HB 503

02-17 08:57  1st Sub. (Buff) H.B. 503
                       Anthony E. Loubet proposes the following substitute bill:
1Real Estate Modifications
                                        2026 GENERAL SESSION
                                              STATE OF UTAH
                                   Chief Sponsor: Anthony E. Loubet
                                                Senate Sponsor:
2
3   LONG TITLE
4   General Description:
5This bill modifies affiliated business arrangements in title insurance.
6   Highlighted Provisions:
7This bill:
8▸ modifies the definition of "affiliated business";
9▸ provides a framework for RESPA compliance based on revenue concentration; and
10▸ makes technical and conforming changes.
11   Money Appropriated in this Bill:
12None
13   Other Special Clauses:
14None
15   Utah Code Sections Affected:
16   AMENDS:
1731A-23a-1001, as last amended by Laws of Utah 2020, Chapter 448
                                                                                                           1st Sub. H.B. 503
1831A-23a-1003, as last amended by Laws of Utah 2020, Chapter 448
19
20   Be it enacted by the Legislature of the state of Utah:
21Section 1. Section 31A-23a-1001 is amended to read:
2231A-23a-1001 . Definitions.
23      As used in this part:
24   (1) "Affiliated business" means the gross [transaction] title premium revenue of a title
25entity's title insurance business in the state that is the result of an affiliated business
26arrangement.
27   (2) "Affiliated business arrangement" means the same as that term is defined in 12 U.S.C.
28Sec. 2602, except the services that are the subject of the arrangement do not need to
29involve a federally related mortgage loan.
1st Sub. (Buff) H.B. 503  02-17 08:57
30   (3) "Applicable percentage" means:
31(a) on February 1, 2020, through January 31, 2021, 0.5%;
32(b) on February 1, 2021, through January 31, 2022, 1%;
33(c) on February 1, 2022, through January 31, 2023, 1.5%;
34(d) on February 1, 2023, through January 31, 2024, 2%;
35(e) on February 1, 2024, through January 31, 2025, 2.5%;
36(f) on February 1, 2025, through January 31, 2026, 3%;
37(g) on February 1, 2026, through January 31, 2027, 3.5%;
38(h) on February 1, 2027, through January 31, 2028, 4%; and
39(i) on February 1, 2028, through January 31, 2029, 4.5%.
40   (4) "Associate" means the same as that term is defined in 12 U.S.C. Sec. 2602.
41   (5) "Division" means the Division of Real Estate created in Section 61-2-201.
42   (6) "Essential function" means:
43(a) examining and evaluating, based on relevant law and title insurance underwriting
44principles and guidelines, title evidence to determine the insurability of a title and
45which items to include or exclude in a title commitment or title insurance policy to be
46issued;
47(b) preparing and issuing a title commitment or other document that:
48(i) discloses the status of the title as the title is proposed to be insured;
49(ii) identifies the conditions that must be met before a title insurance policy will be
50issued; and
51(iii) obligates the insurer to issue a title insurance policy if the conditions described in
52Subsection (6)(b)(ii) are met;
53(c) clearing underwriting objections and taking the necessary steps to satisfy any
54conditions to the issuance of a title insurance policy;
55(d) preparing the issuance of a title insurance policy; or
56(e) handling the closing or settlement of a real estate transaction when:
57(i) it is customary for a title entity to handle the closing or settlement; and
58(ii) the title entity's compensation for handling the closing or settlement is
59customarily part of the payment or retention from the insurer.
60   (7) "New or newly affiliated title entity" means a title entity that:
61(a) is licensed as a title entity for the first time on or after May 14, 2019; or
62(b)(i) is licensed as a title entity before May 14, 2019; and
63(ii) enters into an affiliated business arrangement for the first time on or after May
                                                  -2-
02-17 08:57  1st Sub. (Buff) H.B. 503
6414, 2019.
65   (8) "Producer" means the same as the term "person who is in a position to refer settlement
66service business" is defined in 12 C.F.R. Sec. 1024.15(c).
67   (9) "RESPA" means the federal Real Estate Settlement Procedures Act, 12 U.S.C. Sec.
682601 et seq. and any rules made thereunder.
69   (10) "Section 8 of RESPA" means 12 U.S.C. Sec. 2607 and any rules promulgated
70thereunder.
71   (11) "Sufficient capital and net worth" means:
72(a) for a new or newly affiliated title entity:
73(i) $100,000 for the first five years after becoming a new or newly affiliated title
74entity; or
75(ii) after the first five years after becoming a new or newly affiliated title entity, the
76greater of:
77(A) $50,000; or
78(B) on February 1 of each year, an amount equal to 5% of the title entity's average
79annual gross revenue over the preceding two calendar years, up to $150,000; or
80(b) for a title entity licensed before May 14, 2019, who is not a new or newly affiliated
81title entity:
82(i) for the time period beginning on February 1, 2020, and ending on January 31,
832029, the lesser of:
84(A) an amount equal to the applicable percentage of the title entity's average
85annual gross revenue over the two calendar years immediately preceding the
86February 1 on which the applicable percentage first applies; or
87(B) $150,000; and
88(ii) beginning on February 1, 2029, the greater of:
89(A) $50,000; or
90(B) an amount equal to 5% of the title entity's average annual gross revenue over
91the preceding two calendar years, up to $150,000.
92   (12) "Title entity" means:
93(a) a title licensee as defined in Section 31A-2-402; or
94(b) a title insurer as defined in Section 31A-23a-415.
95   (13)(a) "Title evidence" means a written or electronic document that identifies and
96describes or compiles the documents, records, judgments, liens, and other
97information from the public records relevant to the history and current condition of a
                                                 -3-
 1st Sub. (Buff) H.B. 503  02-17 08:57
98title to be insured.
99(b) "Title evidence" does not include a pro forma commitment.
100Section 2. Section 31A-23a-1003 is amended to read:
10131A-23a-1003 . Affiliated business arrangements.
102   (1) An affiliated business arrangement between a person and a title entity violates Section 8
103of RESPA for purposes of state law if:
104(a) [the title entity does not have sufficient capital and net worth in a reserve account in
105the title entity's name; or] the title entity lacks sufficient capital and net worth
106maintained in a reserve account in the title entity's name; or
107(b) 70% or more of the title entity's annual title premiums are derived from affiliated
108business, excluding title premiums calculated using filed centralized rates from a title
109insurance underwriter.
110[(b) more than 70% of the title entity's annual title insurance business is affiliated
111business on or after the later of:]
112[(i) two years after the title entity begins an affiliated business arrangement; or]
113[(ii) June 1, 2021.]
114   (2) In addition to Subsection (1), the division may find that an affiliated business
115arrangement between a person and a title entity violates Section 8 of RESPA after
116evaluating and weighing the following factors in light of the specific facts before the
117division:
118(a) whether the title entity:
119(i) is staffed with the title entity's own employees to conduct title insurance business;
120(ii) manages the title entity's own business affairs;
121(iii) has a physical office for business that is separate from any producer's or
122associate's office and pays market rent;
123(iv) provides the essential functions of title insurance business for a fee, including
124incurring the risks and receiving the rewards of any comparable title entity; and
125(v) performs the essential functions of title insurance business itself;
126(b) if the title entity contracts with another person to perform a portion of the title
127entity's title insurance business, whether the contract:
128(i) is with an independent third party; and
129(ii) provides payment for the services that bears a reasonable relationship to the value
130of the services or goods received; and
131(c) whether the person from whom the title entity receives referrals under the affiliated
                                                   -4-
 02-17 08:57  1st Sub. (Buff) H.B. 503
132business arrangement also sends title insurance business to other title entities.
133Section 3. Effective Date.
134   This bill takes effect on May 6, 2026.
                                                 -5-