(a) This chapter shall be known and cited as the Alabama Title Insurance Act.

(b) The purpose of this chapter is to set forth certain definitions applicable to title insurance in this state and to provide further for the supervision of the business of title insurance transacted in this state.

Repealed by Act 2001-496, § 12, effective October 1, 2001.

This chapter shall not be interpreted or construed as regulating or attempting to regulate the practice of law

(a) This chapter shall apply to all title insurers and title agents engaged in the business of title insurance in this state.

(b) Except as otherwise expressly provided in this chapter, except where the context otherwise requires, and except those provisions which are inconsistent with this chapter, the provisions of this title, the Alabama Insurance Code, which apply to title insurance and title insurance companies, shall continue to be applicable to the business of title insurance and title insurance companies. No amendment to this title that is enacted after October 1, 2001, that is inconsistent with the provisions of this chapter shall be applicable to the business of title insurance unless the amendment specifically states that it is to be applicable to the business of title insurance.

For the purposes of this chapter, the following terms shall have the following meanings:

(1) ABSTRACT OF TITLE. A compilation or summary of all instruments of public record of whatever kind or nature which in any manner affect title to a specified parcel of real property.

(2) COMMISSIONER. The Commissioner of the Alabama Department of Insurance.

(3) OPINION OF TITLE. A written expression of the status of title, including, but not limited to, the validity or invalidity thereof, based upon an examination by an attorney at law, who is licensed to practice law in this state, of instruments of public record or an abstract thereof affecting title to a specified parcel of real property to ascertain the history and present condition of title to such real property as to its ownership and status with respect to liens, encumbrances, clouds, and defects.

(4) PERSON. Any natural person at least 18 years of age and who is domiciled in this state or is a bona fide resident of and resides within this state or any partnership, association, corporation, or other legal entity properly existing or organized under the laws of this state. The term 'person' does not include 'title insurer,' nor does it include the officers and employees of a title insurer.

(5) PRELIMINARY REPORT, COMMITMENT, OR BINDER. Reports furnished in connection with an application or request for title insurance and are offers to issue a title insurance policy subject to certain requirements and exceptions stated in the report, commitment, or binder and such other matters as are incorporated by reference therein.

(6) PREMIUM. Fees charged for assuming liability and risk under a title insurance policy. For the purposes of this chapter, 'premium' shall include any amount retained by or paid to an agent under an agreement between the agent and the title insurance company. For the purposes of this chapter, 'premium' shall not include expenses for the performance of services such as abstracting, searching, and examining titles or obtaining a title opinion; fees for document preparation; fees for handling escrows, settlements, or closings; fees incurred to cure defects in the title; and fees incident to the issuance of a commitment to insure title or a title insurance policy, including, but not limited to, the costs of reinsurance.

(7) TITLE AGENT or AGENT. Any person who is authorized in writing by a title insurer to perform the following:

a. Solicit title insurance business.

b. Collect premiums.

c. Determine insurability in accordance with underwriting rules, standards, and guidelines prescribed by the title insurer.

d. Issue title insurance commitments, policies, or endorsements of the title insurer.

The term 'title agent' or 'agent' does not include the officers or employees of a title insurer.

(8) TITLE INSURANCE POLICY or POLICY. A contract insuring or indemnifying against loss or damage arising from any or all of the following existing on or before the date of the policy:

a. Defects in or liens or encumbrances on the insured title.

b. Unmarketability of the insured title.

c. Invalidity or unenforceability of liens or encumbrances on the property described in the policy.

d. Lack of priority of liens or encumbrances.

(9) TITLE INSURER or INSURER. A company organized under the laws of this state or licensed in this state for the purpose of transacting as insurer the business of title insurance, as defined in Section 27-5-10, and any foreign or alien title insurer licensed to be engaged in this state in the business of title insurance, as defined in Section 27-5-10.

(10) TITLE SEARCH or TITLE EXAMINATION. A search of the records in the office of the judge of probate in the county where the real property is situated through such period of time as is acceptable to the title insurer. The search of the public records relating to matters of title performed in connection with the issuance of a preliminary report, commitment, or binder shall be solely for the benefit of the title insurance company requested to issue its policy or policies of title insurance.

(a) A title insurance policy insuring the interest of an insured in real property in this state shall not be issued by any person or agent unless the person or agent issuing a title insurance policy is domiciled in or is otherwise a bona fide resident of and resides within this state or is a partnership, association, corporation, or other legal entity properly organized or existing under the laws of this state. Nothing herein contained shall be construed to prevent a title insurer licensed to do business in this state, nor an employee thereof, from issuing a policy of title insurance in this state.

(b) A title insurance policy insuring the interest of an insured in real property in this state shall not be issued by an agent of a title insurer unless the title insurer first obtains a certificate of authority from the commissioner for such an agent. The commissioner shall collect from the title insurer the sum of fifty dollars ($50) annually for each certificate of authority for which application is made. For the purposes of this subsection, a certificate of authority need only be obtained for each agency of the title insurer and not for each person within an agency who is authorized to execute on behalf of the agency title insurance commitments, policies, or endorsements of the title insurer. Nothing herein contained shall be construed to require the issuance of a certificate of authority as described in this subsection to a title insurer licensed to do business in this state, nor an employee thereof, for the purpose of issuing a policy of title insurance in this state.

(c) Unless a later date is specifically authorized by the title insurer for a particular transaction or unless the title insurance commitment specifies a time for which it is effective or such commitment is renewed or extended by the title insurer, the title agent shall issue to the insured the policy or policies of title insurance for which a premium has been collected within 60 days from the effective date of the policy or in the case of a title insurance commitment having been issued, within 60 days after the satisfaction of all requirements and conditions set out in the commitment in accordance with the title insurer's underwriting guidelines. For the purpose of this subsection, the effective date of the policy is defined as the date and time the instrument conveying the interest to be insured is recorded unless the policy to be issued is insuring the interest of the proposed insured by virtue of an instrument recorded in the real property records prior to the time the request or order for title insurance is placed.

(d) The fifty dollar ($50) fee collected by the commissioner for the issuance of certificates of authority to agents of title insurers shall be deposited into the Insurance Department Fund.

No preliminary report, commitment, binder, policy, or contract of title insurance shall be issued until and unless the title insurer or the person or agent issuing the title insurance policy on behalf of the title insurer has performed any of the following:

(1) Caused to be conducted a search or examination of the title as defined in this chapter.

(2) Obtained an abstract of title.

(3) Obtained an opinion of title.

(a) Every title insurer shall file with the commissioner its schedule of premium rates and every modification of any premium rate that it proposes to use in this state. The premium rates shall not be subject to rebate and the rebate of premiums to the insured are expressly prohibited. If a reissue premium rate is filed by an insurer, an insured may receive reissue credit only when the insured physically produces the prior title insurance policy, including schedules associated therewith, issued by a title insurer licensed to be engaged in the business of title insurance in this state. A title insurer that has not filed its premium rates pursuant to the provisions hereof shall not engage in the business of title insurance until such time as its premium rates are filed. No person, title insurer, agency, or agent shall charge any premium rate for any policy or contract of title insurance except in accordance with the filed premium rates which are in effect for the title insurer as provided in this section.

(b) Every premium rate filing by a title insurer shall state the effective date thereof and shall indicate the character and extent of the coverage contemplated. The commissioner shall determine the form, manner, and detail of premium rate filings required in this section. No premium rate filing shall provide for the negotiation or bidding of the rate to be charged for a policy insuring an interest in real property in this state.

(c) Before the expiration of 60 days after the receipt of a premium rate filing by a title insurer, the commissioner shall determine the fairness and justness of all such filings and shall also notify the title insurer of any disapproval of the premium rate filing.

(d) Any premium rate filed may be used or charged after the expiration of 60 days from the date of filing in the office of the commissioner, unless the commissioner has issued notice of the commissioner's prior written disapproval thereto within the time period.

(e) A notice of written disapproval by the commissioner shall set forth the reasons therefor and shall state that a hearing will be granted within 30 days after request in writing by the title insurer. The commissioner or his or her designee shall have the power to administer oaths, to require the appearance of and examine any person under oath, and to require the production of books, records, or papers relevant to the inquiry upon the commissioner's or the designee's own initiative or upon the request of any interested insurer.

(a) In connection with any transaction involving the purchase or sale of a fee simple or possessory interest in real property in this state, the title insurer shall obtain or cause its agent to obtain, at or before the closing of settlement and disbursement of any funds, a statement in writing from the purchaser acknowledging that the purchaser has received a notice that owner's title insurance may be available to the purchaser in accordance with the underwriting guidelines of the title insurer and that the purchaser does or does not desire to purchase owner's insurance coverage. The written notice of availability of owner's title insurance shall contain all of the following:

(1) The address or legal description of the property.

(2) A disclosure that owner's title insurance may be available in accordance with the underwriting guidelines of the title insurer and the premium therefor.

(3) A space to indicate the desire of the purchaser to either acquire or decline owner's title insurance.

(4) The date the notice is executed by the purchaser.

(5) The signature of the purchaser or purchasers.

(b) In the event that the notice required in this section is not obtained from the purchaser at or before the closing of settlement and disbursement of any funds, the omission may be cured by the title agent or title insurer at any time subsequent to the closing of settlement but prior to actual or constructive notice of a claim or possible claim against the title of the real estate which was the subject of the settlement by sending a certified letter, return receipt requested, to the last known address of the purchaser, which includes the notification required in this section.

(c) The notification provided by this section shall not be required in any of the following transactions:

(1) A judicial or nonjudicial foreclosure.

(2) A sale pursuant to a decree of any court.

(3) A tax sale.

(4) A transfer evidenced by a deed upon which a recording or deed tax is not payable as provided by law.

(5) Any transaction in which the purchaser has elected to obtain owner's title insurance or wherein the seller has elected or is required by contract to provide owner's title insurance to the purchaser.

(6) Any transaction that conveys a security interest in property of an existing owner.

The commissioner shall adopt rules and regulations for the purpose of implementing the provisions of this chapter in accordance with the Alabama Administrative Procedure Act.

(a) Each individual transaction which is in violation of this chapter or which does not otherwise conform to the requirements of this chapter shall be considered a violation.

(b) This chapter shall be enforceable only by the commissioner and does not create any private cause of action or other private legal recourse.

(c) The commissioner may, in his or her discretion and upon good cause shown, revoke the certificate of authority of a title agent, revoke the license issued to a title insurer, or impose a fine in an amount not to exceed five hundred dollars ($500) for each violation of this chapter or of any rule or regulation promulgated under this chapter. No title insurer shall pay, directly or indirectly, any portion of a fine imposed on any agent of the title insurer. In addition, the commissioner may impose a fine in an amount not to exceed five thousand dollars ($5,000) per violation upon a finding that an agent or an insurer willfully or intentionally deviated from the filed rates for that insurer. Any fine collected by the commissioner shall be deposited into the State General Fund.

(d) If, from any examination of a title insurer the commissioner finds that a title insurer is violating any of the provisions of Section 34-3-7, the commissioner shall so certify his or her findings in writing to the Attorney General, and the Attorney General shall forthwith bring an action in a court of competent jurisdiction in the State of Alabama to permanently enjoin the commission of such acts by the title insurer. If the title insurer violates any of the provisions of such an injunction, the Attorney General shall forthwith bring an action in such a court to revoke the corporate charter of the title insurer, if a domestic entity, or the license to conduct business in this state of the title insurer, if a foreign or alien entity.