BILL NUMBER: AB 704 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 6, 2015
INTRODUCED BY Assembly Member Cooley
FEBRUARY 25, 2015
An act to amend Section 12340.3 of, to amend, repeal, and add
Section 12389 of, and to add Section 12340.12 to
Sections 12340.12 and 12340.13 to, the Insurance
Code, relating to insurance. escrow.
LEGISLATIVE COUNSEL'S DIGEST
AB 704, as amended, Cooley. Insurance.
Escrow services: authorization to transact business.
Existing law provides for the regulation of title insurers and
underwritten title companies by the Insurance Commissioner. Existing
law, the Escrow Law, defines escrow agents and regulates their
activities. Existing law requires that prior to the
disbursement by an underwritten title company from any escrow account
each underwritten agreement shall contain certain written procedures
reasonably calculated to prevent the misappropriation,
disappearance, or wrongful use of funds. Existing law
defines escrow as a transaction in which one person, for the purpose
of effecting a sale or transfer to another, delivers a thing of value
to a 3rd person to be held by that person until the happening of a
specified event or the performance of a prescribed condition, when it
is then to be delivered.
This bill would define "escrow" as it relates to transactions
involving regarding the sale, transfer,
encumbrance, or lease of real or personal property, as the delivery
of a thing of value to an insurer, underwritten title company,
or controlled escrow company as a transaction in which one
person, for the purpose of effecting a sale or transfer to another,
delivers a thing of value to a 3rd person company,
to be held by that person entity
until the happening of a specified event or the performance of a
prescribed condition, when it is that thing
is then to be delivered. delivered to
another specified person.
Existing law authorizes an underwritten title company to engage in
the escrow business and to act as an escrow agent if the company
satisfies specified requirements, including maintenance of specified
records, and the deposit of a specified sum of money with the
commissioner. Existing law specifies the conditions under which the
commissioner may release or return those deposits to the company.
This bill would expand the requirements for a company to be
authorized to conduct escrow services, to engage in the escrow
business, and to act as an escrow agent. This bill would authorize a
company that is a stock corporation to conduct escrow services
through a business location, as defined, if the company receives
approval of its name from the commissioner, maintains a minimum net
worth, obtains a license to transact its business from the
commissioner, and furnishes audits to the commissioner, as specified.
This bill would require a company, on and after July 1, 2016, as a
condition of engaging in the escrow business or acting as an escrow
agent, to maintain a bond in a specified amount based on its annual
trust fund obligations. This bill would authorize a company to, with
the approval of the commissioner, make a cash deposit or obtain an
irrevocable letter of credit in lieu of that bond. This bill would
specify conditions for the issuance of that bond or letters of credit
or use of that cash deposit. This bill would require the
commissioner to release all escrow-related deposits made with the
commissioner before July 1, 2016, under specified conditions,
including the deposit of the bond, letter of credit, or cash deposit
described above.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 12340.3 of the
Insurance Code is amended to read:
12340.3. "Business of title insurance" includes:
(a) Issuing or proposing to issue any title policy as insurer,
guarantor, or indemnitor;
(b) Transacting or proposing to transact any phase of title
insurance, including solicitation, negotiation preliminary to
execution, or execution of a title policy, insuring and transacting
matters subsequent to the execution of a title policy and arising out
of such policy, excluding reinsurance;
(c) The performance by a title insurer, an underwritten title
company or a controlled escrow company of any service in conjunction
with the issuance or contemplated issuance of a title policy
including but not limited to the handling of any escrow, settlement
or closing in connection therewith; or the doing of or proposing to
do any business, which is in substance the equivalent of any of the
above. policy.
(d) The handling of any escrow, settlement, or closing.
(e) The doing of or proposing to do any business which is in
substance the equivalent of any of the items listed in subdivisions
(a) to (d), inclusive.
(d)
(f) The issuance, by a title insurer, of a letter of
indemnity. Any such letter of indemnity shall be limited to and
issued solely for the purpose of indemnifying the commissioner on
behalf of any member of the public who transacts an escrow with an
underwritten title company, with whom the title insurer has an
underwriting agreement. A title insurer may charge a reasonable fee
in connection with the issuance of any such letter. No rate or form
filing shall be required with respect to any such letter of
indemnity.
(e)
(g) The act of an insurer in furnishing in writing to a
prospective purchaser of the insurer's title policy a statement
which assures, and assumes the liability for, the proper performance
of services necessary to the conduct of a real estate closing
performed by an underwritten title company with whom the insurer
maintains an underwriting agreement. A title insurer may charge a
reasonable fee in connection with the furnishing of any such
statement. No rate or form filing shall be required with respect to
any such statement.
SECTION 1. SEC. 2. Section 12340.12
is added to the Insurance Code, to read:
12340.12. "Escrow" means any transaction in which an
insurer, underwritten title company, or controlled escrow company,
a person, for the purposes of effecting the
sale, transfer, encumbering, or leasing
encumbrance, or lease of real or personal property, regardless
of the location of the real or personal property, delivers
any a written instrument, money, evidence of
title to real or personal property, or other thing of value to
a third person an insurer, underwritten title
company, or controlled escrow company, to be held by that
third person insurer, underwritten title
company, or controlled escrow company until the happening of a
specified event or the performance of a prescribed condition, when it
is then to be delivered by that third person
insurer, underwritten title company, or controlled escrow company
to a grantee, grantor, promisee, promisor, obligee, obligor, or
any agent or employee of any of the latter.
SEC. 3. Section 12340.13 is added to the
Insurance Code , to read:
12340.13. "Business location" means a facility or other place of
business where an underwritten title company or controlled escrow
company engages in the business of receiving an escrow for deposit or
delivery.
SEC. 4. Section 12389 of the Insurance
Code is amended to read:
12389. (a) An underwritten title company as defined in Section
12340.5, which shall be a stock corporation, may engage in the
business of preparing title searches, title reports, title
examinations, or certificates or abstracts of title, upon the basis
of which a title insurer writes title policies, and conducting
escrow services through business locations, as defined in Section
12340.13, in counties in which the underwritten title company is
licensed to transact business, provided that:
(1) Only domestic corporations may be licensed under this section
and no underwritten title company, as defined in Section 12340.5,
shall become licensed under this section, or change the name under
which it is licensed or operates, unless it has first complied with
Section 881.
(2) (A) Depending upon the county or
counties in which the company is licensed to transact business, it
shall maintain required minimum net worth as follows:
Aggregate number of
documents
recorded and documents
filed in the
offices of the county
recorders in the
preceding calendar year in
all counties
where the company is
licensed to transact
business.
Amount of
required
Number of documents minimum net worth
Less than 50,000 .............. $ 75,000
50,000 to 100,000 ............. 120,000
100,000 to 500,000 ............ 200,000
500,000 to 1,000,000 .......... 300,000
1,000,000 or more ............. 400,000
"Net
(B) "Net worth" is defined as the
excess of assets over all liabilities and required reserves. It may
carry as an asset the actual cost of its title plant
plant, provided the value ascribed to that asset
shall not exceed the aggregate value of all other assets.
Where
(C) If a title plant of an
underwritten title company is not being currently maintained, the
asset value of the plant shall not exceed its asset value as
determined in the preceding paragraph as of the date to which that
plant is currently maintained, less one-tenth thereof for each
succeeding year or part of the succeeding year that the plant is not
being currently maintained. For the purposes of this section, a title
plant shall be deemed currently maintained so long as it is used in
the normal conduct of the business of title insurance, and
(A) (i) the owner of the plant continues
regularly to obtain and index title record data to the plant or to a
continuation thereof in a format other than that previously used,
including, but not limited to, computerization of the data, or
(B) (ii) the owner of the plant is a
participant, in an arrangement for joint use of a title plant system
regularly maintained in any format, provided the owner is
contractually entitled to receive a copy of the title record data
contained in the jointly used title plant system during the period of
the owner's participation therein, either periodically or upon
termination of that participation, at a cost not to exceed the actual
cost of duplication of the title record data.
An
(D) An underwritten title company
at all times shall maintain current assets of at least ten thousand
dollars ($10,000) in excess of its current liabilities, as current
assets and liabilities may be defined pursuant to regulations made by
the commissioner. In making the regulations, the commissioner shall
be guided by generally accepted accounting principles followed by
certified public accountants in this state.
(3) (A) An underwritten title company shall
obtain from the commissioner a license to transact its business. The
license shall not be granted until the applicant conforms to the
requirements of this section and all other provisions of this code
specifically applicable to applicant. After issuance the holder shall
continue to comply with the requirements as to its business set
forth in this code, in the applicable rules and regulations of the
commissioner and in the laws of this state.
Any
(B) An underwritten title company
who that possesses, or is required to
possess, a license pursuant to this section shall be
is subject as if an insurer to the provisions of
Article 8 (commencing with Section 820) of Chapter 1 of Part 2 of
Division 1 of this code and shall be is
deemed to be subject to authorization by the Insurance Commissioner
within the meaning of subdivision (e) of Section 25100 of the
Corporations Code.
The
(C) The license may be obtained
by filing an application on a form prescribed by the commissioner
accompanied by a filing fee of three hundred fifty-four dollars
($354). The license when issued shall be for an indefinite term and
shall expire with the termination of the existence of the holder,
subject to the annual renewal fee imposed under Sections 12415 and
12416.
An
(D) An underwritten title company
seeking to extend its license to an additional county shall pay a
two hundred seven dollar
two-hundred-seven-dollar ($207) fee for each additional county,
and shall furnish to the commissioner evidence, at least sufficient
to meet the minimum net worth requirements of paragraph (2), of its
financial ability to expand its business operation to include the
additional county or counties.
(4) (A) An underwritten title company shall furnish an audit to
the commissioner on the forms provided by the commissioner annually,
either on a calendar year basis on or before March 31 or, if approved
in writing by the commissioner in respect to any individual company,
on a fiscal year basis on or before 90 days after the end of the
fiscal year. The time for furnishing any audit required by this
paragraph may be extended, for good cause shown, on written approval
of the commissioner for a period, not to exceed 60 days. Failure to
submit an audit on time, or within the extended time that the
commissioner may grant, shall be grounds for an order by the
commissioner to accept no new business pursuant to subdivision (d).
The audits shall be private, except that a synopsis of the balance
sheet on a form prescribed by the commissioner may be made available
to the public.
(B) The audits shall be made in accordance with generally accepted
auditing standards by an independent certified public accountant or
independent licensed public accountant whose certification or license
is in good standing at the time of the preparation. The fee for
filing the audit shall be three hundred thirteen dollars ($313).
(C) The commissioner may refuse to accept an audit or order a new
audit for any of the following reasons:
(i) Adverse An adverse
result in any proceeding before the California Board of Accountancy
affecting the auditor's license.
(ii) The auditor has an affiliation with the underwritten title
company company, or any of its officers
or directors directors, that would
prevent his or her reports on the company from being reasonably
objective.
(iii) The auditor has suffered conviction of any
a misdemeanor or felony based on his or her
activities as an accountant.
(iv) Judgment A judgment adverse to
the auditor in any civil action finding him or her guilty of fraud,
deceit, or misrepresentation in the practice of his or her
profession.
Any
(D) A company that fails to file
any audit or other report on or before the date it is due shall pay
to the commissioner a penalty fee of one hundred eighteen dollars
($118) and on failure to pay that or any other
another fee or file the audit required by this section shall
forfeit the privilege of accepting new business until the delinquency
is corrected.
(b) An underwritten title company may engage in the escrow
business and act as escrow agent provided that:
(1) It shall maintain The company
maintains a record of all receipts and
disbursements of escrow funds.
(2) It shall deposit (A)
The company deposits seven thousand five hundred dollars
($7,500) for each county in which it transacts business in some form
permitted by Section 12351 with the commissioner who shall
immediately make a special deposit of that amount in the State
Treasury and that deposit shall be subject to Sections 12353, 12356,
12357, and 12358 and, as long as there are no claims against the
deposit, all interest and dividends thereon shall be paid to the
depositor. The deposit shall be for the security and protection of
persons having lawful claims against the depositor growing out of
escrow transactions with it. The deposit shall be maintained until
four years after all escrows handled by the depositor have been
closed.
(A)
(B) The commissioner may release the deposits prior to
the passage of the four-year period upon presentation of evidence
satisfactory to the commissioner of either a statutory merger of the
depositor into a licensee or certificate holder subject to the
jurisdiction of the commissioner, or a valid assumption agreement
under which all liability of the depositor stemming from escrow
transactions handled by it is assumed by a licensee or certificate
holder subject to the jurisdiction of the commissioner.
(B)
(C) With the foregoing exceptions, the deposit shall be
returned to the depositor or lawful successor in interest following
the four-year period, upon presentation of evidence satisfactory to
the commissioner that there are no claims against the deposit
stemming from escrow transactions handled by the depositor. If the
commissioner has evidence of one or more claims against the
depositor, and the depositor is not in conservatorship or
liquidation, the commissioner may interplead the deposit by special
endorsement to a court of competent jurisdiction for distribution on
the basis that claims against the depositor stemming from escrow
transactions handled by it have priority in the distribution over
other claims against the depositor.
(c) The commissioner shall, whenever it appears necessary, examine
the business and affairs of a company licensed under this section.
All of these examinations The examination
shall be at the expense of the company.
(d) At any time that (1)
If the commissioner determines, after notice and hearing,
that a company licensed under this section has willfully failed to
comply with a provision of this section, the commissioner shall make
his or her order prohibiting the company from conducting its business
for a period of not more than one year.
Any
(2) A company violating the
commissioner's order is subject to seizure under Article 14
(commencing with Section 1010) of Chapter 1 of Part 2 of Division 1,
is guilty of a misdemeanor, and may have the license revoked by the
commissioner. Any person aiding and abetting any company in a
violation of the commissioner's order is guilty of a misdemeanor.
The
(e) The purpose of this section
is to maintain the solvency of the companies subject to this section
and to protect the public by preventing fraud and requiring fair
dealing. In order to carry out these purposes, the commissioner may
make reasonable rules and regulations to govern the conduct of its
business of companies subject to this section. The rules and
regulations shall be adopted, amended, or repealed in accordance with
the procedure provided in Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code.
The
(f) The name under which each
underwritten title company is licensed shall at all times be an
approved name. The fee for filing an application for a change of name
shall be one hundred eighteen dollars ($118). Each such company
shall be subject to the provisions of Article 14 (commencing with
Section 1010) and Article 14.5 (commencing with Section 1065.1) of
Chapter 1 of Part 2 of Division 1.
The rules and regulations shall be adopted, amended, or repealed
in accordance with the procedure provided in Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3 of Title 2 of the
Government Code.
(g) This section is repealed as of July 1, 2016.
SEC. 5. Section 12389 is added to the
Insurance Code , to read:
12389. (a) On and after July 1, 2016, an underwritten title
company as defined in Section 12340.5 that is a stock corporation may
engage in the business of preparing title searches, title reports,
title examinations, or certificates or abstracts of title, upon the
basis of which a title insurer writes title policies, and conducting
escrow services through business locations, as defined in Section
12340.13, in counties in which the underwritten title company is
licensed to transact business, provided that:
(1) Only a domestic corporation may be licensed under this section
and no underwritten title company, as defined in Section 12340.5,
may become licensed under this section, or change the name under
which it is licensed or operates, unless it has first complied with
Section 881.
(2) (A) Depending upon the county or counties in which the company
is licensed to transact business, it shall maintain required minimum
net worth as follows:
Aggregate number of
documents
recorded and documents
filed in the
offices of the county
recorders in the
preceding calendar year in
all counties
where the company is
licensed to transact
business.
Amount of
required
Number of documents minimum net worth
Less than 50,000 .............. $ 75,000
50,000 to 100,000 ............. 120,000
100,000 to 500,000 ............ 200,000
500,000 to 1,000,000 .......... 300,000
1,000,000 or more ............. 400,000
(B) "Net worth" for the purposes of this section is defined as the
excess of assets over all liabilities and required reserves. The
company may carry as an asset the actual cost of its title plant,
provided the value ascribed to that asset shall not exceed the
aggregate value of all other assets.
(C) If a title plant of an underwritten title company is not
currently maintained, the asset value of the plant shall not exceed
its asset value as determined in the preceding paragraph as of the
date to which that plant is currently maintained, less one-tenth
thereof for each succeeding year or part of the succeeding year that
the plant is not being currently maintained. For the purposes of this
section, a title plant shall be deemed currently maintained so long
as it is used in the normal conduct of the business of title
insurance, and (i) the owner of the plant continues regularly to
obtain and index title record data to the plant or to a continuation
thereof in a format other than that previously used, including, but
not limited to, computerization of the data, or (ii) the owner of the
plant is a participant, in an arrangement for joint use of a title
plant system regularly maintained in any format, provided the owner
is contractually entitled to receive a copy of the title record data
contained in the jointly used title plant system during the period of
the owner's participation therein, either periodically or upon
termination of that participation, at a cost not to exceed the actual
cost of duplication of the title record data.
(D) An underwritten title company shall at all times maintain
current assets of at least ten thousand dollars ($10,000) in excess
of its current liabilities, as current assets and liabilities may be
defined pursuant to regulations made by the commissioner. In making
the regulations, the commissioner shall be guided by generally
accepted accounting principles followed by certified public
accountants in this state.
(3) (A) An underwritten title company shall obtain from the
commissioner a license to transact its business. The license shall
not be granted until the applicant conforms to the requirements of
this section and all other provisions of this code specifically
applicable to the applicant. After issuance the holder of the license
shall continue to comply with the requirements as to its business
set forth in this code, in the applicable rules and regulations of
the commissioner, and in the laws of this state.
(B) An underwritten title company that possesses, or is required
to possess, a license pursuant to this section shall be subject as if
an insurer to the provisions of Article 8 (commencing with Section
820) of Chapter 1 of Part 2 of Division 1 of this code and is deemed
to be subject to authorization by the Insurance Commissioner within
the meaning of subdivision (e) of Section 25100 of the Corporations
Code.
(C) The license may be obtained by filing an application on a form
prescribed by the commissioner accompanied by a filing fee of three
hundred fifty-four dollars ($354). The license when issued shall be
for an indefinite term and shall expire with the termination of the
existence of the holder, subject to the annual renewal fee imposed
under Sections 12415 and 12416.
(D) An underwritten title company seeking to extend its license to
an additional county shall pay a two-hundred-seven-dollar ($207) fee
for each additional county, and shall furnish to the commissioner
evidence, at least sufficient to meet the minimum net worth
requirements of paragraph (2), of its financial ability to expand its
business operation to include the additional county or counties.
(4) (A) An underwritten title company shall furnish an audit to
the commissioner on the forms provided by the commissioner annually,
either on a calendar year basis on or before March 31 or, if approved
in writing by the commissioner in respect to any individual company,
on a fiscal year basis on or before 90 days after the end of the
fiscal year. The time for furnishing any audit required by this
paragraph may be extended, for good cause shown, on written approval
of the commissioner for a period, not to exceed 60 days. Failure to
submit an audit on time, or within the extended time that the
commissioner may grant, is grounds for an order by the commissioner
to accept no new business pursuant to subdivision (d). The audits
shall be private, except that a synopsis of the balance sheet on a
form prescribed by the commissioner may be made available to the
public.
(B) The audits shall be made in accordance with generally accepted
auditing standards by an independent certified public accountant or
independent licensed public accountant whose certification or license
is in good standing at the time of the preparation. The fee for
filing the audit shall be three hundred thirteen dollars ($313).
(C) The commissioner may refuse to accept an audit or order a new
audit for any of the following reasons:
(i) An adverse result in any proceeding before the California
Board of Accountancy affecting the auditor's license.
(ii) The auditor has an affiliation with the underwritten title
company or any of its officers or directors that would prevent his or
her reports on the company from being reasonably objective.
(iii) The auditor has been convicted of a misdemeanor or felony
based on his or her activities as an accountant.
(iv) A judgment adverse to the auditor in any civil action finding
him or her guilty of fraud, deceit, or misrepresentation in the
practice of his or her profession.
(D) A company that fails to file an audit or other report on or
before the date it is due shall pay to the commissioner a penalty fee
of one hundred eighteen dollars ($118) and on failure to pay that or
another fee or file the audit required by this section shall forfeit
the privilege of accepting new business until the delinquency is
corrected.
(b) An underwritten title company may engage in the escrow
business and act as escrow agent, provided that:
(1) It maintains a record of all receipts and disbursements of
escrow funds.
(2) (A) Except as provided in subdivision (c), the company shall
maintain a bond satisfactory to the commissioner in the amount of one
of the following:
(i) Twenty-five thousand dollars ($25,000) if 150 percent of the
previous year's average annual trust fund obligations, as calculated
in subparagraph (D), does not exceed two hundred fifty thousand
dollars ($250,000).
(ii) Thirty-five thousand dollars ($35,000) if 150 percent of the
previous year's average annual trust fund obligations, as calculated
in subparagraph (D), exceeds two hundred fifty thousand dollars
($250,000), but does not exceed five hundred thousand dollars
($500,000).
(iii) Fifty thousand dollars ($50,000) if 150 percent of the
previous year's average annual trust fund obligations, as calculated
in subparagraph (D), exceeds five hundred thousand dollars
($500,000).
(B) A deposit given instead of the bond required by this section
shall not be deemed an asset of the applicant or licensee.
(C) An applicant or licensee may make a cash deposit or obtain an
irrevocable letter of credit approved by the commissioner in lieu of
the bond. The bond, cash deposit, or letter of credit, as applicable,
shall run to the state for the use of the state, and for any person
who has cause against the obligor of the bond or the applicant of a
letter of credit, under the provision of this division.
(D) Calculations of trust fund obligations shall be
based on the previous calendar year's average of the monthly trust
fund liabilities or credit balances occurring on the last day of each
calendar month.
(3) (A) The issuance of a bond or letter of credit of an
underwritten title company, and the use of a cash deposit of an
underwritten title company, shall be subject to the following
conditions:
(i) The licensee shall faithfully conform to and abide by the
provisions of this division and all of the rules made by the
commissioner under this division.
(ii) The licensee will honestly and faithfully apply all funds
received, will faithfully and honestly perform all obligations and
undertakings under this division, and will pay to the state or to the
person under the provisions of this division, including the costs in
any conservatorship, or liquidation, whether by the commissioner or
by a receiver.
(B) In determining the liability of the principal and the sureties
under the bond, the applicant and issuing bank of a letter of
credit, or the use of a cash deposit, escrow money held in trust and
any money recovered to restore any deficiency in the trust shall not
be considered as an asset of the liquidation subject to the
assessment for the cost of the liquidation.
(C) The surety under the bond, or the issuing bank of a letter of
credit, may pay the full amount of its liability thereunder to the
commissioner or a conservator appointed by the commissioner in lieu
of payment to the state or persons having a cause of action against
the principal of a bond or applicant under a letter of credit, and
upon such payment the surety under a bond, or the issuing bank under
a letter of credit, is completely released from further liability
under the bond or letter of credit, as applicable.
(4) On and after July 1, 2016, the commissioner shall release all
individual escrow-related deposits previously made pursuant to
paragraph (2) of subdivision (b) of Section 12389, as amended by
Section 4 of the act that added this section, if any of the following
occurs:
(A) The underwritten title company has deposited with the
commissioner bond coverage acceptable to the commissioner, an
approved irrevocable letter of credit or a cash deposit in lieu of
the letter of credit as set forth in subdivision (b).
(B) Presentation of evidence satisfactory to the commissioner of
either a statutory merger of the underwritten title company depositor
into a licensee or certificate holder subject to the jurisdiction of
the commissioner, or a valid assumption agreement under which all
liability of the depositor stemming from escrow transactions handled
by it is assumed by a licensee or certificate holder subject to the
jurisdiction of the commissioner.
(5) With the foregoing exceptions, the deposit shall be returned
to the depositor, its duly appointed trustee in bankruptcy or lawful
successor in interest following the four-year period specified in
paragraph (2) of subdivision (b), as that paragraph read on June 30,
2016, unless the commissioner has received claims against the deposit
stemming from escrow transactions handled by the depositor. If the
commissioner has received one or more claims against the depositor,
and the depositor is not in conservatorship or liquidation, the
commissioner may interplead the deposit by special endorsement to a
court of competent jurisdiction for distribution on the basis that
claims against the depositor stemming from escrow transactions
handled by the depositor have priority in the distribution over other
claims against the depositor.
(c) A new applicant for an underwritten title company license
shall deposit with the commissioner a bond satisfactory to the
commissioner in the amount of at least twenty-five thousand dollars
($25,000) or a cash deposit in said amount. After 12 months of
operation as a new underwritten title company, the applicant shall
comply with the requirements set forth in paragraph (3) of
subdivision (b).
(d) The commissioner shall, whenever it appears necessary, examine
the business and affairs of a company licensed under this section.
The examination shall be at the expense of the company.
(e) (1) At any time that the commissioner determines, after notice
and hearing, that a company licensed under this section has
willfully failed to comply with a provision of this section, the
commissioner shall make his or her order prohibiting the company from
conducting its business for a period of not more than one year.
(2) A company that violates the commissioner's order is subject to
seizure under Article 14 (commencing with Section 1010) of Chapter 1
of Part 2 of Division 1, is guilty of a misdemeanor, and may have
its license revoked by the commissioner. Any person aiding and
abetting any company in a violation of the commissioner's order is
guilty of a misdemeanor.
(f) The purpose of this section is to maintain the solvency of the
companies subject to this section and to protect the public by
preventing fraud and requiring fair dealing. In order to carry out
these purposes, the commissioner may make reasonable rules and
regulations to govern the conduct of its business of companies
subject to this section. The rules and regulations shall be adopted,
amended, or repealed in accordance with the procedures provided in
Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3
of Title 2 of the Government Code.
(g) The name under which each underwritten title company is
licensed shall at all times be an approved name. The fee for filing
an application for a change of name shall be one hundred eighteen
dollars ($118). Each company shall be subject to the provisions of
Article 14 (commencing with Section 1010) and Article 14.5
(commencing with Section 1065.1) of Chapter 1 of Part 2 of Division
1.
(h) This section does not prohibit an underwritten title company
from engaging in escrow, settlement, or closing activities on
properties located outside this state if those activities do not
violate the laws of that other state or country.
(i) This section is operative on July 1, 2016.