Brief⁽¹⁾

H.B. 2692, as amended, addresses the issue of controlled title insurance business. The bill amends current law in the following manner.

• Disclosure. No title insurer or agent may accept an order for title insurance or issue a title insurance policy to a consumer referred by a producer of such business who has a financial interest in the title insurance company unless the producer has disclosed in writing to the consumer referred that



• the producer has a financial interest in the title company to which the consumer is referred;



• the nature of the financial interest and a written estimate of the charge or range of charges generally made for title services;



• the person (consumer) is not obligated to use the title insurer in which the producer has the financial interest;



• the consumer has received the names and telephone numbers of other title insurers or agents operating in the county; and



• the disclosure statement is signed by the consumer prior to any commitment having been made to the title insurer or agent.

• Tie-in Arrangements. No title insurer or agent may condition the selling of property or the making of a loan to a consumer upon the purchase of title insurance from the producer having a financial interest in the title insurer or agent. Further, no title insurer or agent may accept an insurance order on a form with the title company name pre-printed prior to the buyer or seller selecting that title company.



• Penalties. Any producer who violates the provisions of this law would be liable to the consumer in an amount equal to the amount of the premium paid for the title insurance; be subject to a fine imposed by the Insurance Commissioner in an amount equal to five times the premium for the title insurance; and if the producer were a licensed real estate agent or broker, the producer would be deemed to have committed a prohibited act under the licensing statutes for such persons.



• Financial Arrangements. The owner of the title insurance company who is a producer of business for the company may receive income from the title business if the financial interest is disclosed as required, the payment is not in exchange for business, and the payment is only a return on the investment of the owner in the business.



• Competitor's Cause of Action. After the act becomes effective, any title insurer or agent who is a competitor of another title insurer or agent who violated the provision of this law has a cause of action against the violator and is entitled to damages as determined by the court. Court costs and attorney fees may be awarded to the successful party in any such action.



• Rules and Regulations. The Insurance Commissioner shall require title agents to provide core title services as mandated by the federal Real Estate Settlement Procedures Act and may adopt rules and regulations necessary to carry out the law.



• Controlled Business. The unfair trade practices act in the Insurance statutes relating to the percentage of business a title insurer or agent may control also would be amended. The exemption from any limitation on the amount of controlled business would continue for real estate transactions in counties of 10,000 or less and a new exemption would be added for real estate transactions in counties with a population of 200,000 or greater. The limitation of 20 percent of controlled business would apply on real estate transactions in counties with a population greater than 10,000 but less than 200,000. (The House Committee of the Whole amendment changed the population size for the exemption for controlled business from 50,000 to 200,000.)

Background

H.B. 2692 was supported by the Kansas Association of Realtors whose representative noted that consumers are better served when there is competition in the marketplace, that controlled business arrangements permit streamlined home purchasing opportunities and buyers and sellers want the convenience of one-stop shopping. The Kansas Building Industry Association, Inc., the Kansas Bankers Association, and several real estate agency representatives spoke or wrote in favor of the bill.

The Kansas Land Title Association opposed H.B. 2692.

The fiscal note on the bill indicates it would have no fiscal effect.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/fulltext-bill.html.