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  S.B. No. 1153
 
 
 
 
AN ACT
  relating to the use of title insurance to insure certain interests
  in personal property.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Title 11, Insurance Code, is amended by adding
  Subtitle F to read as follows:
  SUBTITLE F. TITLE INSURANCE FOR CERTAIN
  PERSONAL PROPERTY INTERESTS
  CHAPTER 2751. TITLE INSURANCE FOR PERSONAL
  PROPERTY INTERESTS
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 2751.001.  GENERAL DEFINITIONS. (a)  The definitions
  under Sections 2501.003(2)-(5), (7), (10), and (12)-(14) apply to
  the regulation of title insurance under this chapter.
         (b)  In this subtitle, a term not defined under Subsection
  (a) that is used in Chapter 9, Business & Commerce Code, has the
  meaning assigned by that code.
         Sec. 2751.002.  DEFINITIONS OF PERSONAL PROPERTY AND
  PERSONAL PROPERTY TITLE INSURANCE. In this subtitle:
               (1)  "Personal property" has the meaning assigned by
  Section 1.04, Tax Code.
               (2)  "Personal property title insurance" means
  coverage that insures:
                     (A)  whether affirming or negating, one or more of
  the elements of attachment, perfection, or priority of a security
  interest in personal property or fixtures;
                     (B)  the results, as to correctness,
  completeness, or other criteria, of a search of:
                           (i)  the filing office of the financing
  statement record of a debtor; or
                           (ii)  any other database, whether publicly
  or privately maintained, such as court dockets, tax records, motor
  vehicle department records, or the records of the Federal Aviation
  Administration as to aircraft, the United States Coast Guard as to
  vessels, or the United States Department of Transportation;
                     (C)  the status of ownership of, rights in, powers
  to transfer rights in, or title with respect to personal property or
  fixtures;
                     (D)  the effectiveness of the filing of a
  financing statement with a filing office, or any other record with
  any publicly maintained database or registry;
                     (E)  the lien status of personal property or
  fixtures, or compliance with Title 1, Business & Commerce Code, the
  Uniform Commercial Code, international conventions such as the
  United Nations Commission on International Trade Law (UNCITRAL), or
  similar laws or regulations; or
                     (F)  any of the matters covered by Paragraphs
  (A)-(E) with respect to the laws of any other domestic or foreign
  jurisdiction.
         Sec. 2751.003.  APPLICABILITY OF OTHER LAWS. (a)  Except as
  provided by Subsection (b), this code, other than this chapter,
  does not apply to the business of personal property title
  insurance.
         (b)  The following laws apply to the business of personal
  property title insurance:
               (1)  Section 2501.005, other than Subsections
  (a)(2)(A)-(C) of that section;
               (2)  Section 2501.007;
               (3)  Section 2502.001;
               (4)  Sections 2502.051, 2502.053, and 2502.055;
               (5)  Chapter 2551;
               (6)  Chapter 2553;
               (7)  Chapter 2601;
               (8)  Chapter 2651;
               (9)  Chapter 2652;
               (10)  Section 2701.002;
               (11)  Chapter 2703, except to the extent of any
  conflict with Subchapter B of this chapter;
               (12)  Section 2704.001, other than Subdivisions (1) and
  (2) of that section;
               (13)  Section 2704.002; and
               (14)  Section 2704.004.
         Sec. 2751.004.  GENERAL RULES. The commissioner, in the
  manner prescribed by Subchapter A, Chapter 36, shall adopt rules as
  necessary to implement and enforce this chapter.
  [Sections 2751.005-2751.050 reserved for expansion]
  SUBCHAPTER B. RATES AND FORMS
         Sec. 2751.051.  FIXING AND PROMULGATING PREMIUM RATES AND
  FORMS. (a)  The commissioner shall, in the manner prescribed by
  this subchapter:
               (1)  fix and promulgate the premium rates to be charged
  by a title insurance company or by a title insurance agent for
  personal property title insurance policies under this chapter; and
               (2)  prescribe the forms to be used in connection with
  those policies.
         (b)  A premium may not be charged for a personal property
  title insurance policy or for another prescribed or approved form
  at a rate different than the rate fixed and promulgated by the
  commissioner.
         (c)  The commissioner may not limit the number of forms for
  personal property title insurance if the forms meet the
  requirements of this title.
         Sec. 2751.052.  FACTORS CONSIDERED IN FIXING PREMIUM RATES.
  (a)  In fixing premium rates, the commissioner shall consider all
  relevant income and expenses of title insurance companies and title
  insurance agents attributable to engaging in the business of
  personal property title insurance in this state.
         (b)  The premium rates fixed by the commissioner must be
  reasonable, adequate, not unfairly discriminatory,
  nonconfiscatory, and not excessive.
         Sec. 2751.053.  HEARING REQUIRED. (a)  Before a premium
  rate may be fixed and forms adopted for personal property title
  insurance under this chapter, the department must provide
  reasonable notice and a hearing must be afforded to title insurance
  companies, title insurance agents, and the public.
         (b)  A hearing under this section is subject to Subchapter B,
  Chapter 40, and is handled as a contested case under Chapter 2001,
  Government Code, in the manner prescribed by that subchapter.
         Sec. 2751.054.  COMMISSIONER ORDER.  (a)  Not later than the
  90th day after the date of a hearing under Section 2751.053, the
  commissioner shall issue an order prescribing the rates and forms
  to be used in connection with personal property title insurance
  policies under this chapter.
         (b)  The commissioner's order promulgating rates must be
  based on the evidence adduced at the hearing.
         Sec. 2751.055.  REVISIONS TO RATES AND FORMS; HEARING.
  (a)  A title insurance company may apply to the department in the
  manner prescribed by the commissioner for approval of a new or
  revised personal property title insurance form or a change in a rate
  associated with such a form. The commissioner may approve or
  disapprove an application after a hearing conducted in the manner
  prescribed by Section 2751.053.
         (b)  A hearing under this section must be conducted not later
  than the 60th day after the date on which the department receives
  the application.
         (c)  The commissioner shall approve or disapprove the
  application not later than the 90th day after the date of the
  hearing under Subsection (a).
  [Sections 2751.056-2751.100 reserved for expansion]
  SUBCHAPTER C. POWERS AND DUTIES OF INSURERS AND AGENTS
         Sec. 2751.101.  ISSUANCE OF POLICIES. A title insurance
  company may issue a personal property title insurance policy in
  this state if the policy covers personal property or fixtures, or a
  secured party or other insured, or a debtor, located in this state.
         Sec. 2751.102.  USE OF FORMS. (a)  A title insurance
  company or title insurance agent shall use the forms prescribed by
  the commissioner in issuing a personal property title insurance
  policy.
         (b)  Unless authorized by rule adopted by the commissioner,
  an insurer may not enter into a contract or other agreement
  concerning a personal property title insurance policy if the
  contract or other agreement is not expressed in the policy. A
  contract or agreement prohibited by this subsection is void.
         Sec. 2751.103.  AGENTS.  A title insurance agent or direct
  operation may accept orders for insurance products authorized under
  this chapter. The agent or direct operation shall act according to
  the authority granted to the agent or direct operation by the title
  insurance company issuing the product.
         Sec. 2751.104.  AGENT COMPENSATION.  (a)  The title
  insurance company that issues a personal property title insurance
  policy shall pay the title insurance agent that places the order for
  the policy a total commission equal to 30 percent of the premium
  charged for the personal property title insurance or personal
  property title insurance product authorized under this chapter.
         (b)  Notwithstanding Subsection (a), a title insurance
  company may not pay a commission to a title insurance agent for an
  application for coverage that is placed with the title insurance
  company directly.
         (c)  A commission paid under Subsection (a) does not
  constitute a violation of Section 2502.051.
         SECTION 2.  Subsection (a), Section 2501.002, Insurance
  Code, is amended to read as follows:
         (a)  The purpose of this title is to completely regulate the
  business of title insurance on real property and, as described by
  Subtitle F, on personal property, including the direct issuance of
  policies and the reinsurance of any assumed risks, to:
               (1)  protect consumers and purchasers of title
  insurance policies; and
               (2)  provide adequate and reasonable rates of return
  for title insurance companies and title insurance agents.
         SECTION 3.  Subdivision (12), Section 2501.003, Insurance
  Code, is amended to read as follows:
               (12)  "Title insurance" means:
                     (A)  insurance that insures, guarantees, or
  indemnifies an owner of real property, or another interested in the
  real property, against loss or damage resulting from:
                           (i)  a lien or encumbrance on or defect in
  the title to the real property; or
                           (ii)  the invalidity or impairment of a lien
  on the real property; [or]
                     (B)  personal property title insurance, as
  defined by Chapter 2751; or
                     (C)  any business that is substantially
  equivalent to the insurance described by Paragraphs (A) and (B)
  [Paragraph (A)] and is conducted in a manner designed to evade the
  provisions of this title.
         SECTION 4.  Subsection (e), Section 2551.001, Insurance
  Code, is amended to read as follows:
         (e)  This title does not regulate the practice of law by an
  attorney. The actions of an attorney in examining title, in
  examining records regarding an interest insured under Chapter 2751,
  or in closing a real property or personal property transaction,
  regardless of whether a title insurance policy is issued, does not
  constitute the business of title insurance, unless the attorney
  elects to be licensed as an escrow officer.
         SECTION 5.  Subsection (a), Section 2551.051, Insurance
  Code, is amended to read as follows:
         (a)  A private corporation may be created and licensed under
  this title for the following purposes:
               (1)  to compile and own or lease, or to acquire and own
  or lease, records or abstracts of title to real property or
  interests in real property in this state or other jurisdictions, to
  insure titles to that real property or interests in that real
  property, and to indemnify the owners of that real property, or the
  holders of interests in or liens on that real property, against loss
  or damage resulting from an encumbrance on or defect in the title to
  the real property or interests in the real property; [and]
               (2)  in transactions in which title insurance is to be
  or is being issued, to supervise or approve the signing of legal
  instruments affecting the interest to be insured [real property
  titles], disbursement of money, prorations, delivery of legal
  instruments, closing of transactions, or issuance of commitments
  for title insurance specifying the requirements for title insurance
  and the defects in title necessary to be cured or corrected; and
               (3)  to issue personal property title insurance under
  Chapter 2751.
         SECTION 6.  Section 2551.302, Insurance Code, is amended to
  read as follows:
         Sec. 2551.302.  REQUIREMENTS FOR REINSURING POLICIES. A
  title insurance company may reinsure any of its policies and
  contracts issued on real property located in this state or on
  policies and contracts issued in this state under Chapter 2751, if:
               (1)  the reinsuring title insurance company is
  authorized to engage in business in this state under this title; and
               (2)  the department first approves the form of the
  reinsurance contract.
         SECTION 7.  Section 2551.304, Insurance Code, is amended to
  read as follows:
         Sec. 2551.304.  ACCEPTANCE OF REINSURANCE. A title
  insurance company may accept a reinsurance risk on real property
  located in this state or on interests described by Section
  2751.002(2) only from an authorized title insurance company.
         SECTION 8.  The State Office of Administrative Hearings
  shall conduct the initial hearing required by Section 2751.053,
  Insurance Code, as added by this Act, not later than November 1,
  2007.
         SECTION 9.  This Act applies only to a title insurance policy
  or contract delivered, issued for delivery, or renewed on or after
  January 1, 2008. A policy or contract delivered, issued for
  delivery, or renewed before January 1, 2008, is governed by the law
  as it existed immediately before the effective date of this Act, and
  that law is continued in effect for that purpose.
         SECTION 10.  This Act takes effect September 1, 2007.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 1153 passed the Senate on
  April 11, 2007, by the following vote: Yeas 30, Nays 0; and that
  the Senate concurred in House amendment on May 21, 2007, by the
  following vote: Yeas 30, Nays 0.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 1153 passed the House, with
  amendment, on May 17, 2007, by the following vote: Yeas 143,
  Nays 0, two present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor