File No. 34258
This rule was published in the December 15, 2010, issue (Vol. 2010, No. 24) of the Utah State Bulletin.
Insurance, Administration
Rule R590-99
Delay or Failure to Record Documents and the Insuring of Properties with the False Appearance of Unmarketability as Unfair Title Insurance Practices
Notice of Proposed Rule
(Amendment)
DAR File No.: 34258
Filed: 11/29/2010 03:04:56 PM
RULE ANALYSIS
Purpose of the rule or reason for the change:
The number of the rule and authority code reference are being changed to indicate that it is a now Title and Escrow Commission rule. Also, an Enforcement Date section has been added to the rule.
Summary of the rule or change:
The rule changes include: changing the rule number to R592-14; replacing "commissioner" to "Title and Escrow Commission"; the general code reference in the Authority Section has been changed to the Title and Escrow Commission Act in Part 4 of Chapter 2 of Title 31A; the Purpose Section has been expanded to include the Scope of the rule noting that all title insurers and producers are affected by it; the background of title insurance provided in the Purpose Section is being eliminated; and an "Enforcement Date" section is being added to the rule.
State statutory or constitutional authorization for this rule:
- Section 31A-2-404
Anticipated cost or savings to:
the state budget:
The changes to this rule will have no fiscal impact on the department or the state's budget since the changes deal with ownership of the rule, elimination of background information and the addition of an "Enforcement Date" section.
local governments:
This rule will have no fiscal impact on local governments since it deals solely with the relationship between the department and its title licensees.
small businesses:
There are no changes that will fiscally impact any of the department's licensees. Changes in the rule are a result of the change in ownership of the rule and an Enforcement Date section only.
persons other than small businesses, businesses, or local governmental entities:
There are no changes that will fiscally impact any of the department's licensees. Changes in the rule are a result of moving the rule from the jurisdiction of the department to that of the Title and Escrow Commission. Since there is no impact on the title industry there will be no fiscal impact on insurance consumers.
Compliance costs for affected persons:
There are no changes that will fiscally impact any of the department's licensees. Changes in the rule are a result of moving the rule from the jurisdiction of the department to that of the Title and Escrow Commission. Since there is no impact on the title industry there will be no fiscal impact on insurance consumers.
Comments by the department head on the fiscal impact the rule may have on businesses:
The changes to this rule will have no fiscal impact on the title industry or its consumers.
Neal T. Gooch, Commissioner
The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:
InsuranceAdministration
450 N MAIN ST
SALT LAKE CITY, UT 84114-1201
Direct questions regarding this rule to:
- Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at [email protected]
Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:
01/14/2011
This rule may become effective on:
01/21/2011
Authorized by:
Jilene Whitby, Information Specialist
RULE TEXT
R59[0]2
. Insurance, [Administration]Title and Escrow Commission
.
[R590-99]R592-14
. Delay or Failure to Record Documents and the Insuring of
Properties with the False Appearance of Unmarketability as Unfair
Title Insurance Practices.
[R590-99]R592-14-1. Authority.
This rule is promulgated
by the Title and Escrow Commission pursuant to [the general authority vested in the commissioner
by] Section 31A-2-
404(2).[201(2)(3) to make reasonable rules necessary for, or as an
aid to, the effectuation of any provision of the Utah Insurance
Code, and pursuant to the specific authority of Section 31A-23a-402
allowing the commissioner to prescribe a classification of material
inducements constituting unlawful trade practices, and to define
unfair or deceptive acts or practices prohibited in the business of
insurance.]
[R590-99]R592-14-2. Purpose and Scope.
[Title insurance is designed to provide indemnification
against loss, including a loss resulting from a determination of
unmarketability of the insured's interest in real property. The
burden of proving any loss, together with the measure of damages,
is the obligation of the insured. Normally, a claim of
unmarketability of title or a claim involving a "defect, lien
or encumbrance" not excluded from coverage will arise in
connection with a proposed sale or loan requiring a review of the
insured property as to current marketability. The insured owner, as
a potential seller or borrower, may then be placed in the position
of being forced or coerced into dealing only with his prior insurer
or agent purely as the result of time constraints in meeting the
requirements of his transaction, and as the only practical
alternative to processing his claim and proving his damage as an
insured under his existing coverage. The commissioner is advised
and is aware that, in some instances, this circumstance has
resulted from the](1) The purpose of this rule is to prohibit intentional
delay, neglect or refusal by insurers, through their agents, to
record or deliver for recording documentation necessary to support
policy insuring provisions, resulting in the false appearance of
unmarketability, in the record only, of property which would
otherwise be marketable. This practice is deemed to be an unfair or
deceptive act or practice detrimental to free competition in the
business of insurance and injurious to the public.
(2) This rule applies to all title insurers and producers.
[R590-99]R592-14-3. Definitions.
For the purpose of this rule, the [commissioner]Commission adopts the definitions as particularly set forth
in Section 31A-1-301 and in addition the following:
A. "Document" means any instrument in writing relating to real property described in any title insurance policy, contract or commitment, and reasonably required for the support of the insuring provisions.
B. "Record" means to cause to be delivered to the county recorder, or other public official as may be appropriate, any document in the possession or control of any title insurance company or title insurance agent for which a request to record has been made by an insured party.
[R590-99]R592-14-4. Definition and Classification of Unfair or Deceptive
Practices and Material Inducements.
A. Any knowing conduct by a title insurance company or title insurance agent which results in the failure, neglect, refusal to record, or to obtain for recording, any document which, unless recorded, results in the apparent unmarketability of title or a title which may not be insurable by another insurer, is defined as an unfair or deceptive act or practice as prohibited by Section 31A-23a-402.
B. The issuance or agreement to issue title insurance, or the affirmation of current marketability of title, when the possible recording of documents of title has not occurred, and the record does not manifest a title which would be insurable according to generally accepted title insurance standards, is classified and proscribed as an advantage and material inducement to obtaining title insurance business as prohibited under Section 31A-23a-402(2)(c)(i) (D).
R592-14-5. Enforcement Date.
The commissioner will begin enforcing this rule upon the rule's effective date.
[R590-99-5]R592-14-6 . Severability.
If any provision or clause of this rule or the application of it to any person or circumstance is for any reason held to be invalid, the remainder of the rule and the application of this provision to other persons or circumstances may not be affected by it.
KEY: insurance law
Date of Enactment or Last Substantive Amendment: [1994]2011
Notice of Continuation: January 27, 2007
Authorizing, and Implemented or Interpreted Law: 31A-2-[201]404
;[ 31A-23-302]
Additional Information
The Portable Document Format (PDF) version of the Bulletin is the official version. The PDF version of this issue is available at https://rules.utah.gov/publicat/bull-pdf/2010/b20101215.pdf. The HTML edition of the Bulletin is a convenience copy. Any discrepancy between the PDF version and HTML version is resolved in favor of the PDF version.
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For questions regarding the content or application of this rule, please contact Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at [email protected].