CHAPTER 3. ABSTRACT AND TITLE INSURANCE
IC 27-7-3
Chapter 3. Abstract and Title Insurance
IC 27-7-3-1
Citation
Sec. 1. This chapter shall be known and may be cited as TheIndiana Abstract and Title Insurance Law.
(Formerly: Acts 1937, c.104, s.1.) As amended by P.L.252-1985,SEC.247.
IC 27-7-3-2
Definitions
Sec. 2. As used in this chapter and unless a different meaningappears from the context:
(a) The term "title insurance" means a contract of insuranceagainst loss or damage on account of encumbrances upon or defectsin the title to real estate.
(b) The term "company" shall mean and include any corporation,domestic or foreign, to which this chapter is applicable.
(c) The term "department" shall mean the department of insuranceof the state of Indiana.
(d) The term "commissioner" shall mean the insurancecommissioner.
(e) The term "public record" has the meaning set forth inIC 5-14-3-2.
(f) The term "title search" means a search and examination of thepublic records sufficient to determine:
(1) ownership of;
(2) encumbrances on;
(3) liens on; and
(4) defects in the title to;
the real estate that is the subject of the search.
(Formerly: Acts 1937, c.104, s.2.) As amended by P.L.252-1985,SEC.248; P.L.68-2002, SEC.1.
IC 27-7-3-3
Title insurance business; authorization of domestic and foreigncorporations; application of business corporation law
Sec. 3. Any domestic corporation having among its purposes theinsuring against loss or damage on account of encumbrances upon ordefects in the title to real estate, is hereby authorized to organizeunder IC 23-1, and any foreign corporation, having among itspurposes the insuring against loss or damage on account ofencumbrances upon or defects in the title to real estate, is herebyauthorized to and may be admitted to do business in this state underIC 23-1. Any domestic or foreign corporation, organized or admittedto do business before or after June 7, 1937, as provided in thissection, may engage in business as a title insurance company bycomplying with the provisions of this chapter.
(Formerly: Acts 1937, c.104, s.3.) As amended by P.L.252-1985,
SEC.249.
IC 27-7-3-4
Corporate rights; powers and privileges
Sec. 4. Every such company shall possess and may exercise all therights, powers, and privileges conferred upon domestic corporationsby IC 23-1 but only to the extent that the same may be necessary,convenient or expedient to accomplish the purposes for which it isorganized, and in addition thereto, but subject to the restrictions andlimitations contained in this chapter, every such company shallpossess and may exercise the power of making insurance to insureagainst the loss or damage on account of encumbrances upon ordefects in the title to real estate. In all things not specificallyprovided for in this chapter, the provisions of IC 23-1 shall apply.
(Formerly: Acts 1937, c.104, s.4.) As amended by P.L.252-1985,SEC.250.
IC 27-7-3-5
Capital stock
Sec. 5. The capital stock of any company engaged in businessunder the provisions of this chapter shall be not less than onehundred thousand dollars ($100,000), which shall be fully paid in.
(Formerly: Acts 1937, c.104, s.5.) As amended by P.L.252-1985,SEC.251.
IC 27-7-3-6
Certificate of authority; requirements; issuance; necessity to dobusiness
Sec. 6. (a) Whenever any such company shall have shown to thedepartment by a sworn statement, verified by the oaths of thepresident or a vice president and the secretary or an assistantsecretary of the company and bearing the corporate seal of suchcompany, that it has complied with all the requirements of thischapter necessary for beginning business and that it has deposited theamount as required in section 7 of this chapter, the commissionershall issue a certificate of authority reciting that such company hascomplied with the provisions of this chapter and is authorized toinsure against the loss or damage on account of encumbrances uponor defects in the title to real estate, which certificate shall expire asof midnight of April 30 of each calendar year. The certificate shallbe issued under the seal of the department.
(b) No person, firm, partnership, corporation, association, orcompany shall transact any business of insuring against loss ordamage on account of encumbrances upon or defects in the title toreal estate until it or they shall have received a certificate of authorityas provided for in this section.
(Formerly: Acts 1937, c.104, s.6.) As amended by P.L.252-1985,SEC.252.
IC 27-7-3-7 Deposits; title insurance fund
Sec. 7. Every company described in section 3 of this chapter,before engaging in business, shall deposit with the department thesum of fifty thousand dollars ($50,000) either out of its capital orsurplus. The deposit shall be known as the title insurance fund andmust be deposited in securities of the kind and character designatedby IC 27-1-13-3(b).
(Formerly: Acts 1937, c.104, s.7.) As amended by P.L.252-1985,SEC.253; P.L.159-1986, SEC.5; P.L.161-1986, SEC.2;P.L.184-1996, SEC.3.
IC 27-7-3-8
Additional deposit to meet requirements of another state;withdrawal
Sec. 8. In the event any such domestic company shall be requiredby the laws of any other state, country, or province, as a requirementprior to doing such business as defined in this chapter therein, todeposit, with the duly appointed officer of such other state, country,or province or with the department of this state, any securities orcash in excess of the deposit required of the company by this chapter,such company may deposit with the department securities of thecharacter authorized by this chapter sufficient to meet suchrequirement. The department is hereby authorized and directed toreceive such deposit and to hold it exclusively for the protection ofall policyholders of the company. Any deposit so made to meet therequirement of any such other state, country, or province shall not bewithdrawn by the company except upon filing with the departmentevidence satisfactory to it that the company has withdrawn frombusiness, and has no unsecured liability outstanding in any suchother state, country, or province by which such additional depositwas required, and upon the filing of such evidence, and the approvalof the department, the company may withdraw such additionaldeposit. Upon the approval of the department, any such domesticcompany may deposit and use the reserve fund, provided for insection 9 of this chapter, for the purpose of complying with theadditional deposit requirement of any other state, country, orprovince.
(Formerly: Acts 1937, c.104, s.8.) As amended by P.L.252-1985,SEC.254.
IC 27-7-3-9
Title insurance reserve fund
Sec. 9. Every company described in section 3 of this chapter shallannually set apart, accumulate, and maintain, in a fund to be knownas the title insurance reserve fund, securities of the kind andcharacter designated by IC 27-1-13-3(b) of the face amount equal toten percent (10%) of the actual premiums collected during thepreceding year by the company on account of such title insurance,until the fund totals fifty thousand dollars ($50,000). The fund shallbe maintained in the treasury of the company as additional security
to the holders of policies issued by the company. However, at itsoption, the company may deposit the title insurance reserve fundwith the department in the amount of ten thousand dollars ($10,000),or any multiple thereof up to fifty thousand dollars ($50,000). Thisdeposit shall be known as the title insurance reserve fund deposit.
(Formerly: Acts 1937, c.104, s.9.) As amended by P.L.252-1985,SEC.255; P.L.159-1986, SEC.6; P.L.161-1986, SEC.3;P.L.184-1996, SEC.4.
IC 27-7-3-10
Deficiency in title insurance reserve fund
Sec. 10. Whenever the amount of the title insurance reserve fundof any such company shall fall below the amount required in section9 of this chapter, no further title insurance shall be made or issued bysuch company until the deficiency has been supplied.
(Formerly: Acts 1937, c.104, s.10.) As amended by P.L.252-1985,SEC.256.
IC 27-7-3-11
Interest on deposited securities
Sec. 11. The department shall permit such companies having ondeposit with it stocks or bonds as security to collect the interestaccruing on such deposits, delivering to their authorized agents,respectively, the coupons or other evidences of interest as the samebecome due.
(Formerly: Acts 1937, c.104, s.11.)
IC 27-7-3-12
Foreign corporations; capital and deposit requirements; certificateof authority; rights and privileges
Sec. 12. Every foreign corporation duly authorized to do a titleinsurance business in the state in which it is incorporated ororganized and admitted to do business in this state under IC 23-1may be authorized by the department to transact a title insurancebusiness in this state upon filing with the department proof whichsatisfies it that the corporation has complied with sections 5 and 9 ofthis chapter and has deposited with the proper official of the state inwhich it is incorporated or organized, or has deposited with thedepartment, the amount as required by section 7 of this chapter, andthat it has complied with the provisions of this chapter. Upon thereceipt of such proof, the commissioner may issue to such foreigncorporation a certificate of authority as provided for in section 6 ofthis chapter. A foreign corporation admitted to do business under thischapter shall have the same but no greater rights and privileges thana domestic corporation under this chapter.
(Formerly: Acts 1937, c.104, s.12.) As amended by P.L.252-1985,SEC.257.
IC 27-7-3-13
Examination of company; appointment of examiners; report of
examination
Sec. 13. (a) The department may examine into the affairs of anysuch company doing business in this state under the provisions ofthis chapter. For such purpose it may appoint as examinerscompetent persons, and upon such examination the commissioner,his deputy, or any examiner authorized by him may examine underoath the officers and agents of such company and all persons deemedto have material information regarding the company's property orbusiness. Every such company, its officers, and agents shall produceat the office of the company where the same are kept, its books andall papers in its or their possession relating to its business or affairs,and any other person may be required to produce any book or paperin his custody relevant to the examination for the inspection of thecommissioner, his deputy, or examiners whenever required, and theofficers and agents of such company shall facilitate such examinationand aid the examiners in making the same so far as it is within theirpower to do so.
(b) Upon the conclusion of such examination a full, true, anddetailed report of such company shall be made to the department, bythe person or persons making the examination, in such form as thedepartment may prescribe.
(Formerly: Acts 1937, c.104, s.13.) As amended by P.L.252-1985,SEC.258.
IC 27-7-3-14
Annual financial statement; effect of certification by certifiedpublic accountant
Sec. 14. (a) Every such company doing business in this state shallfile with the department on or before March 15 in each year afinancial statement for the year ending December 31 immediatelypreceding on forms furnished by the department. Such statementshall include a showing that the sum of ten percent (10%) of allactual premiums received by such company, on account of such titleinsurance business, during the year ending on December 31 priorthereto, as required by section 9 of this chapter, has been duly setapart and is held by such company in said title insurance reserve fundor is held on deposit by the department as provided in section 9 ofthis chapter. Such statement shall be verified by the oaths of thepresident or a vice president and the secretary or an assistantsecretary.
(b) If the annual statement, as required by this section, shall becertified to by a certified public accountant, then such statement shallbe prima facie evidence of the facts stated therein, and thedepartment may in its discretion accept such certified statements inlieu of an examination under this chapter.
(Formerly: Acts 1937, c.104, s.14.) As amended by P.L.252-1985,SEC.259.
IC 27-7-3-15
Collection of charges, fees, and taxes; disposition Sec. 15. The department shall collect the charges, fees and taxesprovided for in this section, and give proper acquittances therefor,and on or before the end of every calendar month shall pay into thestate treasury the amounts collected by it during such month, ashereinafter provided:
Fees. Domestic Companies: Every such domestic company shallpay to the department the following stipulated fees: For filing annualstatement, twenty dollars ($20.00); for license to such company, andfor each renewal thereof, five dollars ($5.00); for affixing seal orcertifying to any paper, one dollar ($1.00). The department mayrequire payment of fees on or before the first day of the month nextafter the same are chargeable.
Fees. Foreign Companies: Every such foreign company shall payto the department the following stipulated fees: For filing annualstatement, twenty dollars ($20.00); for license to such company, andfor each annual renewal thereof, five dollars ($5.00); for filingwithdrawal and cancellation of certificate, twenty dollars ($20.00);for affixing seal or certifying to any paper, one dollar ($1.00).
(Formerly: Acts 1937, c.104, s.15.)
IC 27-7-3-15.5
Residential mortgage transactions; electronic storage of data onpersons involved; closing agents to input data and submit form;duty to provide information; failure to comply; civil penalty;access to data; rules; administrative fee
Sec. 15.5. (a) This section applies to a transaction that:
(1) is a single family residential:
(A) first lien purchase money mortgage transaction; or
(B) refinancing transaction; and
(2) is closed after December 31, 2009.
(b) Not later than September 1, 2009, the department shallestablish and maintain an electronic system for the collection andstorage of the following information concerning any of the followingpersons that have participated in or assisted with a transaction towhich this section applies, or that will participate in or assist with atransaction to which this section applies:
(1) The name and license number (under IC 23-2-5) of eachloan brokerage business involved in the transaction.
(2) The name and license or registration number of anymortgage loan originator who is:
(A) either licensed or registered under state or federal law asa mortgage loan originator consistent with the Secure andFair Enforcement for Mortgage Licensing Act of 2008 (H.R.3221 Title V); and
(B) involved in the transaction.
(3) The name and license number (under IC 25-34.1) of each:
(A) principal broker; and
(B) salesperson or broker-salesperson, if any;
involved in the transaction.
(4) The: (A) name of; and
(B) code assigned by the National Association of InsuranceCommissioners (NAIC) to;
each title insurance underwriter involved in the transaction.
(5) The name and license number (under IC 27-1-15.6) of eachtitle insurance agency and agent involved in the transaction asa closing agent (as defined in IC 6-1.1-12-43(a)(2)).
(6) The name and:
(A) license or certificate number (under IC 25-34.1-3-8) ofeach licensed or certified real estate appraiser; or
(B) license number (under IC 25-34.1) of each broker;
who appraises the property that is the subject of the transaction.
(7) The name of the mortgagee and, if the mortgagee is requiredto be licensed under IC 24-4.4, the license number of themortgagee.
(8) In the case of a first lien purchase money mortgagetransaction, the name of the seller of the property that is thesubject of the transaction.
(9) In the case of a first lien purchase money mortgagetransaction, the name of the buyer of the property that is thesubject of the transaction.
(10) The:
(A) name; and
(B) license number, certificate number, registration number,or other code, as appropriate;
of any other person that participates in or assists with atransaction to which this section applies, as the department mayprescribe.
(c) The system established by the department under this sectionmust include a form that:
(1) is uniformly accessible in an electronic format to the closingagent (as defined in IC 6-1.1-12-43(a)(2)) in the transaction;and
(2) allows the closing agent to do the following:
(A) Input information identifying the property that is thesubject of the transaction by lot or parcel number, streetaddress, or some other means of identification that thedepartment determines:
(i) is sufficient to identify the property; and
(ii) is determinable by the closing agent.
(B) Subject to subsection (d) and to the extent determinable,input the information described in subsection (b) withrespect to each person described in subsection (b) thatparticipates in or assists with the transaction.
(C) Respond to the following questions:
(i) "On what date did you receive the closing instructionsfrom the creditor in the transaction?".
(ii) "On what date did the transaction close?".
(D) Submit the form electronically to a data base maintainedby the department. (d) Not later than the time of the closing, each person describedin subsection (b), other than a person described in subsection (b)(8)or (b)(9), shall provide to the closing agent in the transaction theperson's:
(1) legal name; and
(2) license number, certificate number, registration number, orNAIC code, as appropriate;
to allow the closing agent to comply with subsection (c)(2)(B). Aperson described in subsection (b)(7) shall provide the informationrequired by this subsection for any person described in subsection(b)(6) that appraises the property that is the subject of the transactionon behalf of the person described in subsection (b)(7). A persondescribed in subsection (b)(3)(B) who is involved in the transactionmay provide the information required by this subsection for a persondescribed in subsection (b)(3)(A) that serves as the principal brokerfor the person described in subsection (b)(3)(B). In the case of a firstlien purchase money mortgage transaction, the closing agent shalldetermine the information described in subsection (b)(8) and (b)(9)from the HUD-1 settlement statement.
(e) Except for a person described in subsection (b)(8) or (b)(9), aperson described in subsection (b) who fails to comply withsubsection (d) is subject to a civil penalty of one hundred dollars($100) for each closing with respect to which the person fails tocomply with subsection (d). The penalty:
(1) may be enforced by the state agency that has administrativejurisdiction over the person in the same manner that the agencyenforces the payment of fees or other penalties payable to theagency; and
(2) shall be paid into the home ownership education accountestablished by IC 5-20-1-27.
(f) Subject to subsection (g), the department shall make theinformation stored in the data base described in subsection (c)(2)(D)accessible to:
(1) each entity described in IC 4-6-12-4; and
(2) the homeowner protection unit established underIC 4-6-12-2.
(g) The department, a closing agent who submits a form undersubsection (c), each entity described in IC 4-6-12-4, and thehomeowner protection unit established under IC 4-6-12-2 shallexercise all necessary caution to avoid disclosure of any information:
(1) concerning a person described in subsection (b), includingthe person's license, registration, or certificate number; and
(2) contained in the data base described in subsection (c)(2)(D);
except to the extent required or authorized by state or federal law.
(h) The department may adopt rules under IC 4-22-2 to implementthis section. Rules adopted by the department under this subsectionmay establish procedures for the department to:
(1) establish;
(2) collect; and
(3) change as necessary;an administrative fee to cover the department's expenses inestablishing and maintaining the electronic system required by thissection.
(i) If the department adopts a rule under IC 4-22-2 to establish anadministrative fee to cover the department's expenses in establishingand maintaining the electronic system required by this section, asallowed under subsection (h), the department may:
(1) require the fee to be paid:
(A) to the closing agent responsible for inputting theinformation and submitting the form described in subsection(c)(2); and
(B) by the borrower in the transaction;
(2) allow the closing agent described in subdivision (1)(A) toretain a part of the fee collected to cover the closing agent'scosts in inputting the information and submitting the formdescribed in subsection (c)(2); and
(3) require the closing agent to pay the remainder of the feecollected to the department for deposit in the title insuranceenforcement fund established by IC 27-7-3.6-1, for thedepartment's use in establishing and maintaining the electronicsystem required by this section.
As added by P.L.145-2008, SEC.31. Amended by P.L.105-2009,SEC.16; P.L.35-2010, SEC.96.
IC 27-7-3-16
Retirement or withdrawal from business; reinsurance; cancellationof certificate of authority; return of deposit
Sec. 16. (a) Whenever any domestic company desires to retirefrom the business provided for in this chapter, it shall furnish to thedepartment satisfactory evidence that it no longer has outstandingany liability upon any policy of insurance made by it in the conductof its business as a title insurance company, or that it has reinsuredits outstanding policies with a solvent company, authorized to dobusiness under this chapter in this state, or with a company approvedby the department. At the same time the company shall surrender tothe department its certificate of authority. If the department issatisfied that there is no outstanding liability upon any policy issuedby such company, or, that its outstanding policies have been properlyreinsured, then the department shall cancel the surrendered certificateof authority and shall return to the company any and all depositsmade by such company under the provisions of this chapter.
(b) Whenever any foreign company desires to withdraw fromdoing a title insurance business in this state, it shall furnish to thedepartment satisfactory evidence that it no longer has outstandingany liability upon any policy of title insurance made by it in theconduct of its business in this state, or that it has reinsured itsoutstanding policies with a solvent company, authorized to dobusiness in this state, or with a company approved by the department.At the same time such company shall surrender to the department itscertificate of authority. If the department is satisfied that there is no
outstanding liability upon any policy issued by such company in theconduct of its business in this state, or that its outstanding policieshave been properly reinsured, then the department shall cancel thesurrendered certificate of authority and shall return to the companyany and all deposits made with it by such company under theprovisions of this chapter.
(Formerly: Acts 1937, c.104, s.16.) As amended by P.L.252-1985,SEC.260.
IC 27-7-3-17
Violations
Sec. 17. A person who recklessly violates this chapter or fails tofulfill any of the requirements of this chapter commits a Class Bmisdemeanor.
(Formerly: Acts 1937, c.104, s.17.) As amended by Acts 1978, P.L.2,SEC.2724.
IC 27-7-3-18
Exemptions from chapter
Sec. 18. The provisions of this chapter shall not apply to anyinsurance company organized or desiring to organize under andpursuant to IC 27-1 nor to any person, firm, partnership, corporation,limited liability company, association, or company whose businessis the making of abstracts of title to real estate and attaching theircertificate thereto and not engaging in the business of making titleinsurance, nor to any person, firm, partnership, corporation, limitedliability company, or association acting as an authorized agent for aduly qualified title insurance company.
(Formerly: Acts 1937, c.104, s.18.) As amended by P.L.252-1985,SEC.261; P.L.8-1993, SEC.425.
IC 27-7-3-19
Construction of chapter
Sec. 19. This chapter shall be deemed to create an additional andseparate method for engaging in the business of title insurance, asdefined in this chapter, and providing for the incorporation of suchcompanies and their licensing to do such business. This chapter shallnot be deemed to alter, amend, or repeal any other statutes of thestate of Indiana. No requirements or proceedings shall be necessaryfor the incorporation and licensing of a title insurance companyunder this chapter except such as are prescribed in this chapter, anyprovision of the laws of the state of Indiana or IC 27-1 to the contrarynotwithstanding.
(Formerly: Acts 1937, c.104, s.20.) As amended by P.L.252-1985,SEC.262.
IC 27-7-3-20
Limitation on risks
Sec. 20. (a) As used in this section, "any one (1) risk" means arisk or hazard that arises in connection with any one (1) piece or
parcel of property, whether or not the policy insures other property.
(b) Any company organized to issue title insurance in Indiana maynot expose itself to any one (1) risk in an amount exceeding fiftypercent (50%) of the aggregate amount of its total capital and surplusand its reserves other than its loss of claim reserves.
(c) Any risk or portion of any risk that has been reinsured asauthorized under IC 27-7, must be deducted in determining thelimitation of risk prescribed in this section.
As added by Acts 1982, P.L.162, SEC.2.
IC 27-7-3-21
Requirement of title search
Sec. 21. A company described in section 3 of this chapter thatissues a title insurance policy shall perform or cause to be performeda title search for the real estate in conjunction with a mortgagesecured by the real estate unless the mortgage meets all of thefollowing requirements:
(1) The principal amount of the mortgage is not more than fiftythousand dollars ($50,000).
(2) The mortgage is subordinate to a prior mortgage where atitle search was conducted and a title policy was issued.
(3) The mortgage is not a reverse mortgage.
As added by P.L.68-2002, SEC.2.