PART 6. INSURANCE COVERING LAND [12340. - 12661.]

Part 6 enacted by Stats. 1935, Ch. 145.

§§ 12340–12661 · 152 sections

CHAPTER 1. Title Insurance §§ 12340–12418.4 · 127 sections
1. ARTICLE 1. Definitions §§ 12340–12342 · 14 sections
  - § 12340 The definitions set forth in this article shall govern the construction of the terms used in this chapter, but shall not affect any other provisions of this…
  - § 12340.1 “Title insurance” means insuring, guaranteeing or indemnifying owners of real or personal property or the holders of liens or encumbrances thereon or others…
  - § 12340.2 “Title policy” means any written instrument or contract by means of which title insurance liability is assumed.
  - § 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…
  - § 12340.4 “Title insurer” means any company issuing title policies as insurer, guarantor or indemnitor. “Domestic title insurer” means any title insurer organized under…
  - § 12340.5 “Underwritten title company” means any corporation engaged in the business of preparing title searches, title examinations, title reports, certificates or…
  - § 12340.6 (a) “Controlled escrow company” means any person, other than a title insurer or underwritten title company, whose principal business is the handling of escrows…
  - § 12340.7 Except as provided in Section 12401.8, and excluding miscellaneous charges, “rate” or “rates” means the charge or charges, whether denominated premium or…
  - § 12340.8 “Advisory organization” means every person or entity (other than a title insurer, underwritten title company, or controlled escrow company) which recommends or…
  - § 12340.9 “Willful” or “willfully” in relation to an act or omission which constitutes a violation of this chapter means with actual knowledge or belief that such act or…
  - § 12340.10 “Abstract of title” is a written representation, provided pursuant to a contract, whether written or oral, intended to be relied upon by the person who has…
  - § 12340.11 “Preliminary report”, “commitment”, or “binder” are reports furnished in connection with an application for title insurance and are offers to issue a title…
  - § 12340.13 “Business location” means a facility or other place of business in this state where an underwritten title company or controlled escrow company engages in the…
  - § 12342 For purposes of this chapter, “holders of liens or encumbrances” includes, but is not limited to, the institutional third parties described in Sections 1452…
2. ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements §§ 12350–12360 · 11 sections
  - § 12350 Every title insurer, before issuing any policy, shall deposit $100,000 with the Insurance Commissioner or other designated official of its home State as a…
  - § 12351 Any such deposit may be made either in lawful money of the United States or in any of the securities, other than collateral trust bonds or notes, authorized…
  - § 12352 If the deposit is made in this state, it shall first be approved by the commissioner who shall make a special deposit thereof in the State Treasury, for the…
  - § 12353 Except as provided in section 12355, assets in such deposits in this State may, with the approval of the commissioner, be withdrawn or exchanged from time to…
  - § 12354 As long as the depositing insurer continues solvent, it shall receive the interest and dividends on any assets in the deposit.
  - § 12355 Except on withdrawal of the insurer from this State, or substitution pursuant to section 12353, assets in the deposit in this State shall be subject to final…
  - § 12356 When any part of the assets to be deposited in this State consists of mortgage-secured notes or bonds, or loans upon real property secured by mortgage, such…
  - § 12357 Unless the mortgage is covered by mortgage insurance, the value of the property covered by each such mortgage constituting all or part of such deposit in this…
  - § 12358 The reasonable cost of examining such evidence of title and of making such appraisement, shall be paid by the title insurer making the deposit.
  - § 12359 A title insurer shall not transact any insurance in this state unless it has paid-in capital represented by shares of stock of at least five hundred thousand…
  - § 12360 An insurer which anywhere in the United States transacts any class of insurance other than title insurance is not eligible for the issuance of a certificate of…
3. ARTICLE 3. Title Insurers: Finances and Investments §§ 12370–12377 · 9 sections
  - § 12370 Every title insurer shall annually set apart a sum equal to 10 percent of its premiums collected during the year. Such sums shall be allowed to accumulate…
  - § 12371 The title insurance surplus fund shall be maintained as a further security to holders and beneficiaries of the title policies issued by the insurer. If all or…
  - § 12372 Any such domestic insurer, after having its required capital paid in and depositing its required guarantee fund with the State Treasurer, may invest its funds…
  - § 12372.5 Notwithstanding the provisions of Section 12372, where a title plant is not being currently maintained, the asset value of such plant shall not exceed its…
  - § 12373 A title insurer shall not make any dividends except from profits remaining on hand after retaining unimpaired assets aggregating in value an amount equal to…
  - § 12374 Except as otherwise authorized by subdivision (g) of Section 1105, a title insurer shall not directly or indirectly make a loan from its assets to any of its…
  - § 12375 Whenever a title insurer, upon withdrawing from insurance business in this State, desires to reinsure its policies with a title insurer whose “title insurance…
  - § 12376 (a) If an underwritten title company is placed into bankruptcy, receivership, or conservation by the commissioner, each title insurer operating under an…
  - § 12377 (a) All escrow funds received by an underwritten title company that are subject to Section 12413.5 shall not be considered part of the estate of the…
4. ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense §§ 12380–12388 · 14 sections
  - § 12380 Unless the provision or context otherwise requires, the following definitions govern the construction of this article: (a) “Total charges for policies of title…
  - § 12381 Every domestic title insurer shall, in addition to other reserves, establish and maintain a reserve to be known as the “unearned premium reserve” for title…
  - § 12382 The unearned premium reserve of every title insurer shall consist of: (a) Such amount as would have been required to be set aside in said reserve on all…
  - § 12382.2 (a) Out of total charges for policies of title insurance, a title insurer shall add to and set aside in its unearned premium reserve commencing as of January…
  - § 12382.3 The aggregate amount set aside in the unearned premium reserve shall be separately recorded and reserved in respect to such policies and contracts issued in…
  - § 12382.4 For the purpose of determining the amounts of the unearned premium reserve that may be withdrawn pursuant to Section 12382.5 and the interest of the…
  - § 12382.5 (a) The aggregate of the amounts set aside in unearned premium reserve in any calendar year pursuant to subdivision (a) of Section 12382.2 shall be released…
  - § 12382.6 If substantially the entire outstanding liability under all policies and contracts of title insurance or reinsurance of any ceding company shall be reinsured,…
  - § 12383 All amounts set aside in the unearned premium reserve of a title insurer shall be held either as cash on hand or shall be deposited or invested in those…
  - § 12384 If the aggregate amount set aside by a title insurer in its unearned premium reserve should at any time be less than the amount required to be maintained in…
  - § 12385 If a title insurer shall at any time become insolvent, be in the process of liquidation or dissolution or be in the possession of the commissioner, all amounts…
  - § 12386 In the event that reinsurance is not obtained, as authorized by Section 12385, the unearned premium reserve and assets constituting the guarantee fund of the…
  - § 12387 Where a title insurer organized or incorporated under the laws of any state other than California does business in California, if the laws of the state of its…
  - § 12388 Every title insurer shall, in addition to other reserves establish and maintain a reserve to be known as the “reserve for unpaid losses and loss adjustment…
5. ARTICLE 3.7. Underwritten Title Companies §§ 12389–12389.7 · 8 sections
  - § 12389 (a) On and after July 1, 2016, an underwritten title company as defined in Section 12340.5 that is a stock corporation may, subject to subdivision (b), (1)…
  - § 12389.1 Before granting a license or a reissued license to act as an underwritten title company to any applicant, the commissioner shall consider the qualifications of…
  - § 12389.2 After the issuance or reissuance of a license to act as an underwritten title company, the holder shall continue to comply with the requirements as to its…
  - § 12389.3 When there exists a restriction in a stock certificate requiring the consent of the department prior to the transfer of the stock, the request for consent to…
  - § 12389.4 An underwritten title company shall furnish a quarterly financial statement to the commissioner on forms prescribed by the commissioner on or before 30 days…
  - § 12389.5 Every person engaged in the business of preparing title searches, title examinations, title reports, and certificates of abstracts of title, upon which a title…
  - § 12389.6 (a) Prior to the disbursement by an underwritten title company from any escrow account under Section 12413.1, each underwriting agreement between the…
  - § 12389.7 (a) Sections 1070, 1070.5, 1070.6, 1071.5, 1072, and 1076 shall be applicable to underwritten title companies. (b) The following terms from Sections 1070,…
6. ARTICLE 4. General Powers §§ 12390–12394 · 3 sections
  - § 12390 Every domestic title insurer may issue title policies and may also insure: (a) The identity, due execution, and validity of any note or bond secured by…
  - § 12391 Such insurer also may: (a) Act as registrar or transfer agent of this State, or of any political subdivision or district therein, or of any private or public…
  - § 12394 A title insurer, as to its title insurance department, shall be subject to and shall comply with all the requirements of the insurance laws and the rules and…
7. ARTICLE 4.5. Business Plans §§ 12396–12399 · 5 sections
  - § 12396 (a) For purposes of this article, “controlled business source” means an affiliate, as defined in subdivision (a) of Section 1215, of any title insurer,…
  - § 12397 Any applicant for a license shall indicate the applicant’s intent to actively compete in the marketplace for title insurance in each county in which the…
  - § 12397.5 (a) Each licensee shall make submissions as are required by the Department of Insurance to enable the department to determine the nature and extent of the…
  - § 12398 The failure of an applicant or licensee to comply with any of the requirements of this article shall be grounds for the denial of an application for a license,…
  - § 12399 Nothing in this article shall limit or preclude the consideration or approval of an application for a license, except as expressly provided in this article.
8. ARTICLE 5. Exemptions §§ 12400–12400.5 · 3 sections
  - § 12400 The provisions of subdivision (f) of Section 381, and the provisions of Sections 382, 383, 383.5, 386, 481, 750, 751, 752, 755, 755.5, 756, 757, 7
  - § 12400.1 Article 5.6 (commencing with Section 1875.20) of Chapter 12 of Part 2 of Division 1 does not apply to title insurers.
  - § 12400.5 A title insurance company or underwritten title company engaged in the business of title insurance, as defined in Section 12340.3, shall not be deemed to have…
9. ARTICLE 5.5. Rate Filing and Regulation §§ 12401–12401.10 · 12 sections
  - § 12401 The purpose of this article is to promote the public welfare by regulating rates for the business of title insurance as herein provided to the end that they…
  - § 12401.1 Every title insurer, underwritten title company, and controlled escrow company shall file with the commissioner its schedules of rates, all regularly issued…
  - § 12401.2 Every title insurer, underwritten title company and controlled escrow company shall establish basic classifications of coverages and services to be used as the…
  - § 12401.3 The following standards shall apply to the making and use of rates pertaining to all the business of title insurance to which the provisions of this article…
  - § 12401.4 In order to further uniform administration of rate regulatory laws, the commissioner and every person or entity in the business of title insurance and every…
  - § 12401.5 As a further aid to uniform administration of rate regulatory laws of this state, the commissioner may prescribe by reasonable rules and regulations: (a) For…
  - § 12401.6 Nothing in this article shall be construed to prohibit concert of action between entities under the same general management and control.
  - § 12401.7 No title insurer, underwritten title company or controlled escrow company shall use any rate in the business of title insurance prior to its effective date nor…
  - § 12401.71 (a) Notwithstanding Sections 12401.1 and 12401.7, a title insurer, underwritten title company, or controlled escrow company may use a new rate prior to 30 days…
  - § 12401.8 Charges in excess of those set forth in a rate filing which has become effective may be made when such filing includes a statement that such charges may be…
  - § 12401.9 The schedules of rates which are required to be filed with the commissioner under the provisions of Section 12401.1 shall be printed or typed in type not…
  - § 12401.10 Nothing in this article shall require the filing of rates by title insurers for reinsurance contracts or agreements or policies of excess coinsurance.
10. ARTICLE 5.7. Advisory Organizations §§ 12402–12402.2 · 3 sections
  - § 12402 No advisory organization shall conduct its operations in this state without first filing with the commissioner: (a) a copy of its constitution, articles of…
  - § 12402.1 Every advisory organization shall adopt bylaws or rules and regulations which will: (a) Permit any person or entity in the business of title insurance in this…
  - § 12402.2 No bylaw or rule or regulation required by Section 12402.1 shall be effective until filed with the commissioner.
11. ARTICLE 6. Rebates and Commissions §§ 12404–12413.5 · 18 sections
  - § 12404 (a) It is unlawful for any title insurer, underwritten title company or controlled escrow company to pay, directly or indirectly, any commission, compensation,…
  - § 12404.1 The furnishing of a preliminary report by any title insurer, controlled escrow company or underwritten title company, without charge to any person, shall…
  - § 12404.5 As used in this section “personal or controlled insurance” means a policy of title insurance, or insurance as to the identity, due execution and validity of…
  - § 12405 No title insurer, no controlled escrow company, and no underwritten title company shall make any rebate of any portion of the fee or charge shown by the…
  - § 12405.7 In addition to other acts prohibited by this article, no controlled escrow company or title insurer or other person engaged in the business of selling or…
  - § 12406 No title insurer shall issue any title policy in any transaction in connection with which it or any person which is a controlled escrow company or underwritten…
  - § 12406.5 (a) The commissioner shall develop, publish, and disseminate a brochure for consumers who are required to buy title insurance as part of a residential real…
  - § 12407 The commissioner, if he has reason to believe that any controlled escrow company or any underwritten title company has violated or is violating any of the…
  - § 12408 Every title insurer shall include in its annual statement furnished the commissioner pursuant to Article 10 (commencing with Section 900), Chapter 1, Part 2,…
  - § 12408.1 Whenever a title insurer terminates its underwriting agreement with any underwritten title company, it shall at the same time give notice of the termination to…
  - § 12408.5 (a) Notwithstanding any other provision of this article no title insurer, no controlled escrow company, and no underwritten title company shall pay any…
  - § 12409 (a) Every title insurer, controlled escrow company, and underwritten title company which pays any commission or which makes any unlawful rebate in violation of…
  - § 12410 In enforcing any of the provisions of this article, the commissioner shall be entitled to the remedies provided for in Section 12928.6 of this code.
  - § 12411 The commissioner may after a hearing suspend or revoke the certificate of authority of any title insurer or the license of any underwritten title company…
  - § 12412 Nothing in this article prohibits the division of fees or charges, for work and services actually performed, between title insurers or between title insurers…
  - § 12413.1 No title insurance company, controlled escrow company, or underwritten title company shall disburse funds from an escrow account until the day established by…
  - § 12413.2 Any item or draft received by a title insurance company, controlled escrow company, or underwritten title company in connection with any escrow shall be…
  - § 12413.5 All funds received in connection with any escrow conducted by a title insurance company, controlled escrow company, or underwritten title company shall be…
12. ARTICLE 6.7. Hearings, Procedure, and Judicial Review §§ 12414.13–12414.19 · 7 sections
  - § 12414.13 Any person aggrieved by any rate charged, rating plan or rating system followed or adopted by a title insurer, underwritten title company, or controlled escrow…
  - § 12414.14 If after examination of a title insurer, an underwritten title company, or a controlled escrow company, or upon the basis of other information, or upon…
  - § 12414.15 If the commissioner has good cause to believe such noncompliance to be willful, or if within the period prescribed by the commissioner in the notice required…
  - § 12414.16 If after a hearing pursuant to Section 12414.15 the commissioner finds: (a) That any rate, rating plan or rating system violates the provisions of Article 5.5…
  - § 12414.17 In addition to other penalties provided in this code, the commissioner may suspend or revoke, in whole or in part, the authority of any person or entity to…
  - § 12414.18 Except as otherwise provided in this chapter, all proceedings in connection with the denial, suspension, or revocation of a license or certificate of authority…
  - § 12414.19 Any finding, determination, rule, ruling, or order made by the commissioner under Article 5.5 (commencing with Section 12401), Article 5.7 (commencing with…
13. ARTICLE 6.9. Examinations, Penalties and Miscellaneous §§ 12414.20–12414.31 · 12 sections
  - § 12414.20 The commissioner may, as often as may be reasonable and necessary, make or cause to be made an examination of any advisory organization for the business of…
  - § 12414.21 The commissioner may, pursuant to reasonable rules and regulations which he shall prescribe, make or cause to be made an examination of every title insurer,…
  - § 12414.22 The officers, managers, agents, and employees of any advisory organization, title insurer, underwritten title company, or controlled escrow company may be…
  - § 12414.23 The reasonable cost of any examination authorized by this article shall be paid by the advisory organization, title insurer, underwritten title company, or…
  - § 12414.24 No person, title insurer, underwritten title company, controlled escrow company, or advisory organization shall willfully withhold information from, or…
  - § 12414.25 (a) Any person, title insurer, underwritten title company, or controlled escrow company who fails to comply with a final order of the commissioner under this…
  - § 12414.26 No act done, action taken, or agreement made pursuant to the authority conferred by Article 5.5 (commencing with Section 12401) or Article 5.7 (commencing with…
  - § 12414.27 Commencing 120 days following January 1, 1974, no title insurer, underwritten title company or controlled escrow company shall charge for any title policy or…
  - § 12414.28 All title policies issued by title insurers shall be subscribed by the president or a vice president and by the secretary or an assistant secretary of the…
  - § 12414.29 The administration and enforcement of Article 5.5 (commencing with Section 12401) and Article 5.7 (commencing with Section 12402) of this chapter shall be…
  - § 12414.30 (a) When constituting an offer to issue an owner’s policy of title insurance, a preliminary report shall incorporate the following statement, in bold print on…
  - § 12414.31 (a) (1) Whenever the commissioner takes any formal enforcement or disciplinary action directly against an employee of a title insurer, underwritten title…
14. ARTICLE 7. Annual Renewal Fees §§ 12415–12417 · 3 sections
  - § 12415 It is the intent of the Legislature that certificated title insurers and licensed underwritten title companies, as defined in Section 12340.5 shall pay to the…
  - § 12416 Each certificated title insurer possessing a certificate of authority of indefinite term pursuant to Section 701 shall owe and pay an annual renewal fee of…
  - § 12417 The annual renewal fee provided by this article is not a tax but a charge for services to be rendered.
15. ARTICLE 8. Title Insurance Representatives §§ 12418–12418.4 · 5 sections
  - § 12418 (a) No person shall be employed as a title marketing representative in this state unless the person holds a valid “certificate of registration” as a title…
  - § 12418.1 (a) A certificate of registration as a title marketing representative shall be applied for and renewed by filing with the commissioner a written application.…
  - § 12418.2 (a) An applicant or holder of a certificate of registration as a title marketing representative is not required to pass a qualifying examination, and is exempt…
  - § 12418.3 (a) Each certificate of registration issued under this article shall be for a three-year period beginning on the date the certificate is issued. (b) Not less…
  - § 12418.4 (a) Sections 1667, 1668, 1669, 1670, 1729, 1729.2, 1738, 1738.5, 1742, 1743, and Article 6 (commencing with Section 12404), shal
CHAPTER 2A. Mortgage Guaranty Insurance §§ 12640.01–12640.20 · 23 sections
1. ARTICLE 1. Definitions §§ 12640.01–12640.02 · 2 sections
  - § 12640.01 This chapter may be cited as the Mortgage Guaranty Insurance Act.
  - § 12640.02 The definitions set forth in this article shall govern the construction of the terms used in this chapter but shall not affect any other provisions of this…
2. ARTICLE 2. Capital, Surplus and Contingency Reserve Requirements §§ 12640.03–12640.06 · 4 sections
  - § 12640.03 An insurer shall not transact the business of mortgage guaranty insurance unless it has paid-in capital of at least one million dollars ($1,000,000) and…
  - § 12640.04 (a) In addition to the paid-in capital and surplus provided in Section 12640.03, each mortgage guaranty insurer shall establish a contingency reserve after…
  - § 12640.05 (a) A mortgage guaranty insurer shall maintain a policyholders surplus in an amount not less than the amount required by this section. The policyholders…
  - § 12640.06 A mortgage guaranty insurer shall not declare any dividends except from undivided profits remaining on hand over and above the aggregate of its paid-in…
3. ARTICLE 4. Limitations and Restrictions for Transacting Business §§ 12640.07–12640.11 · 7 sections
  - § 12640.07 (a) Mortgage guaranty insurance may be transacted in this state only by a stock or mutual casualty insurer holding a certificate of authority for the…
  - § 12640.08 A mortgage guaranty insurer shall not insure loans secured by properties in a single housing tract or a contiguous tract in excess of ten (10) percent of the…
  - § 12640.09 (a) A mortgage guaranty insurer shall limit its coverage for the class of insurance defined in paragraph (3) of subdivision (a) of Section 12640.02 to no more…
  - § 12640.091 (a) In order to qualify as a segregated trust under subdivision (d) of Section 12640.09, a trust shall meet all of the following requirements: (1) Be…
  - § 12640.095 A mortgage guaranty insurer transacting the class of insurance defined in paragraph (2) of subdivision (a) of Section 12640.02 may reinsure with either the…
  - § 12640.10 (a) An insurer that anywhere transacts any class of insurance other than mortgage guaranty insurance defined in paragraphs (1), (3), and (4) of subdivision (a)…
  - § 12640.11 (a) Nothing in this chapter (commencing with Section 12640.01) shall be construed as limiting the right of any mortgage guaranty insurer to impose reasonable…
4. ARTICLE 5. Rebates and Commissions §§ 12640.12–12640.15 · 5 sections
  - § 12640.12 Every mortgage guaranty insurer shall adopt, print and make available a schedule of premium charges for mortgage guaranty insurance policies. The schedule…
  - § 12640.13 (a) No mortgage guaranty insurer shall pay to any person who is acting as agent, representative, attorney or employee of the owner, mortgagee of the…
  - § 12640.14 No mortgage guaranty insurer shall make any rebate of any portion of the premium charge shown by the schedule required by Section 12640.12. No mortgage…
  - § 12640.145 No mortgage guaranty insurer shall pay any compensation to any person for transacting insurance for or with it based in whole or in part upon a commission…
  - § 12640.15 The commissioner may after a hearing suspend or revoke the certificate of authority of any mortgage guaranty insurer which, after 10 days written notice from…
5. ARTICLE 6. Financial Statements § 12640.16 · 1 section
  - § 12640.16 (a) The provisions of Article 10 (commencing with Section 900), Chapter 1, Part 2, Division 1, relating to financial statements, shall apply to mortgage…
6. ARTICLE 7. Applicability of Other Laws § 12640.17 · 1 section
  - § 12640.17 All the applicable provisions of this code and of other statutes of this state, except as the same may be in conflict herewith, shall apply to the operation…
7. ARTICLE 8. Additional Powers of Commissioner § 12640.18 · 1 section
  - § 12640.18 The commissioner may adopt, pursuant to Chapter 3.5 (commencing with Section 11340 ) of Part 1 of Division 3 of Title 2 of the Government Code, such reasonable…
8. ARTICLE 9. Advertising § 12640.19 · 1 section
  - § 12640.19 No bank, savings and loan association or insurance company, any of whose authorized real estate securities are insured by mortgage guaranty insurance pursuant…
9. ARTICLE 10. Fees § 12640.20 · 1 section
  - § 12640.20 The commissioner shall collect in advance a fee of four hundred seventy-two dollars ($472) from each mortgage guaranty insurer for the examination and analysis…
CHAPTER 3. Land Value Insurance §§ 12660–12661 · 2 sections
- § 12660 Any person who in this state engages in the business of guaranteeing or insuring land values, or who solicits or negotiates in this state for the purpose of,…
- § 12661 The commissioner may suspend or revoke or may deny any license or certificate issued under any provision of this code in any case where the applicant or…