable), there is no
requirement that the invoice provided by the title insurance provider
clearly differentiate between the amount payable to a third party for
services rendered and the amount payable to a title insurance
provider for services it provided directly.

This lack of clear, up front disclosure impedes the ability of
applicants to select, in a timely manner, the best title insurance
provider at the cheapest possible price. The failure of title
insurance providers to differentiate between the amount payable to a
third party for services it has rendered and the amount payable to a
title insurance provider for services it provided directly means that
invoices lack transparency and make customers vulnerable to excessive
charges.

In light of the foregoing, this legislation requires that a title
insurance provider, upon receipt of an application for a title


insurance policy for real property improved by a one-to-four family
residence, provide to the applicant a list of its service charges for
title services, whether those services are provided directly or
indirectly. This bill also requires that an invoice issued to a
customer by a title insurance provider clearly differentiate, on
separate lines, between the amount that the title insurance provider
is collecting to remit to a third party and the amount that it is
collecting for the services that it has rendered.

Finally, in some parts of the State, under insurance department
regulations, a charge for the search and examination of title is not
part of the title insurance premium and thus may be billed to a
customer as a separate service charge. However, since this charge may
not be known until the search and examination of title is completed,
such a charge is not required to be included in the list of service
charges required to be disclosed to an applicant under this
legislation.

LEGISLATIVE HISTORY:
None.

FISCAL IMPLICATIONS:
None to the State.

EFFECTIVE DATE:
This act will take effect on the ninetieth day after it shall have
become a law.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  4920

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             April 29, 2011
                               ___________

Introduced  by  Sen.  DeFRANCISCO -- read twice and ordered printed, and
  when printed to be committed to the Committee on Insurance

AN ACT to amend the insurance  law,  in  relation  to  disclosing  title
  service  charges  by  a  title insurance provider to the customer upon
  receipt of an application for a title

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  The insurance law is amended by adding a new section 6412
to read as follows:
  S 6412. DISCLOSURE OF TITLE  SERVICE  CHARGES  BY  A  TITLE  INSURANCE
PROVIDER.  (A)  DEFINITIONS. (1) "TITLE INSURANCE PROVIDER" SHALL MEAN A
TITLE INSURANCE CORPORATION, AS DEFINED IN  SUBSECTION  (A)  OF  SECTION
SIXTY-FOUR HUNDRED ONE OF THIS ARTICLE, AND ANY AGENT, APPROVED ATTORNEY
OR  EXAMINING  COUNSEL  WHICH  IS  ISSUING  A TITLE INSURANCE POLICY, AS
DEFINED IN SUBSECTION (B) OF SECTION  SIXTY-FOUR  HUNDRED  ONE  OF  THIS
ARTICLE, ON BEHALF OF A TITLE INSURANCE CORPORATION.
  (2)  "TITLE  SERVICES"  OR  "TITLE  SERVICE"  SHALL MEAN EVERY SERVICE
ORDERED OR TO BE ORDERED BY A CUSTOMER FROM A TITLE INSURANCE  PROVIDER,
WHETHER  SUCH  SERVICE  IS  RENDERED  BY  A  TITLE INSURANCE PROVIDER OR
OBTAINED BY A TITLE INSURANCE PROVIDER THROUGH A THIRD PARTY, THE CHARGE
FOR WHICH IS IMPOSED ON A CUSTOMER AND IS NOT REGULATED BY  THE  DEPART-
MENT,  INCLUDING,  WITHOUT  LIMITATION,  THE  OBTAINING  OF GOVERNMENTAL
RECORDS, THE ORDERING OF A  SURVEY  OR  A  SURVEY  INSPECTION,  AND  THE
RECORDING  OR FILING OF INSTRUMENTS IN THE OFFICE OF A RECORDING OFFICER
AS DEFINED IN SECTION TWO HUNDRED NINETY OF THE REAL PROPERTY LAW OR  IN
ANY OTHER STATE, COUNTY OR MUNICIPAL OFFICE.
  (3) "SERVICE CHARGES" OR "SERVICE CHARGE" SHALL MEAN AN AMOUNT CHARGED
TO  A  CUSTOMER  BY A TITLE INSURANCE PROVIDER FOR PROVIDING ONE OR MORE
TITLE SERVICES; PROVIDED, HOWEVER, THAT "SERVICE  CHARGES"  OR  "SERVICE
CHARGE"  SHALL  NOT  INCLUDE  A CHARGE FOR THE SEARCH AND EXAMINATION OF
TITLE.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11192-01-1

S. 4920                             2

  (4) "APPLICANT" SHALL MEAN THE PERSON OR ENTITY ORDERING TITLE  INSUR-
ANCE OR TITLE SERVICES, OR THE DULY AUTHORIZED REPRESENTATIVE THEREOF.
  (5)  "CUSTOMER"  SHALL MEAN ANY PERSON OR ENTITY PAYING A TITLE INSUR-
ANCE PROVIDER TITLE INSURANCE PREMIUMS AND  SERVICE  CHARGES  FOR  TITLE
SERVICES  FOR  REAL PROPERTY IMPROVED BY A ONE-TO-FOUR FAMILY RESIDENCE,
OR THE DULY AUTHORIZED REPRESENTATIVE THEREOF.
  (B) ON RECEIPT OF AN APPLICATION FOR A POLICY OF TITLE  INSURANCE  FOR
REAL PROPERTY IMPROVED BY A ONE-TO-FOUR FAMILY RESIDENCE, A TITLE INSUR-
ANCE PROVIDER SHALL ISSUE TO THE APPLICANT A LIST OF SERVICE CHARGES FOR
ALL  TITLE  SERVICES APPLICABLE TO THE TRANSACTION.  THE TITLE INSURANCE
PROVIDER SHALL ONLY BE REQUIRED TO PROVIDE THE AMOUNTS OF SERVICE CHARG-
ES APPLICABLE TO THE TRANSACTION BASED UPON THE FACTS KNOWN TO THE TITLE
INSURANCE PROVIDER AT THE TIME OF THE APPLICATION.
  (C) A STATEMENT OF CHARGES ISSUED BY A TITLE INSURANCE PROVIDER  TO  A
CUSTOMER SHALL CLEARLY AND SEPARATELY ITEMIZE:
  (1)  EACH SERVICE CHARGE TO BE PAID BY A CUSTOMER TO A TITLE INSURANCE
PROVIDER, WHICH THE TITLE INSURANCE PROVIDER WILL PAY TO A  THIRD  PARTY
FOR TITLE SERVICES RENDERED BY SUCH THIRD PARTY;
  (2)  EACH SERVICE CHARGE TO BE PAID BY A CUSTOMER TO A TITLE INSURANCE
PROVIDER FOR TITLE SERVICES RENDERED BY SUCH TITLE  INSURANCE  PROVIDER;
AND
  (3) ANY OTHER SERVICE CHARGES IMPOSED BY A TITLE INSURANCE PROVIDER ON
A CUSTOMER FOR ANY OTHER TITLE SERVICE.
  (D)  IN  THE EVENT OF A WILLFUL FAILURE TO COMPLY WITH THIS SECTION, A
CUSTOMER SHALL BE ENTITLED TO RECOVER FROM THE TITLE INSURANCE  PROVIDER
RENDERING THE TITLE SERVICES THE LESSER OF:
  (1) FIFTEEN HUNDRED DOLLARS; OR
  (2)  THREE  TIMES  THE  AMOUNT  OF  EACH  SERVICE CHARGE BILLED TO THE
CUSTOMER IN VIOLATION OF THIS SECTION.
  (E) NOTHING CONTAINED IN THIS SECTION SHALL BE CONSTRUED AS PERMITTING
ANY PRACTICE OR CONDUCT OTHERWISE PROHIBITED BY LAW.
  S 2. This act shall take effect on the ninetieth day  after  it  shall
have become a law.

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