BILL NUMBER: S7901

SPONSOR: GOLDEN
 
TITLE OF BILL:  An act to amend the insurance law, in relation to fees
for ancillary or discretionary non-insurance services provided by title
insurance agents

 
PURPOSE OR GENERAL IDEA OF BILL:

To provide that the Department of Financial Services is not authorized
to establish fees for ancillary or discretionary non-insurance services
provided by title insurance companies.

 
SUMMARY OF PROVISIONS:

Section one of the bill amends Insurance Law section 2113 to add a new
subsection (i) providing that the Department of Financial Services is
not authorized to establish a schedule of fees for any ancillary or
discretionary non-insurance services provided by title insurance agents,
insurers or their representatives.

              

Section two of the bill provides that this act shall take effect imme-
diately.

 
JUSTIFICATION:

Title insurance agents are an integral part of the New York State econo-
my, and they provide a variety of services as part of the real estate
transfer process. In addition to the issuance of title insurance poli-
cies, title agents perform many non-insurance services, such as curative
or corrective actions, to aid the attorneys who hire them on behalf of
their clients. Some of the services rendered include: bankruptcy search-
es; verifying certificates of occupancy, patriot searches, preparing
documents for county recording purposes; managing escrow funds at clos-
ing to ensure proper taxes, liens and fees are paid; and paying off any
existing mortgages on the property and obtaining proof of the satisfac-
tion of the mortgages to name a few. Title professionals are entrusted
with these services because of their keen attention to detail, and the
cost and time effectiveness of their work product.

In 2017, the Department of Financial Services (DFS) promulgated Regu-
lation 208, which imposed strict limits on the fees title agents can
charge for their services, many of which go beyond issuing title insur-
ance policies. This one-size-fits all approach promulgated by DFS fails
to account for the time and attention title professionals spend perform-
ing these services, and results in services rendered without compen-
sation. While the goal of these regulations is to help reduce closing
costs, this provision may in fact have the opposite effect. If these
services were solely provided by attorneys, consumers would likely face
charges that exceed the cost charged by title professionals. Due to this
regulation, many title agents are leaving the industry, unable to afford
to make a living under the new fee restrictions.

Chapter 57 of the laws of 2014 established licensing requirements for
title insurance agents. Title professionals sought these provisions in
an effort to root out bad actors by putting clear guidelines in statute.
The provisions agreed upon by the governor and the legislature expressly
require the disclosure of fees for these services; however, the language
did not grant DFS authority over non-insurance services. This bill would
make the legislature's intent explicitly clear that the superintendent
of DFS does not have the authority to establish a schedule of fees for
any ancillary or discretionary non-insurance service provided by a title
insurance agent. If the Department believes such a policy is needed they
should draft legislation to accomplish their recommended policy for the
legislature's consideration.

 
PRIOR LEGISLATIVE HISTORY:

New bill

 
FISCAL IMPLICATIONS:

None to the state.

 
EFFECTIVE DATE:
This act shall take effect immediately.