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Consumer Financial Protection Bureau
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ALTA Best Practice #1 - LICENSING

Best Practice 1 - Licensing: Establish and maintain current license(s) as required by the applicable licensing bodies to conduct the business of title insurance and settlement services. The purpose is to ensure that the company is fully compliant with all applicable laws and regulations.

I. Title Insurance Agent License Required
A. Texas Law:
A – 1 Texas Insurance Code – Title 11 – Sec. 2651.001. LICENSE AND BOND OR DEPOSIT REQUIRED. (a) An individual, firm, association, or corporation may not act in this state as a title insurance agent for a title insurance company unless the individual or entity:
(1) holds a license as an agent issued by the department; and
(2) maintains a surety bond or deposit required under Subchapter C (see A-2, below).
(b) A title insurance company may not allow or permit an individual, firm, association, or corporation to act as its agent in this state unless the individual or entity complies with this section.

A – 2 Texas Insurance Code – Title 11 – Sec. 2651.101. BOND REQUIRED. (a) Each licensed title insurance agent and direct operation shall make, file, and pay for a surety bond payable to the department and issued by a corporate surety company authorized to write surety bonds in this state. The bond shall obligate the principal and surety to pay for any pecuniary loss sustained by:
(1) any participant in an insured real property transaction through an act of fraud, dishonesty, theft, embezzlement, or wilful misapplication by a title insurance agent or direct operation; or
(2) the department as a result of any administrative expense incurred in a receivership of a title insurance agent or direct operation.
(b) The amount of the bond must be the greater of:
(1) $10,000; or
(2) an amount equal to 10 percent of the gross premium written by the title insurance agent or direct operation in accordance with the latest statistical report to the department but not to exceed $100,000.

B. Proof of Compliance with Texas Law:
(1) A copy of our current Agency License, issued by the Texas Department of Insurance, is attached hereto; and
(2) A copy of our Surety Bond is attached hereto.

II. Title Insurance Escrow Officer License Required
A. Texas Law:
A – 1 Texas Insurance Code – Title 11 – Sec. 2652.001. LICENSE AND BOND OR DEPOSIT REQUIRED.
An individual may not act as an escrow officer unless the individual:
(1) holds a license issued by the department; and
(2) maintains a surety bond or deposit required under Subchapter C.

A – 2 Texas Insurance Code – Title 11 – Sec. 2652.101. BOND REQUIRED. (a) A title insurance agent or direct operation shall obtain, at its own expense, a bond for its escrow officers payable to the department. The bond shall obligate the principal and surety to pay for any pecuniary loss sustained by the title insurance agent or direct operation through an act of fraud, dishonesty, forgery, theft, embezzlement, or willful misapplication by an escrow officer, either directly and alone, or in conspiracy with another person.
(b) The bond must be:
(1) of a type approved by the department; and
(2) issued by a surety licensed by the department to do business in this state.

B. Proof of Compliance with Texas Law:
(1) A spreadsheet that lists each of our licensed escrow officers is maintained by the agent, reviewed monthly and available upon request; and
(2) A copy of each licensed Escrow Officer’s required Surety Bond is reviewed monthly and available upon request; and
(3) A list of currently licensed escrow officers in the State of Texas can be found on the Texas Department of Insurance website at the following link:
http://www.tdi.texas.gov/title/index.html.

C. Because it is imperative that each license required by the Laws of the State of Texas are promptly obtained and maintained, the responsibility for keeping track of the licenses and any required renewal thereof has been assigned to Michael A. Knudsen, Compliance Officer.
Michael A. Knudsen
11 Greenway Plaza, Suite 3170
Houston, TX 77046
Direct: 713.482.2801
mknudsen@veritastitlepartners.com

In order to document that all required licenses have been obtained and are up-to-date, Michael A. Knudsen is required to:

  • Create a file, notebook or spreadsheet of licenses;
  • Verify license status using Department of Insurance website (which can be found at:
    http://www.tdi.texas.gov/title/index.html
  • Review monthly for expiration dates and Department of Insurance website accuracy; and
  • Notify the Department of Insurance when a licensee is no longer employed by our company, and surrender the license promptly to the Department of Insurance.
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