HB5409 Summary

• Amends the Title Insurance Act to establish new escrow agent requirements and protections, including restrictions on when title insurance agents can act as escrow agents in real property transactions.

• Prohibits title insurance agents from acting as escrow agents in nonresidential transactions with less than $2,000,000 in settlement funds or in residential transactions unless a title insurance commitment has been issued and the agent is authorized by the insurance company.

• Creates new "closing protection letters" issued by title insurance companies that indemnify transaction parties against losses from escrow agent fraud, dishonesty, negligence, or failure to comply with closing instructions related to title status and mortgage lien validity.

• Specifies allowed limitations on closing protection letter coverage, including exceptions for bank failures, mechanics' liens, inconsistent title insurance instructions, and fraud by third-party agents or brokers.

• Requires title insurance companies to be liable for authorized escrow agents' acts or omissions only to the extent of liability undertaken in agency agreements or closing protection letters, and prohibits charging parties fees for title company-provided protections.