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PAG LIN 1 1 Section 1. Section 16.1, subsection 39, Code 2001, is 1 2 amended to read as follows: 1 3 39. "Title guaranty policy" means a guaranty policy 1 4 against loss or damage caused by defective title to real 1 5 property. 1 6 Sec. 2. Section 16.2, subsection 1, unnumbered paragraph 1 7 2, Code 2001, is amended to read as follows: 1 8 A title guaranty division is created within the authority. 1 9 The powers of the division relating to the issuance of title 1 10guarantiesguaranty policies are vested in and shall be 1 11 exercised by a division board of five members appointed by the 1 12 governor subject to confirmation by the senate. The 1 13 membership of the board shall include an attorney, an 1 14 abstractor, a real estate broker, a representative of a 1 15 mortgage-lender, and a representative of the housing 1 16 development industry. The executive director of the authority 1 17 shall appoint an attorney as director of the title guaranty 1 18 division who shall serve as an ex officio member of the board. 1 19 The appointment of and compensation for the division director 1 20 are exempt from the merit system provisions of chapter 19A. 1 21 Sec. 3. Section 16.3, subsection 15, Code 2001, is amended 1 22 to read as follows: 1 23 15. The abstract-attorney's title opinion system promotes 1 24 land title stability for determining the marketability of land 1 25 titles and is a public purpose. A public purpose will be 1 26 served by providing, as an adjunct to the abstract-attorney's 1 27 title opinion system, a low cost mechanism to provide for 1 28 additional guaranties of real property titles in Iowa. The 1 29 titleguarantiesguaranty policies will facilitate mortgage 1 30 lenders' participation in the secondary market and add to the 1 31 integrity of the land-title transfer system in the state. 1 32 Sec. 4. Section 16.5, subsection 15, Code 2001, is amended 1 33 as follows: 1 34 15. Through the title guaranty division, make and issue 1 35 titleguarantiesguaranty policies on Iowa real property in a 2 1 form acceptable to the secondary market, to fix and collect 2 2 the charges for theguarantiesguaranty policies and to 2 3 procure reinsurance against any loss in connection with the 2 4guarantiesguaranty policies. 2 5 Sec. 5. Section 16.91, subsections 1, 2, 3, 4, 5, 6, and 2 6 7, Code 2001, are amended to read as follows: 2 7 1. The authority through the title guaranty division shall 2 8 initiate and operate a program in which the division shall 2 9 offerguarantiestitle guaranty policies of real property 2 10 titles in this state. The terms,and conditionsand formof 2 11 the title guarantycontractpolicy shall be forms approved by 2 12 the division board. The division, as it may determine, may 2 13 use the policy, endorsement, and other forms adopted for the 2 14 title insurance industry by the American land title 2 15 association and may obtain ratings of the division similar to 2 16 ratings given to title insurance companies. The division 2 17 shall fix a charge for the guaranty in an amount sufficient to 2 18 permit the program to operate on a self-sustaining basis, 2 19 including payment of administrative costs and the maintenance 2 20 of an adequate reserve against claims under the title guaranty 2 21 program. A title guaranty policy fund is created in the 2 22 office of the treasurer of state. Funds collected under this 2 23 program shall be placed in the title guaranty policy fund and 2 24 are available to pay all claims, necessary reserves, and all 2 25 administrative costs of the title guaranty program. Moneys in 2 26 the fund shall not revert to the general fund and interest on 2 27 the moneys in the fund shall be transferred to the department 2 28 of economic development for deposit in the local housing 2 29 assistance program fund established in section 15.354 and 2 30 shall not accrue to the general fund. If the authority board 2 31 in consultation with the division board determines that there 2 32 are surplus funds in the title guaranty policy fund after 2 33 providing for adequate reserves and operating expenses of the 2 34 division, the surplus funds shall be transferred to the 2 35 housing program fund created pursuant to section 16.40. 3 1 2. A title guaranty policy, closing protection letter, or 3 2 gap coverage issued under this program is an obligation of the 3 3 division only and claims are payable solely and only out of 3 4 the moneys, assets, and revenues of the title guaranty policy 3 5 fund and are not an indebtedness or liability of the state. 3 6 The state is not liable on any title guaranty policy, closing 3 7 protection letter, or gap coverage. 3 8 3. With the approval of the authority board the division 3 9 and its board shall consult with the insurance division of the 3 10 department of commerce in developing a title guarantycontract3 11 policy acceptable to the secondary market and developing any 3 12 other feature of the program with which the insurance division 3 13 may have special expertise. The insurance division shall 3 14 establish the amount for a loss reserve fund. Except as 3 15 provided in this subsection, the title guaranty program is not 3 16 subject to the jurisdiction of or regulation by the insurance 3 17 division or the commissioner of insurance. 3 18 4. Attorneys, abstractors, lenders, closing and escrow 3 19 companies, and mortgage brokers may participate in the title 3 20 guaranty program. Each participating attorney and abstractor 3 21 may be required to pay an annual participation fee to be 3 22 eligible to participate in the title guaranty program. The 3 23 fee, if any, shall be set by the division, subject to the 3 24 approval of the authority. A participating attorney shall be 3 25 licensed to practice in this state. 3 26 5. The participation of abstractors and attorneys shall be 3 27 in accordance with rules established by the division and 3 28 adopted by the authority pursuant to chapter 17A. Each 3 29participantparticipating attorney and abstractor shall at all 3 30 times maintain liability and other indemnity coverage in 3 31 amounts approved by the division. Upon payment of a claim by 3 32 the division, the division shall be subrogated to the rights 3 33 of the claimant against all persons relating to the claim. 3 34 Additionally, each participating abstractor is required to 3 35 own or lease, and maintain and use in the preparation of 4 1 abstracts, an up-to-date abstract title plant including tract 4 2 indices for real estate for each county in which abstracts are 4 3 prepared for real property titles guaranteed by the division. 4 4 The tract indices shall contain a reference to all instruments 4 5 affecting the real estate which are recorded in the office of 4 6 the county recorder, and shall commence not less than forty 4 7 years prior to the date the abstractor commences participation 4 8 in the title guaranty program. However, a participating 4 9 attorney providing abstract services continuously from 4 10 November 12, 1986, to the date of application, either 4 11 personally or through persons under the attorney's supervision 4 12 and control is exempt from the requirements of this paragraph. 4 13 The division may waive the requirements of this subsection 4 14 pursuant to an application of an attorney or abstractor which 4 15 shows that the requirements impose a hardship to the attorney 4 16 or abstractor and that the waiver clearly is in the public 4 17 interest or is absolutely necessary to ensure availability of 4 18 titleguarantiesguaranty policies throughout the state. 4 19 The division may also waive the requirements of this 4 20 subsection pursuant to an application of a participating 4 21 attorney who is not a participating attorney providing 4 22 abstract services continuously from November 12, 1986, if the 4 23 participating attorney is found to be competent to conduct 4 24 title searches and prepare abstracts of title pursuant to 4 25 rules issued by the authority. 4 26 6. Prior to the issuance of a title guaranty policy, the 4 27 division shall require evidence that an abstract of title to 4 28 the property in question has been brought up-to-date and 4 29 certified by a participating abstractor in a form approved by 4 30 division rules and a title opinion issued by a participating 4 31 attorney in the form approved in the rules stating the 4 32 attorney's opinion as to the title. The division shall 4 33 require evidence of the abstract being brought up-to-date and 4 34 the abstractor shall retain evidence of the abstract as 4 35 determined by the board. If an owner is refinancing a loan 5 1 secured by a mortgage, the division may establish standards 5 2 for title searches and underwriting procedures and 5 3 requirements for the issuance of a title guaranty policy if a 5 4 title guaranty policy was previously issued on the property 5 5 for the same owner within a period of five years. 5 6 7.The attorney rendering a title opinionParticipating 5 7 attorneys and participating abstractorsshallmay be 5 8 authorized to issue a title guarantycertificatepolicy 5 9 subject to the rules of the authority. 5 10 Sec. 6. Section 16.92, subsection 1, Code 2001, is amended 5 11 by adding the following new paragraphs after paragraph e: 5 12 NEW PARAGRAPH. ee. "Participating abstractor" means an 5 13 abstractor participating in the title guaranty program 5 14 pursuant to section 16.91. 5 15 NEW PARAGRAPH. ef. "Participating closing and escrow 5 16 company" means a closing and escrow company participating in 5 17 the title guaranty program pursuant to section 16.91. 5 18 NEW PARAGRAPH. eg. "Participating mortgage broker" means 5 19 a mortgage broker participating in the title guaranty program 5 20 pursuant to section 16.91. 5 21 Sec. 7. Section 16.92, subsection 1, paragraph g, Code 5 22 2001, is amended to read as follows: 5 23 g. "Real estate lender or closer" means a person licensed 5 24 to regularly lend moneys to be secured by a mortgage on real 5 25 property in this state, a licensed real estate broker,ora 5 26 licensed attorney, a participating abstractor, a participating 5 27 closing and escrow company, or a participating mortgage 5 28 broker. 5 29 Sec. 8. Section 16.93, subsections 1, 2, and 3, Code 2001, 5 30 are amended to read as follows: 5 31 1. The authority through the title guaranty division may 5 32 issue a closing protection letter to a person to whom a 5 33 proposed title guaranty policy is to be issued, upon the 5 34 request of the person, if the division issues a commitment for 5 35 a title guarantyor title guaranty certificatepolicy. The 6 1 closing protection letter shall conform to the terms of 6 2 coverage and form of the instrument as approved by the 6 3 division board and may indemnify a person to whom a proposed 6 4 title guaranty policy is to be issued against loss of 6 5 settlement funds due to only the following acts of the 6 6 division's named participating attorney or participating 6 7 abstractor: 6 8 a. Theft of settlement funds. 6 9 b. Failure by the participating attorney or participating 6 10 abstractor to comply with written closing instructions of the 6 11 person to whom a proposed title guaranty policy is to be 6 12 issued relating to title certificate coverage when agreed to 6 13 by the participating attorney or participating abstractor. 6 14 2. A closing protection letter shall only be issued to a 6 15 person to whom a proposed title guaranty policy is to be 6 16 issued for real property transactions in which the division 6 17 has committed to issue an owner or lender certificate and for 6 18 which the division receives a premium and other payments or 6 19 fees for a title guarantycertificatepolicy or other 6 20 coverage. 6 21 3. The division board shall establish the amount of 6 22 coverage to be provided and may distinguish between classes of 6 23 property including, but not limited to, residential, 6 24 agricultural, or commercial, provided that the total amount of 6 25 coverage provided by the closing protection letter shall not 6 26 exceed the amount of the commitment or title guaranty policy 6 27 to be issued. Liability under the closing protection letter 6 28 shall be coextensive with liability under the certificate to 6 29 be issued in connection with a transaction such that payments 6 30 under the terms of the closing protection letter shall reduce 6 31 by the same amount the liability under the title guaranty 6 32certificatepolicy and payment under the title guaranty 6 33certificatepolicy shall reduce the liability under the terms 6 34 of the closing protection letter. 6 35 Sec. 9. Section 535.8, subsection 2, paragraph b, 7 1 subparagraph (10), Code 2001, is amended to read as follows: 7 2 (10) The cost of a title guaranty policy issued by the 7 3 Iowa finance authority pursuant to chapter 16. 7 4 SF 425 7 5 tm/cc/26
Text: SF00424 Text: SF00426 Text: SF00400 - SF00499 Text: SF Index Bills and Amendments: General Index Bill History: General Index
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