Legislation
State: Maryland
Signed: May 20, 2010
Effective: July 01, 2010
Chapter: 740
SummaryHouse Bill 1470 removes the requirement that title insurance producer independent contractors (TIPIC) acting under a title insurance producer to hold the requisite fidelity and surety bonds as long as these bonds are held by the title insurance producer the TIPIC works for and the title insurance producer assumes liability for all actions of the TIPIC. The bill also requires any mortgage or deed of trust executed in a transaction in which a TIPIC is acting on behalf of a title insurance producer to include on or with the recorded mortgage or deed of trust the name, address and license number of the TIPIC and title insurance producer for which the TIPIC is acting.
AffectsRepeals and reenacts without amendments Sections 10-101 and 10-121, and repeals and reenacts with amendments Sections 10-101, 10-121, and 10-121.1 (Insurance) of the Annotated Code of Maryland.
Changes - Clarifies that a “title insurance producer independent contractor” (TIPIC) is a person who is licensed to act as a title insurance producer; provides escrow, closing, or settlement services that may result in the issuance of a title insurance contract as an independent contractor for, or on behalf of, a licensed and appointed title insurance producer; and is not an employee of a licensed and appointed title insurance producer.
- No longer requires a TIPIC who renders services on behalf of a title insurance producer to file a blanket fidelity bond and blanket surety bond, or letter of credit with the commissioner of insurance, subject to provisions of Nos. 3 and 4.
- Prohibits a title insurance producer from accepting or using the services of a TIPIC unless the TIPIC is covered under the title insurance producer’s blanket fidelity bond and the blanket surety bond or letter of credit.
- Stipulates that a title insurance producer that uses the services of a TIPIC is the legal principal of the TIPIC and is liable for all actions of the TIPIC, including unintentional conduct that occurs within the scope of the TIPIC’s employment.
- Stipulates that any mortgage or deed of trust executed in a transaction in which a TIPIC is acting on behalf of a title insurance producer must include on or with the recorded mortgage or deed of trust the name, address and license number of the TIPIC and title insurance producer for which the TIPIC is acting.
- Requires the Maryland Insurance Commissioner to study whether a guaranty fund should be established to compensate consumers and title insurers who have had money held in escrow stolen by a title insurance producer, and to adopt regulations for matters related to the issuance of title insurance; and requires the Maryland Insurance Agency to create a booklet for consumers entitled “The Title Insurance Consumer’s Bill of Rights,” adopt regulations that this document be presented to consumers at the same time the Good Faith Estimate is given in connection with a mortgage loan, share information regarding complaints against licensees and report back to the Maryland Senate Finance Committee and the House Economic Matters Committee by December 31, 2010 on these matters.
AnalysisMaryland requires any Notary Signing Agent who conducts loan signings to become a title insurance producer. The reason for this requirement is that the state wants consumers to be protected against the improper conduct and negligence of title insurance producers. Hence, the law requires all title insurance producers to post a blanket fidelity bond and either a blanket surety bond or letter of credit. Title insurance producers have complained that these financial requirements were unfairly burdensome. Many NSAs operate not as title insurance producers, but as title insurance producer independent contractors (TIPIC). House Bill 1470 no longer requires TIPICs acting under a title insurance producer to hold the requisite fidelity and surety bonds as long as these bonds are held by the title insurance producer the TIPIC works for and the title insurance producer assumes liability for all actions of the TIPIC. The other major provision of this bill affecting TIPICs is that any mortgage or deed of trust executed in a transaction in which a TIPIC is acting on behalf of a title insurance producer must include on or with the recorded mortgage or deed of trust the name, address and license number of the TIPIC and title insurance producer for which the TIPIC is acting.
Read House Bill 1470.