The California Legislature was active in 2015 and passed a number of bills that were signed by the Governor, and then chaptered as law. Below are a few of interest to the title insurance industry:
Chapter 76 (AB 661) Recording Fees – Real Estate Fraud Fee
Under this new act, the exclusion of a “real estate instrument” subject to the up to $10 fraud fee is expanded to include a statement that the real estate fraud fee does not apply to any real estate instrument, paper, or notice accompanied by a declaration stating that the transfer is subject to a documentary transfer tax, is recorded concurrently with a transfer subject to a documentary transfer tax, or is presented for recording within the same business day as, and is related to the recording of, a transfer subject to a documentary transfer tax.
Chapter 213 (AB 553) Title Insurance
This act sets forth certain corporate governance suggestions, obligations, and prohibitions, and identifies penalties and liability related to failing to meet those requirements. For example, the act encourages an insurer or insurance group of which the insurer is a member, to, no later than June 1 of each calendar year; submit to the commissioner a Corporate Governance Annual Disclosure that contains information relating to corporate governance structure, policies, and practices.
Chapter 348 (AB 1515) Insurance (Title Marketing Representatives)
This act sets forth various general insurance-related laws. Most significant for the title insurance industry, under this new act, title marketing representatives are required to notify the commissioner when any of the background information changes after the application has been submitted or the license has been issued. Specifically, notification to the commissioner shall be in writing and be sent within 30 days of the date of the change in background information. Background information means any of the following: a misdemeanor or felony conviction; a filing of felony criminal charges in state or federal court; an administrative action regarding a professional or occupational license; any licensee’s discharge or attempt to discharge, in a personal or organizational bankruptcy proceeding, an obligation regarding any insurance premiums or fiduciary funds owed to any company, including a premium finance company, or managing general agent; and any admission, or judicial finding or determination, of fraud, misappropriation or conversion of funds, misrepresentation, or breach of fiduciary duty.
Chapter 370 (AB 704) Escrow Services (CLTA Sponsored Bill)
Under this new act, the financial requirements for underwritten title companies conducting escrows throughout the state, i.e. the existing $7,500 per county deposit requirement, is replaced with a single bonding requirement affording more protection to consumers. This act also adopts a revised regulatory framework for the Department of Insurance when licensing underwritten title companies to conduct the business of title insurance, including the performance of escrow services for consumers.
Chapter 634 (AB 807) Real Estate Transfer Fees
Under this new act, real estate transfer fee requirements were expanded, altered and clarified. Real estate transfer fees are specified amounts required to be paid to a designated party upon each subsequent sale and transfer of the subject property. Real estate transfer fees are typically imposed by a developer as set forth in a covenant, condition or restriction contained in a deed or other document. Existing law required a description of the real estate transfer fee and notice and disclosure requirements to the buyers prior to completion of the sale and transfer. Under existing law, certain real estate transfer fee requirements imposed on or before December 31, 2007 were not affected by the new law.
This new act sets forth additional details, information and disclosure requirements that are to be provided to the buyers. Also, certain real estate transfer fee requirements imposed on or before December 31, 2007 will no longer be enforceable unless those real estate transfer fees are brought into compliance with existing law and recorded in a separate document by December 31, 2016.
Also of particular interest are new chaptered laws relating to: (1) Revocable Transfer Upon Death Deeds (Chapter 293); and (2) Redevelopment Agencies (Chapters 319, 320 and 325). The important topics will be separately addressed in upcoming Stewart bulletins.
If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.
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