The Alabama Title Insurance Act, Ala. Act No. 2001-496, becomes effective October 1, 2001. To view a "PDF" copy of the new law, please click below:
Ala. Act No. 2001-496 (Senate Bill 246, 2001 Regular Session)
On July 12, 2001, Commissioner Parsons issued a bulletin to all title insurers licensed in this state providing information necessary to comply with
the new law. To view a copy of the bulletin, please click below:
Title Insurance Bulletin
Included with this bulletin was an application to be used by title insurers to obtain a certificate of authority for their title insurance agents. To
download a "PDF" copy of the application, please click below:
Title Agent Application
Please note that the second page of the application is actually a format to follow. It is anticipated that title insurers will include multiple agents with a single application. To help accommodate this, we have designed the second page as a format to be followed in reporting the necessary information on each agent. To view a sample filled-in form providing an example of how this form may
appear, please click below:
Sample "filled-in" Form AL-T-2
Here are several responses to recent questions regarding the new title insurance law:
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AGENT CERTIFICATE OF AUTHORITY [Section 4 of the Act, Now Section 27-25-4]: Upon the effective date of the act, October 1, 2001, a title insurance policy shall not be issued by an agent unless the insurer has first obtained a
certificate of authority for the agent.
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RESIDENCE OF AGENTS [Section 4 of the Act, Now Section 27-25-4]: Individual title insurance agents must be residents of the State of Alabama. Business entities must be formed under the laws of the State of Alabama, i.e., must be an Alabama corporation, Alabama limited liability company, etc. There is no limitation on who can "own" a title insurance agency; thus a non-resident individual can form an Alabama corporation, which can then be appointed as the Alabama title insurance agent, even though the individual is not qualified individually due to residence.
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QUALIFICATIONS OF A BUSINESS ENTITY AS TITLE AGENT [Section 4 of the Act, Now Section 27-25-4]: The position of the Alabama Department of Insurance is that a
business entity exists under the laws of the state in which it is organized. It is clear to us that in the Alabama Title Insurance Act the legislative intent
was to limit the authority to act as an agent for a title insurer to resident individual citizens of Alabama and to business entities organized under the laws of this state. It is not enough to be "qualified" to do business in Alabama. This is bolstered by language found in the Alabama Business Corporation Act, Section 10-2B-1.28, Code of Alabama 1975, whereby a domestic (Alabama) corporation can apply to the Alabama Secretary of State for a "certificate of existence," but a foreign corporation must apply for a "certificate of authorization." Thus it appears clear that while a foreign corporation may be
authorized to do business in Alabama, only an Alabama corporation is "authorized or existing under the laws of this state."
Based on this position, this Department will only approve certificates of authority for title insurance agents as a corporation or other business entity
if the corporation or other business entity is an Alabama-domiciled entity. Foreign corporations and other foreign business entities are not qualified to be licensed as a title insurance agent in Alabama.
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REISSUE CREDIT [Section 6(a) of the Act, Now Section 27-25-6(a)]: Title insurers are not required to file a "reissue rate," but if they do, one of the
requirements to receive the reissue rate must be the production of the prior title insurance policy. It is the opinion of the Department that for purposes of this requirement, a photocopy of the prior policy is sufficient.
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NOTICE OF OWNERS POLICY AVAILABILITY [Section 7 of the Act, Now Section 27-25-7]: In prior discussions, it was determined the Department would take the position the new title insurance act is to be enforced through Title Insurance Companies. In line with this decision, we will enforce Section 7 as being applicable only to title insurance companies. Clearly, the obligation in
Subsection (a) is for the "title insurer" to either "obtain or cause its agent to obtain" the statement regarding the availability of owners coverage. We
anticipate our regulation will determine this mandate as only applicable "in a transaction involving the purchase or sale of a fee simple or possessory interest in real property" wherein a mortgagee policy is being written.
Based on this position, the owners title insurance availability disclosure is not required to be provided in transactions in which a mortgagee policy is not
written. Thus, the disclosure form would not be required in the following examples:
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An attorney, who happens to be a title insurance agent, prepares a deed but does not handle the "closing."
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A person, who happens to be a title insurance agent, handles a closing in a transaction in which mortgagee title insurance was not written.
A further question that has arisen is related to Paragraph (2) in Subsection (a) of Section 7, whereby the premium of the owners policy is to be disclosed.
It is the position of the Department that it is not necessary to disclose all of the different owners policies that may be available. We understand the intent of
the statute to be that consumers are to be informed of the availability of
owners protection when mortgagee insurance is provided in a sale context. We
feel that if a consumer expresses an interest based on the disclosure form, the
agent may then wish to advise the consumer of any additional types of owners
policies that may also be available.
If you have other questions in this regard, please contact Reyn Norman,
Association Counsel, by phone at (334) 241-4119, or by E-Mail at RNorman@insurance.state.al.us