Bill
SB 3902
Imposes mandatory licensing, registration, and E&O requirements for title agents, strengthens disclosures, fiduciary escrow rules, and DFPR enforcement to heighten consumer protect
SB3902 (104th General Assembly) – Title Insurance-VARIOUS
Jurisdiction: Illinois
Overview
SB3902 proposes comprehensive reforms to the Title Insurance Act, tightening licensing, registration, and supervision of title insurance agents, escrow providers, and related education/providers. It introduces mandatory licensing for title insurance agents, expands designation and control mechanisms, strengthens fiduciary escrow practices, adds mandatory disclosures, and enhances Department of Financial and Professional Regulation (DFPR) enforcement, including probation, penalties, and reporting requirements. Some provisions align with federal settlement procedures and market practices in title insurance.
Key Provisions and Changes
1) Licensing and registration framework
- Prohibits acting as a title insurance agent without an issued license from the Secretary of DFPR and registration by at least one title insurance company to perform core title agent services.
- Establishes a new license requirement (Section 5.1) for title insurance agents, with an automatic deeming of preexisting agents as licensed if the Secretary sets a date by rule.
- Requires designation of a designated licensee for each licensed entity; a designated licensee cannot serve for more than one entity.
2) Core title agent services and definition changes
- Clarifies and broadens definitions of “title insurance business,” “title insurance agent,” and “core title agent services.”
- Core title agent services include reviewing title-related information, issuing commitments, verifying underwriting conditions, and issuing title insurance policies.
3) Disclosure and discipline
- Requires disclosures of criminal or disciplinary actions involving title companies, agents, or independent escrowes.
- Adds a mandatory notice requirement for convictions, disciplinary actions in other jurisdictions, and grounds for discipline (including dishonesty and related conduct) (Section 12.1).
4) Errors and omissions (E&O) and professional standards
- Agents performing core title services must maintain E&O (or equivalent) insurance, with higher minimums if the agent also acts as an escrow agent:
- Escrow agents: at least $500,000 per claim and $1,000,000 aggregate.
- Non-escrow agents: at least $250,000 per claim and $500,000 aggregate.
- If E&O insurance is unavailable, the Secretary can approve alternatives.
5) Licensing process and qualifications (Agent licensing - Section 16.2)
- Establishes licensing requirements for individuals and entities, including age, designation of a licensed designated agent, and extensive background disclosures for owners, officers, etc.
- Requires passing an exam with at least 70% and meeting a prelicensing education requirement (8 credit hours) before taking the exam.
- Sets ongoing education requirements: 8 hours of continuing education (plus 4 hours for escrow activity) and allows MCLE credits if applicable in another jurisdiction.
- Introduces reciprocity standards with other states and allows for certain continuing education waivers or substitutions (e.g., MCLE).
6) Education and examination providers (Section 16.3)
- Requires certification from the Department to operate as a prelicensing or continuing education provider or to administer examinations.
- Establishes standards, renewal timelines, and approval processes for providers.
7) Escrow and settlement practices
- Reaffirms fiduciary handling of escrow funds, with required segregation and handling, and clarifies liability between title companies and agents in escrow scenarios.
- Sets conditions under which escrow agents may act as escrow agents in certain high-value residential or nonresidential transactions, including required agency contracts or closing protection letters.
8) Fees and regulatory actions
- Lists various fees for licenses, registrations, annual statements, and processing (with specified amounts: original applications, licenses, copies, seals, annual statements, and renewal-related fees).
- Grants DFPR authority to suspend, revoke, place on probation, or fine licensees for misconduct, misrepresentation, theft, dishonesty, or failure to comply with deposits or rules.
- Provides for notices, hearings, emergency orders, cease-and-desist authority, and administrative reviews.
9) Regulatory cohesion and effective date
- The bill emphasizes alignment with federal Real Estate Settlement Procedures Act (RESPA) and existing Title Insurance Act provisions.
- Effective date: upon becoming law.
Who is Affected
Timelines and Procedures
Impact Considerations
Note: This summary reflects the introduced text and its stated provisions. If amended, the final enacted version could differ in scope, language, or enforcement details.
Compiled from official sources — confirm details with the bill’s official record.
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