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Alabama Title Insurance Act and New Residency Requirements

Posted By USFN, Wednesday, January 02, 2013
Updated: Tuesday, December 01, 2015

January 2, 2013

 

by Jeff G. Underwood
Sirote & Permutt, P.C. – USFN Member (Alabama)

On January 1, 2013, House Bill 460, “The Alabama Title Insurance Act,” (the Act) became effective. The Alabama Department of Insurance has adopted regulations that implement the provisions of the Act, which also became effective on that date. The Act is codified in Title 27-25-3, et seq. The Act requires higher qualification standards and strengthened residency requirements for title insurance agents or agencies in the state of Alabama.

The new law dictates that in order to receive a title insurance agent’s license, an applicant must be at least 19 years of age and a bona fide resident of the state of Alabama or a fulltime employee of a duly licensed title agency with its principal place of business physically located in the state. The applicant must not have committed any act that would provide grounds for revocation, suspension, or refusal of license by the Department of Insurance. The applicant must complete a pre-licensing educational course approved by the Department of Insurance (parties with five years of uninterrupted title insurance experience can be exempted from this requirement). The applicant must successfully pass a title licensing exam and pay the necessary licensing fee to the state.

Further, the law compels that business entities which are title agents must have a principal place of business physically located in Alabama. This “brick and mortar” requirement is a key change to the existing law. Failure to comply with this act would subject individuals or agencies to license denial, nonrenewal, or revocation, in addition to the potential for civil fines of up to $10,000 per violation.

Clients should analyze their current title vendors to ensure that the existing title agents meet the licensing requirements outlined under this law, especially in light of the punitive measures put into place under the new provisions.

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