Utah Administrative Code
The Utah Administrative Code is the body of all effective administrative rules as compiled and organized by the Division of Administrative Rules (Subsection 63G-3-102(5); see also Sections 63G-3-701 and 702).
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R592. Insurance, Title and Escrow Commission.
Rule R592-6. Unfair Inducements and Marketing Practices in Obtaining Title Insurance Business.
As in effect on August 1, 2014
Table of Contents
- R592-6-1. Authority.
- R592-6-2. Purpose and Scope.
- R592-6-3. Definitions.
- R592-6-4. Unfair Methods of Competition, Acts and Practices.
- R592-6-5. Permitted Advertising, Business Entertainment, and Methods of Competition.
- R592-6-6. Enforcement Date.
- R592-6-7. Severability.
- Date of Enactment or Last Substantive Amendment
- Notice of Continuation
- Authorizing, Implemented, or Interpreted Law
This rule is promulgated pursuant to Section 31A-2-404(2), which authorizes the Title and Escrow Commission (Commission) to make rules for the administration of the Insurance Code related to title insurance, including rules related to standards of conduct for a title insurer, agency title insurance producer or individual title insurance producer.
(1) The purpose of this rule is to identify certain practices, which the Commission finds creates unfair inducements for the placement of title insurance business and as such constitute unfair methods of competition. These practices include the payment of expenses that are considered normal, customary, reasonable and recurring in the operation of a client of a title insurer, agency title insurance producer or individual title insurance producer.
(2) This rule applies to all title insurers, agency title insurance producers, individual title insurance producers and all employees, representatives and any other party working for or on behalf of said entities whether as a full time or part time employee or as an independent contractor.
For the purpose of this rule the Commission adopts the definitions as set forth in Section 31A-1-301 and 31A-2-402, and the following:
(1) "Bona fide real estate transaction" means:
(a) a preliminary title report is issued to a seller or listing agent in conjunction with the listing of a property; or
(b) a commitment for title insurance is ordered, issued, or distributed in a purchase and sale transaction showing the name of the proposed buyer and the sales price, or in a loan transaction showing the proposed lender and loan amount.
(2) "Business Activities" shall include sporting events, sporting activities, musical and art events. In no case shall such business activities rise to the level of ceremonies, for example, award banquets, recognition events or similar activities sponsored by or for clients, or include travel by air, or other commercial transportation.
(3) "Business meals" shall include breakfast, brunch, lunch, dinner, cocktails and tips. In no case shall such business meals raise to the level of ceremonies, for example, awards banquets, recognition events or similar activities sponsored by or for clients.
(4)(a) "Client" means any person, or group, who influences, or who may influence, the placement of title insurance business or who is engaged in a business, profession or occupation of:
(i) buying or selling interests in real property; and
(ii) making loans secured by interests in real property.
(b) "Client" includes real estate agents, real estate brokers, mortgage brokers, lending or financial institutions, builders, developers, subdividers, attorneys, consumers, escrow companies and the employees, agents, representatives, solicitors and groups or associations of any of the foregoing.
(5) "Discount" means the furnishing or offering to furnish title insurance, services constituting the business of title insurance or escrow services for a total charge less than the amounts set forth in the applicable rate schedules filed pursuant to Section 31A-19a-203 or 31A-19a-209.
(6) "Official trade association publication" means:
(a) a membership directory, provided its exclusive purpose is that of providing the distribution of an annual roster of the association's members to the membership and other interested parties; or
(b) an annual, semiannual, quarterly or monthly publication containing information and topical material for the benefit of the members of the association.
(7) "Title insurance business" means the business of title insurance and the conducting of escrow.
(8) "Trade Association" means a recognized association of persons, a majority of whom are clients or persons whose primary activity involves real property.
In addition to the acts prohibited under Section 31A-23a-402, the Commission finds that providing or offering to provide any of the following benefits by parties identified in Section R592-6-2 to any client, either directly or indirectly, except as specifically allowed in Section R592-6-5 below, is a material and unfair inducement to obtaining title insurance business and constitutes an unfair method of competition.
(1) The furnishing of a title insurance commitment without one of the following:
(a) sufficient evidence in the file of the title insurer, agency title insurance producer or individual title insurance producer that a bona fide real estate transaction exists; or
(b) payment in full at the time the title insurance commitment is provided.
(2) The paying of any charges for the cancellation of an existing title insurance commitment issued by a competing organization, unless that commitment discloses a defect which gives rise to a claim on an existing policy.
(3) Furnishing escrow services pursuant to Section 31A-23a-406:
(a) for a charge less than the charge filed pursuant to Section 31A-19a-209(5); or
(b) the filing of charges for escrow services with the Utah Insurance Commissioner (commissioner), which are less than the actual cost of providing the services.
(4) Waiving all or any part of established fees or charges for services which are not the subject of rates or escrow charges filed with the commissioner.
(5) Deferring or waiving any payment for insurance or services otherwise due and payable, including a series of real estate transactions for the same parcel of property.
(6) Furnishing services not reasonably related to a bona fide title insurance, escrow, settlement, or closing transaction, including non-related delivery services, accounting assistance, or legal counseling.
(7) The paying for, furnishing, or waiving all or any part of the rental or lease charge for space which is occupied by any client.
(8) Renting or leasing space from any client, regardless of the purpose, at a rate which is excessive or inadequate when compared with rental or lease charges for comparable space in the same geographic area, or paying rental or lease charges based in whole or in part on the volume of business generated by any client.
(9) Furnishing any part of a title insurer's, title agency title insurance producer's, or individual title insurance producer's facilities, for example, conference rooms or meeting rooms, to a client or its trade association, for anything other than the providing of escrow or title services, or meetings related to such, without receiving a fair rental or lease charge comparable to other rental or lease charges for facilities in the same geographic area.
(10) The co-habitation or sharing of office space with a client of a title insurer, agency title insurance producer, or individual title insurance producer.
(11) Furnishing all or any part of the time or productive effort of any employee of the title insurer, agency title insurance producer or individual title insurance producer, for example, secretary, clerk, messenger or escrow officer, to any client.
(12) Paying for all or any part of the salary of a client or an employee of any client.
(13) Paying, or offering to pay, either directly or indirectly, salary, commissions or any other consideration to any employee who is at the same time licensed as a real estate agent or real estate broker or as a mortgage lender or mortgage company subject to 31A-2-405 and R592-5.
(14) Paying for the fees or charges of a professional, for example, an appraiser, surveyor, engineer or attorney, or for the pre-payment of fees and charges of a client or party to the transaction, for example subordination, loan or HOA payoff request fees, whose services are required by any party or client to structure or complete a particular transaction. This subsection does not include the pre-payment of overnight delivery/mail fees that will be recovered through closing of a transaction.
(15) Sponsoring, cosponsoring, subsidizing, contributing fees, prizes, gifts, food or otherwise providing anything of value for an activity of a client, except as allowed under Subsection R592-6-5(6). Activities include open houses at homes or property for sale, meetings, breakfasts, luncheons, dinners, conventions, installation ceremonies, celebrations, outings, cocktail parties, hospitality room functions, open house celebrations, dances, fishing trips, gambling trips, sporting events of all kinds, hunting trips or outings, golf or ski tournaments, artistic performances and outings in recreation areas or entertainment areas.
(16) Sponsoring, cosponsoring, subsidizing, supplying prizes or labor, except as allowed under Subsection R592-6-5(2) or otherwise providing things of value for promotional activities of a client. Title insurers, agency title insurance producers or individual title insurance producers may attend activities of a client if there is no additional cost to the title insurer, agency title insurance producer or individual title insurance producer, other than their own entry fees, registration fees, meals, and provided that these fees are no greater than those charged to clients or others attending the function.
(17) Providing gifts or anything of value to a client in connection with social events such as birthdays or job promotions. A letter or card in these instances will not be interpreted as providing a thing of value.
(18) Furnishing or providing access to the following, even for a cost:
(a) building plans;
(b) construction critical path timelines;
(c) "For Sale by Owner" lists;
(f) credit reports;
(g) mortgage leads for loans;
(h) rental or apartment lists; or
(i) printed labels.
(19) Newsletters cannot be property specific or cannot highlight specific customers.
(20) A title insurer, agency title insurance producer or individual title insurance producer cannot provide a client access to any software accounts that are utilized to access real property information that the insurer, agency title insurance producer or individual title insurance producer pays for, develops, or pays to maintain. Closing software is exempt as long as it is used for a specific closing.
(21)(a) A title insurer, agency title insurance producer or individual title insurance producer cannot provide title or escrow services on real property where an existing or anticipated investment loan or financing has been or will be provided by said title insurer, agency title insurance producer or individual title insurance producer, including its owners or employees.
(b) Subsection (21)(a) does not apply to such transactions involving seller financing.
(22) Paying for any advertising on behalf of a client.
(23) Advertising jointly with a client on subdivision or condominium project signs, or signs for the sale of a lot or lots in a subdivision or units in a condominium project. A title insurer, agency title insurance producer or individual title insurance producer may advertise independently that it has provided title insurance for a particular subdivision or condominium project but may not indicate that all future title insurance will be written by that title insurer, agency title insurance producer or individual title insurance producer.
(24) Advertisements may not be placed in a publication, including an internet web page and its links, that is hosted, published, produced for, distributed by or on behalf of a client.
(25) A donation may not be made to a charitable organization created, controlled or managed by a client.
(26) A direct or indirect benefit, provided to a client which is not specified in Section R592-6-5 below, will be investigated by the department for the purpose of determining whether it should be defined by the Commission as an unfair inducement under Section 31A-23a-402(8).
(27) Title insurers, agency title insurance producers or individual title insurance producers who have ownership in, or control of, other business entities, including I.R.C. Section 1031 qualified intermediaries and escrow companies, may not use those other business entities to enter into any agreement, arrangement, or understanding or to pursue any course of conduct, designed to avoid the provisions of this rule.
Except as specifically prohibited in Section R592-6-4 above, the following are permitted:
(1) In addition to complying with the provisions of 31A-23a-402 and R590-130, Rules Governing Advertisements of Insurance, advertisement by title insurers, agency title insurance producers or individual title insurance producers must comply with the following:
(a) the advertisement must be purely self-promotional; and
(b) advertisement in official trade association publications are permissible as long as any title insurer, agency title insurance producer or individual title insurance producer has an equal opportunity to advertise in the publication and at the standard rates other advertisers in the publication are charged.
(2) A title insurer, agency title insurance producer or individual title insurance producer may donate time to serve on a trade association committee and may also serve as an officer for the trade association.
(3) A title insurer, agency title insurance producer or individual title insurance producer may have two self-promotional open houses per calendar year for each of its owned or occupied facilities, including branch offices. The title insurer, agency title insurance producer or individual title insurance producer may not expend more than $15 per guest per open house. The open house may take place on or off the title insurer's, agency title insurance producer's or individual title insurance producer's premises but may not take place on a client's premises.
(4) A donation to a charitable organization must:
(a) not be paid in cash;
(b) if paid by a negotiable instrument, be made payable only to the charitable organization;
(c) be distributed directly to the charitable organization; and
(d) not provide any benefit to a client.
(5) A title insurer, agency title insurance producer or individual title insurance producer may distribute self-promotional items having a value of $5 or less to clients, consumers and members of the general public. These self-promotional items shall be novelty gifts which are non-edible and may not be personalized or bear the name of the donee. Self-promotional items may only be distributed in the regular course of business. Self-promotional items may not be given to clients or trade associations for redistribution by these entities.
(6) A title insurer, agency title insurance producer or individual title insurance producer may make expenditures for business meals or business activities on behalf of any person, whether a client or not, as a method of advertising, if the expenditure meets all the following criteria:
(a) the person representing the title insurer, agency title insurance producer or individual title insurance producer must be present during the business meal or business activity;
(b) there is a substantial title insurance business discussion directly before, during or after the business meal or business activity;
(c) the total cost of the business meal, the business activity, or both is not more than $100 per person, per day;
(d) no more than three individuals from an office of a client may be provided a business meal or business activity by a title insurer, agency title insurance producer or individual title insurance producer in a single day; and
(e) the entire business meal or business activity may take place on or off the title insurer's, agency title insurance producer's or individual title insurance producer's premises, but may not take place on a client's premises.
(7) A title insurer, agency or producer may conduct continuing education programs that are approved by the appropriate regulatory agency, under the following conditions:
(a) the continuing education program shall address only title insurance, escrow or other topics directly related thereto;
(b) the continuing education program must be of at least one hour in duration;
(c) for each hour of continuing education, $15 or less per person may be expended, including the cost of meals and refreshments; and
(d) no more than one such continuing education program may be conducted at the office of a client per calendar quarter.
(8) A title insurer, agency title insurance producer or individual title insurance producer may acknowledge a wedding, birth or adoption of a child, or funeral of a client or members of the client's immediate family with flowers or gifts not to exceed $75.
(9) Any other advertising, business entertainment, or method of competition must be requested in writing and approved in advance and in writing by the Commission.
The commissioner will begin enforcing the provisions of this rule 45 days from the effective date of the rule.
If any provision or clause of this rule or its application to any person or situation is held invalid, such invalidity may not affect any other provision or application of this rule which can be given effect without the invalid provision or application, and to this end the provisions of this rule are declared to be severable.
August 9, 2011
June 13, 2014
For questions regarding the content or application of rules under Title R592, please contact the promulgating agency (Insurance, Title and Escrow Commission). A list of agencies with links to their homepages is available at http://www.utah.gov/government/agencylist.html or from http://www.rules.utah.gov/contact/agencycontacts.htm.