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Real Estate e-Alert: New Missouri Law Revises Title Insurance Code and Provides Greater Protections to Consumers |
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On July 13, 2007, Missouri Governor Matt Blunt signed into law Senate Bill 66, which substantially revises Missouri's Title Insurance Code and provides new protections for consumers. According to Governor Blunt, the new legislation "cracks down on loopholes to put a stop to unscrupulous insurance agents and ensure all agents protect their customers' best interest." The new law, which went into effect August 28, 2007, was driven by the failure of eight title agencies in Missouri over the past few years.
Under the new law, title agents must provide consumers with a breakdown of charges that shows specific prices for the title search, insurance premium and settlement or closing fees. Missouri insurance regulators had accused some title agents of misleading consumers by lumping charges together and calling the total amount a "premium." The new law requires "clear and conspicuous disclosure of premiums and charges" to prevent misrepresentation or concealment of prices. Title agents must also disclose to consumers any business arrangements with companies or individuals who refer customers to them.
Title agents are prohibited from commingling or misusing money kept in escrow accounts. No previous stated law governed the handling of escrow funds. State insurance regulators had previously argued that they had no power to prevent agents from misusing consumer funds they were supposed to keep safe in escrow accounts. Now, the director may issue administrative orders, suspend or revoke licenses, or bring a court action to enjoin individuals who violate title insurance laws.
The new law also requires title underwriting companies to supervise and audit their agents who sell their title insurance. A title insurer must conduct an annual on-sight review of the underwriting, claims and escrow practices of the title insurance company or agent with which it has a contract.
The new law increases the civil penalties for agencies who defraud consumers from $100 to as much as $20,000 per violation or a maximum of up to $1,000,000 for multiple violations.
For additional information on this or any other Real Estate e-Alert, contact Dave Frantze at 816.691.3181 or Kevin McManus at 816.691.2337.
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