On April 3, 2018, the Title Insurance Division of the Illinois Department of Financial and Professional Regulation (“IDFPR”) proposed a new disclosure form to be executed by title insurance agents and underwriters when title insurance is referred by a “producer” as defined under the Title Insurance Act. The form had an effective date of April 4, 2018.
The Illinois Land Title Association (“ILTA”), Attorney’s Title Guarantee Fund, Inc. (“ATG”), Greater Illinois Title (“GIT”) and others in the legal, real estate and title communities had a number of serious concerns about the new proposed form, including:
- the IDFPR’s authority to promulgate the form;
- the process the IDFPR employed in drafting and implementing the form;
- the content of the form;
- an attorney’s and consumer’s ability to interpret and complete the form accurately;
- the effectiveness of the form in accomplishing its apparent objective — to improve consumer disclosure; and
- serious bias against lawyer agents contained in both the disclosure form itself and in the Instructions for completing it.
The last point is among the most important. While ATG, GIT and others believe that a lawyer representing a client, examining title, and issuing a title insurance policy is not “referring” title insurance to an agency and arguably may not be subject to the provisions of this disclosure requirement under the act, lawyers acting in this capacity do have disclosure obligations under the Illinois Code of Professional Responsibility. The existing state disclosure form (called the DS-1) is one effective way to fulfill that obligation. However, the proposed form is flawed, and has the potential to create even more consumer confusion.
In response to comments from ILTA, ATG, GIT and others in the legal, real estate and title communities, the IDFPR agreed to delay implementation until May 15, 2018, pending further study. Since that time, ILTA, ATG and others have submitted written comments to the IDFPR highlighting concerns and offering to provide guidance on ways to accomplish the IDFPR’s important objective of improving consumer transparency, while ensuring that consumers have reasonable access to legal counsel in real estate transactions.
In response to those comments, the IDFPR agreed to delay implementation of the form until June 1, 2018. ITLA and other interested parties announced their intention to work with the IDFPR to help them accomplish their objectives in a fair and effective manner.
ILTA, ATG and GIT have been among the more vocal advocates for the State to take action regarding egregious forms of market conduct, such as “pay to play” real estate brokerage referrals to actives, “junk fees,” and irrational splits. These behaviors will be solved only through administrative or judicial prosecutions by the State. Many leading attorneys in the real estate field, including this author, wish to see these practices abolished, as well.
Byrne Law will continue to provide news and updates on matters affecting the Illinois real estate community. If you have further questions, please contact Sean Byrne