Title Insurance Agent Licensing

New York had been one of three states that did not license or register title insurance agents. The NYSLTA has advocated for agent licensing for many years. In that time, we have drafted several pieces of legislation and lobbied both the legislature and the former Insurance Department.
 
The Administration Title Agent Licensing Bill of 2014
On January 21, 2014, Governor Andrew Cuomo presented his budget. The budget bill included a change to the Insurance Law to license title insurance agents.
 
This bill - designated S6357-D Part V / A8557-D Part V - was passed by the Legislature and signed into law by Governor Cuomo on April 1, 2014.
 
Click here to download S6357-D Part V/A8557-D Part V
 
Click here to download the NYSLTA Memorandum in Support of S6357-D Part V/A8557-D Part V
 
Click here to download the NYSLTA News Release on Title Agent Licensing
 
Draft Regulations (released publically June 10, 2014)
Draft - Amendment  to Title 11 NYCRR 35, propsed insurance regulation206
Draft - Amendments to Title 11 NYCRR 20; NYCRR 29; NYCRR 30; NYCRR 34
 
 
FREQUENTLY ASKED QUESTIONS
Disclaimer: While not definitive, the information below has been prepared in response to inquiries received as to the recently enacted law on agency licensing.  As indicated, the answers to a number of questions will only be known when the DFS issues its regulations and forms.
 
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When will licensing go into effect?
The law is effective on September 29, 2014, which is 180 days after it was enacted.
 

How often will this license have to be renewed?
The license must be renewed every two years.
 
Will an out of state agent be permitted to be licensed in NY?
An out of state agent is required to be licensed to do business in New York.
 
Will currently operated title agencies be grandfathered for the pre-licensed testing?   What is the length of time for grandfathering?
Currently operating title agencies will be grandfathered for the pre-licensing testing provided they file an application within one year satisfying the superintendent that such agency has without interruption, regularly and continuously performed the functions of a title insurance agent for a period of at least five years and is competent and trustworthy to act as a title insurance agent.
The superintendent may refuse to issue a title insurance agent’s license if, in the superintendent’s judgment, the applicant is not trustworthy and competent or has given cause for the revocation of its license.
 
Do closers or salespeople have to be licensed?
Closers, and salaried employees who do not receive a commission directly dependent on the amount of title insurance business done, do not need a license.
Whether a commissioned salesperson who also underwrites, or an underwriter who is also commissioned for business he or she obtains, must be licensed will need to be addressed in the regulations or any legislation making technical corrections.
 
Does the majority owner of the agency need to be licensed?
This may be addressed in the regulations.
 
Is an ownership interest in an agent required for a person to be a sub-licensee?   Do all owners need to be licensed or sub-licensed?
Not all owners of a firm nor all officers and directors of a corporation need to be licensed.  However, only a member, or members, of a firm, or only an officer or director, or officers or directors, of a corporation may be sub-licensees.  At least one sub-licensee must have a financial or other beneficial interest in the firm or corporation.
 
 
Do you need a certificate of appointment from an underwriter to apply for a license?
A certificate of appointment must be issued by a title insurance corporation.  This should be addressed in the regulations.  
 
When will the pre-license education classes for non-grandfathered agents begin?  When will the cycle of CE credits begin for the non-attorneys’?  If we are grandfathered in, will the credits need to be obtained prior to October 2014?
Guidance on issues relating to continuing legal education is expected to be included in regulations or in other bulletins to be issued by the DFS. However, there is no requirement that an agent filing an application for a license, which agent has regularly and continuously performed the functions of a title insurance agent for immediately prior five years, and is determined by the DFS to be “competent and trustworthy”, have any CLE credits prior to that license being issued.
 
Will there be a central registry of licensees? 
It is expected that title insurance licensees will be listed on the website of the Department of Financial Services in the same way as other types of licensees and that regulations will determine what specific information will be available to the public.
 
Under what conditions can agents outsource certain core title services?
Most core title services must be done by the agent itself in order to be licensed as a title insurance agent. However, the bill seems to permit certain limited functions, such as collecting funds, closing title and preparing the policy, to be done by non-employees. Clarification may be provided by the regulations.
 
 How much is the fee to get a license? Are there circumstances under which it can be reduced or waived?
The fee for a license is $40 per year or fraction of a year in which a license is in effect. There is also a $10 fee for late filing of a license renewal and a $15 fee for replacement of a lost or destroyed license.  No license fee is required of any person who served as a member of the armed forces at any time and who was not dishonorably discharged.
 
What are the continuing education requirements?
Every licensee must complete 15 hours of continuing education during the 2 year term of the license.  Excess hours in one biennial period do not carry over for the next period.
 
 Are attorneys exempt from the continuing education requirement?
An attorney who has completed his or her continuing legal education requirements and is in good standing with the NYS Office of Court Administration is exempt from the continuing education requirements applicable to agents.
 
 Are attorneys exempt from the exam requirement?
Attorneys in good standing with the NYS Office of Court Administration are exempt from the pre-licensing exam.
 
Under what conditions can licensed agents share premiums?
Section 2113(a) permits one licensed agent to pay a commission to another licensed agent.  This will need to be clarified by regulation.
 
 When will regulations go into effect?
The law requires that the addition, amendment, or repeal of any rule or regulation necessary for the implementation of the act be made by its effective date, September 29, 2014.
 
Are rates or ancillary charges affected by the licensing law?
The rates are not directly addressed; however, title insurance rates are to be subject to Article 23 of the Insurance. Law. 
Fees for ancillary services may be charged if said fees are not encompassed in the premium.  In addition, the compensation charged for ancillary services is to be set forth in a written memorandum “signed by the party to be charged”.  This should be addressed in the regulations.
 
Can closers still charge a pick-up fee and receive gratuities?
While not addressed, this may be dealt with in the regulations.
 
Are underwriter data calls now compulsory and will the DFS require data directly from agents?
The law does not address data calls.
 
Is a separate license required for each agency for which a person is a sub-licensee? 
Each title agency will need a separate license.  Whether a person can be a sub-licensee for more than one agent is not addressed.
 
[Updated April 16, 2014]