31A-23a-503. Controlled business in title insurance.
(1) As used in this section:
(a) "Associate" means any:
(i) business organized for profit in which a person who refers title business is a director,
officer, partner, or employee;
(ii) spouse or relative within the second degree by blood or marriage of a person who
refers title business, who is a natural person;
(iii) employee of a person who refers title business; or
(iv) person with whom a person who refers title business or any associate of that
producer has any agreement, arrangement, or understanding, or pursues any course of conduct,
designed to avoid the provisions of this chapter.
(b) "Controlled business" means that portion of the title insurance business of a title
insurer or producer in this state that is referred to it by all those producers of title business who
have a financial interest in the title insurer or producer and by all associates of those producers.
Business is referred if there is influence over the selection of the person with whom the business
is placed.
(c) "A person who refers title business" includes any person engaged in this state in a
business of:
(i) buying or selling interests in real property;
(ii) making loans secured by interests in real property; or
(iii) acting as a representative or employee of a person who buys or sells any interest in
real property or who lends or borrows money with interest as security, other than acting as a
licensed title insurer or producer doing the business of title insurance.
(d) "Financial interest" means any legal or beneficial interest that together with other
interests entitles the holder to more than 1% of the net profits or net worth of the business in
which the interest is held.
(2) A title insurer or producer or person having a financial interest in a title insurer or
producer may not knowingly be a party to or knowingly permit to continue in any arrangement in
which the title insurer, producer, or person knows or has reason to believe that any person who
refers title business has or will have, directly or indirectly, a financial interest in the title insurer
or producer, if it reasonably appears that a substantial factor in the person who refers title
business owning or acquiring the financial interest is the expected realization of financial profit
or gain derived in whole or in part from controlled business.
(3) A title insurer may not appoint or knowingly continue its authorization of any title
insurance producer in which the company knows or has reason to believe that any person who
refers title business has or will have, directly or indirectly, a financial interest, if it reasonably
appears that a substantial factor in the person who refers title business owning or acquiring the
financial interest is the person's expected realization of financial profit or gain derived in whole
or part from controlled business.
(4) (a) If for any calendar quarter, the gross operating revenues of a title insurer or
producer derived from all sources of controlled business in this state amount to more than 1/3 of
its gross operating revenues from all other sources of its business of title insurance in this state, it
is presumed that the expected realization of financial profit or gain derived in whole or in part
from controlled business was a substantial factor in the ownership of financial interest in the title
insurer or producer.
(b) The title insurer or producer has the burden of overcoming the presumption described
in Subsection (4)(a).
(c) This Subsection (4) does not authorize any controlled business if a violation of the
standards set forth in Subsection (2) or (3) exists.
(5) A title insurer or producer may not accept any order for the business of title insurance
that it knows or has reason to believe constitutes controlled business, unless it records and
maintains in its permanent records on forms prescribed by the commissioner the facts relating to
the transactions.
(6) An applicant for qualification as a title insurer or producer may not be granted a
license if it reasonably appears that the expected realization of financial profit or gain to be
derived in whole or in part from controlled business is or will be a substantial factor in the
applicant's plan of operation or in the ownership or acquisition of financial interests in the
applicant by any person who refers title business.
(7) Each title insurer and producer shall maintain permanent records relating to its
controlled business on forms prescribed by the commissioner.
(8) (a) Each title insurer and producer shall file annually with the commissioner, on
forms prescribed by the commissioner, reports setting forth:
(i) the names and addresses of any persons owning a financial interest in the title insurer
or producer as of the last day of the calendar year, who are known or reasonably believed by the
title insurer or producer to be a person who refers title business; and
(ii) a summary compiled from the title insurer's or producer's records of the controlled
business, sufficient to inform the commissioner and the Title and Escrow Commission as to the
proportion of the title insurer's or producer's gross operating revenues attributable to controlled
business during the preceding calendar year.
(b) The reports shall be filed with the reports required under Section 31A-23a-413 and
shall contain the certification of an officer of the title insurer or producer that the information
contained in them is true to the best of the officer's knowledge, information, and belief. Upon
filing, the reports are public records.
(c) A report filed pursuant to Subsection (8)(a) is subject to review by the Title and
Escrow Commission.
(9) An attorney who is also a licensed title insurance producer and who issues as
producer a policy of title insurance to a client on behalf of whom the attorney is also acting as an
attorney and who, in so doing, acts consistently with the applicable ethical standards of the Utah
State Bar pertaining to the billing and receipt of legal fees and the receipt of a commission on a
policy of title insurance is not, without more, considered to be engaged in controlled business.
Amended by Chapter 185, 2005 General Session
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Last revised: Thursday, May 28, 2009