Bulletin: AR2011001

Dear Associates: 

This bulletin is being issued to inform you that Arkansas lawmakers have adopted Act 515 (the Act), which expressly prohibits title insurance agencies from issuing closing protection or title insurance policies as an insurer, and provides that "only a title insurer may issue closing protection or issue as an insurer a title insurance policy."  

Please note that the Act changes the definition of "closing" to include "the collection and disbursement of funds and title insurance premiums out of escrow" in connection with a transaction involving either personal or real property and removes from the definition of "title insurance agent" a closing agent "that provides closing services but does not otherwise engage in the title insurance business."  

The Act provides that closing agents will now be required to alert parties in a real estate transaction to the availability of closing protection. This function formerly fell to title insurers. Title insurers are also barred from issuing closing protection letters unless they contemplate issuing a title insurance policy. Additionally, the Act amends state rules as they relate to instances when insurers are required to issue closing protection. The measure states that "upon receiving a written request by a party to a closing with a licensed title insurance agency with which the title insurer has an agency contract or closing agent with which the title insurer is in privity of contract, the title insurer shall issue a closing protection letter to the requesting party." Previously, insurers were only required to issue such protection if a written request was made to a "licensed agency."

The full text of the Act can be found by clicking here.

If you have questions related to this bulletin, please contact your local underwriting personnel or Stewart Legal Services.

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