June 22, 2010, Introduced by Reps. Lipton, Polidori, Gonzales, Corriveau, Leland, Segal, Byrum, Constan and Rocca and referred to the Committee on Banking and Financial Services.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 7304 (MCL 500.7304) and by adding sections 7314
and 7317a.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 7304. Every title insurer authorized to do business
pursuant
to under this code act may issue title
insurance; make,
execute, and
perfect such title
insurance contracts, agreements,
policies, and
other instruments as may be required therefor for the
title insurance; examine titles to real estate in connection with
any transaction in which a policy of title insurance or commitment
therefor
is being issued and report thereon
on it; issue
commitments for title insurance policies specifying the
requirements
for the issuance of such the
policies; and act
as
escrow agent in any transaction involving the issuance of a title
insurance policy. A title insurer that does not create an escrow
account or act as an escrow agent in a transaction involving the
issuance of a title insurance policy, but requires or permits a
producer to act as an escrow agent, is responsible for the
producer's escrow activities. Nothing contained in this chapter
shall
be construed to authorize authorizes
any title insurer, or
any
title insurer officer, director, employee, trustee, agent
producer,
or solicitor, thereof,
to engage in any act or practice
prohibited
by Act No. 354 of the Public Acts of 1917, being section
450.681
of the Compiled Laws of 1948 section
1 of 1917 PA 354, MCL
450.681, under a claim that the act or practice is incidental to
the conduct of a business authorized by this chapter, whether or
not
a separate charge is made therefor for that act or practice. It
shall
be is unlawful for any title insurer ,
or any such person, to
suggest to any party to a transaction involving the examination,
insuring, and conveyancing of titles to real estate that the party
does not need to retain for the transaction the professional
services of an independent attorney duly licensed to practice law
in this state.
Sec. 7314. (1) At the time an order for a title insurance
policy is placed with a title insurer, the title insurer or the
title insurance producer shall offer closing or settlement
protection to the lender, borrower, and seller of the property and
to any applicant for title insurance.
(2) The closing or settlement protection offered pursuant to
this section shall meet all of the following:
(a) Indemnify any lender, borrower, seller, and applicant that
has requested the protection, both individually and collectively,
against the loss of settlement funds resulting from any of the
following acts of the title insurer's named title insurance
producer or anyone acting on the producer's behalf:
(i) Theft, misappropriation, fraud, or any other failure to
properly disburse settlement, closing, or escrow funds.
(ii) Failure to comply with any applicable written closing
instructions, when agreed to by the title insurance producer.
(b) Cost not more than $50.00, which cost is payable to the
title insurer.
(3) The issuance of closing or settlement protection under
this section is part of the business of title insurance for the
purpose of section 7304.
(4) The commissioner may adopt rules in accordance with the
administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
24.328, as the commissioner considers necessary to carry out the
purposes of this section, including, but not limited to, rules that
detail the specific language that must be included in the written
document offering closing or settlement protection as provided for
in this section.
Sec. 7317a. (1) All of the following apply to a title
insurance producer or solicitor that establishes an escrow or trust
account:
(a) The account shall be a noninterest-bearing demand account
and shall be maintained in a federally insured bank, savings and
loan association, credit union, or savings bank.
(b) The officer or agent shall sign checks drawn on the escrow
or trust account, even if a cosigner is used.
(c) A surety bond shall be maintained.
(d) Disbursement of escrow money shall be made in accordance
with the agreement signed by the parties.
(2) More than 1 escrow or trust account may be maintained by a
producer. A producer may maintain not more than $500.00 of an
agency's own funds in an escrow or trust account to cover bank
service, minimum balance, and other similar requirements. All funds
in an escrow or trust account shall be accounted for as provided in
chapter 12.
(3) A title insurance producer or solicitor shall maintain a
bookkeeping system that, at a minimum, has all of the following:
(a) A permanent record or journal that shows the chronological
sequence in which funds are received and disbursed. An electronic
media may be used if funds can be retrieved and printed. For funds
received, the record or journal shall include the amount, the
receipt date, the deposit date, the name of the party who gave the
money, and the principal's name. For disbursements, the record or
journal shall include the amount, the disbursement date, the payee,
the check number, and the disbursement purpose. For both receipt
and disbursement, a running balance shall be shown after each
entry. If a separate record or journal is maintained for an escrow
or trust account, a combined balance of all escrow or trust
accounts shall also be maintained.
(b) A record or ledger that shows receipts and disbursements
as they affect a single, particular transaction between a buyer and
seller. For funds received, the record or ledger shall include the
amount, the receipt date, the names of all parties to a
transaction, and the property address or brief legal description.
For disbursements, the record or ledger shall include the amount,
the disbursement date, the payee, and the check number. The record
or ledger shall segregate each transaction.
(c) A system for maintaining all records, journals, and
ledgers for a period of not less than 5 years.