Bulletin: LA2024002

Dear Associates:

The Louisiana Department of Insurance (LDI) has issued Advisory Letter 2024-02 to address auditing requirements for title insurers and title insurance producers operating in Louisiana. The advisory highlights the LDI’s concerns about compliance with La. R.S. 22:532, which regulates the handling of escrow, closing, or settlement funds. We advise you to read the advisory letter linked. Below is a quick summary of the key points within the statute and letter.

• Fiduciary Capacity and Fund Management:
  • Title insurers and producers may act in a fiduciary capacity (closing, escrow, or settlement agents) under the condition that all funds collected are deposited with a qualified financial institution by the close of the next business day following receipt. Likewise, this includes instances where a borrower has a right of rescission.
• Escrow Account Requirements:
  • All funds as defined under La RS 22:532(B) must be deposited into a clearly designated escrow, settlement, closing, or trust account.
  • Funds are to be held as property of the entitled individuals and identified on an individual basis.
  • Funds must be used solely according to the terms of the escrow instructions.
• Disbursement of Funds:
  • Funds held in escrow can only be disbursed according to specified escrow instructions.
  • For funds held in a security agreement, disbursement must adhere to a written agreement outlining the necessary actions to satisfy the obligation and duties regarding fund disbursement.
• Real Estate Closings Without Escrow Instructions:
  • Funds must be disbursed according to a signed closing or disbursement statement if no specific escrow instructions or security agreements apply.
• Conditions for Drawing Funds from Escrow Accounts:
  • Disbursements are only permitted if funds are equal to or exceed the disbursement amount, are in possession of the title insurer or producer, and are in acceptable forms such as cash, wire transfers, or other specified checks.
• Certification Requirements:
  • If checks are drawn on a title insurer or producer’s escrow account, producers must certify by affidavit that funds drawn at closing are from an escrow account as defined by La. R.S. 22:512(6) and that they meet the enumerated requirements.
• Compliance Notice:
  • Title insurers and producers must ensure full compliance with La. R.S. 22:532. Non-compliance may result in regulatory action. For questions regarding this advisory, contact the LDI Deputy Commissioner for the Office of Property and Casualty at (225) 342-5203 or email public@ldi.la.gov.

Please review your current practices to ensure adherence to these requirements. 

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