Senate Bill No. 343

Senate Bill No. 343-Committee on Commerce and Labor

April 30, 1997
____________

Referred to Committee on Commerce and Labor

SUMMARY--Makes various changes concerning title insurance. (BDR 57-989)

FISCAL NOTE: Effect on Local Government: No.

Effect on the State or on Industrial Insurance: No.

EXPLANATION - Matter in italics is new; matter in brackets [ ] is material to be omitted.

AN ACT relating to title insurance; requiring certain title agents and title insurers to own and maintain a title plant; requiring a title insurer to use sound underwriting practices in determining the insurability of a title; repealing provisions relating to title plant companies; and providing other matters properly relating thereto.

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

Section 1 Chapter 692A of NRS is hereby amended by adding thereto the provisions set forth as sections 2 to 5, inclusive, of this act.
Sec. 2 A "title plant" consists of all documents that have been recorded during the preceding 25 years in the office of the county recorder of the county where the real property for which a policy of title insurance is to be written or issued is located, which, pursuant to the laws of this state, impart constructive notice of matters affecting the title to real property or any interest therein or encumbrance thereon. Such documents must include, without limitation, a general index, adequate maps and currently posted tract or geographic indexes.
Sec. 3 1. Except as otherwise provided in subsection 2, a title agent shall not write a policy of title insurance against a risk located in a county whose population is 100,000 or more, unless the title agent owns and maintains a title plant in that county.
2. This section does not apply to a title agent who:
(a) Is a natural person;
(b) Is appointed by and acts only through another title agent or a title insurer that owns and maintains a title plant; and
(c) Writes only policies of title insurance that are based on information derived wholly from the title plant of the title agent or title insurer that owns and maintains the title plant.
Sec. 4 1. Except as otherwise provided in subsection 2, a title insurer shall not write or issue a policy of title insurance against a risk located in a county whose population is 100,000 or more, unless the title insurer owns and maintains a title plant in that county.
2. This section does not apply to a title insurer that issues the policy of title insurance based on a policy issued to it by another title insurer that owns and maintains a title plant in that county.
Sec. 5 1. A title insurer or title agent may own and maintain a title plant solely or, if the ownership satisfies the requirements of subsection 2, as a joint venturer, partner, shareholder or any other participant in a form of joint ownership recognized pursuant to the laws of this state.
2. If the ownership of the title plant is held by:
(a) Four or more title insurers or title agents, the percentage owned by each title insurer or title agent must be equal.
(b) Less than four title insurers or title agents, the percentage owned by each title insurer or title agent must not be less than 25 percent.
Sec. 6 NRS 692A.011 is hereby amended to read as follows:
692A.011 As used in this chapter, unless the context otherwise requires, the words and terms defined in NRS 692A.015 to [692A.080,] 692A.070, inclusive, and section 2 of this act have the meanings ascribed to them in those sections.
Sec. 7 NRS 692A.220 is hereby amended to read as follows:
692A.220 1. No policy [or contract] of title insurance may be completed or executed until the title insurer has or has caused to be:
(a) Conducted a reasonable search and examination of the title; and
(b) Determined the insurability of the title in accordance with [its established] sound underwriting practices.
2. Each title insurer shall maintain records and evidence of its search and examination and of its determination of insurability for a period of not less than 5 years after the date of the policy . [or contract.]
Sec. 8 NRS 692A.080 and 692A.230 are hereby repealed.

TEXT OF REPEALED SECTIONS

692A.080"Title plant company" defined. "Title plant company" means a person engaged in the business of preparing title searches, title examinations and certificates or abstracts of title which are the basis of the issuance of title policies by a title insurer.
692A.230Title plant companies.
1. No person may engage in business as a title plant company unless he has been granted a license to do so by the commissioner.
2. An applicant for a license to conduct business as a title plant company shall submit as part of his application:
(a) A copy of the proposed articles of incorporation or association and bylaws, or the partnership agreement, which will govern the operation of the business.
(b) A list of the owners or participants and the nature and degree of their interest.
(c) A list of the persons who will operate the business, and their addresses and qualifications, including experience.
(d) The conditions under which ownership or participation in the business may be sold or acquired.
(e) A statement of whether or not title information will be compiled for persons other than owners or participants in the business.
(f) A pro forma balance sheet and other financial information to indicate the sufficiency of financing of the business.
(g) Other information which the commissioner requires.
(h) A fee of $10.
3. If the commissioner finds that:
(a) The business of the applicant will be sufficiently financed;
(b) The persons who will be operating the business are qualified;
(c) The rules of operation expressed in the articles of incorporation or association and the bylaws, or in the partnership agreement, will promote the efficiency of the operation of the owners or participants; and
(d) The operation of the business will not unduly restrict competition, he may issue a license to the applicant and permit organization of the business.
4. A license issued under this section is valid for a period of 1 year, and may be renewed by the submission of any information which the commissioner requires and a fee of $10.
5. A license issued under this section may be suspended or revoked by the commissioner if:
(a) The licensee ceases to operate in a manner set forth in its approved application.
(b) In the opinion of the commissioner, the operation of the business has become a restraint on competition or is not in the best interests of the public.
(c) The licensee has not informed the commissioner promptly of each change in conditions set forth in its application.
6. The commissioner shall give written notice to any licensee whose license he intends to suspend or revoke, and the licensee shall be granted a hearing if he requests it in writing within 15 days after the receipt of the notice from the commissioner. A decision of the commissioner after hearing is final administrative action.
7. This section does not apply to any person licensed under the provisions of this chapter engaged in the business of a title plant company when the operation is not in concert with others.