Mid Atlantic Real Estate Journal — October 12 - 25, 2012 — 13A
I nsurance /T itle
By Bernie Bittner, Fidelity National Title and Chicago Title Insurance Pennsylvania approves title insurance rate changes
or the first time in ten years, the Pennsylvania Department of Insurance
munity investment act, short form residential policies and enhanced residential coverage policies. Most of these classifications have been simplified to two categories, sale rates and non- sale rates. The loan modifica- tion and assignment rates and the various residential policies will continue to be available. The basic, re-issue, leasehold, subdivision, condominium, refinance, permanent loans following a construction loan, and community investment act rates will no longer be available.
Sales transactions will be charged at the sale rate and all other transactions at the non-sale rate, although there are some limited exceptions to that rule. One example is the simultaneous issue of an own- er’s and lender’s policy. Similar to the existing regulations, it will still be possible to charge only for the higher liability amount policy with the lower liability policy being provided at no additional charge, other than endorsement costs to the loan policy. The charge for the larger policy will be based upon the sale rate regardless
of whether that higher liability policy is an owner’s or lender’s policy. Another exception to the sale/non-sale application of rates relates to purchase and sale transactions in which a Buyer declines to obtain an owner’s policy but a loan policy is issued. In that case, the loan policy would be charged at the sale rate. Endorsements for simul- taneously issued owner and lender policies that are based upon a percentage of the pre- mium will be charged at the sale rate using the highest liability amount policy being
issued, regardless of whether that policy is an owner’s or loan policy. If only one policy is being issued, the percentage endorsements would normally be charged at the sale rate for owners’ policies and at the non- sale rate for lenders’ policies. However, if the transaction represents one of the excep- tions discussed above and the loan policy is being charged at the sale rate, percentage lender endorsements would also be charged based upon the sale rate. It should be noted that the regulations will continue continued on page 14A
has approved an increase in title insur- ance costs, which will be effective for all closings occurring on or after July 1st, 2012. In
addition, the manner in which title charges are calculated will be simplified. Title insurance can be highly regulated, as it is for example in Delaware, New Jersey and New York, where the cost of insurance is strictly set by each State’s Department of Insur- ance. In some states, rates are negotiable, but there may be caps and floors to the permis- sible charges. Other states are very much unregulated and al- low for totally negotiated costs. Pennsylvania’s current rate structure is somewhat unique in its approach in that it main- tains a two tiered system that is strictly regulated up to a cer- tain threshold amount (which amount has changed over the years), but which is completely negotiable for liability amounts above that threshold. For the past decade or so, the rates were set for transactions up to $30 million and insurance pur- chased above that amount has been unregulated as to price. As a result of the new changes, costs will be set for all transac- tions, including that portion of the insurance policy that is over $30 million. In addition to setting the cost of insurance, the Pennsylvania title insurance regulations cover a wide range of matters including types of policies, coverages and endorsements that are available. The overall system of regulations under the current laws is rather complex. In fact, it’s probably safe to say that the details are only under- stood by title companies! Those rates and coverages include a basic, re-issue, leasehold, subdivision, condominium, refinance for loans that are up to two years old, refinance for loans that are two to four years old, modification rates for loans that are up to five years old, that are five to seven years old and that are over 10 years old, permanent loans following a construction loan, assignments of mortgages, properties covered by the com-
Strength. Expertise. Service.
Strength is a continuous process that requires effort, dedication, and discipline.
James D. Pullman, Vice President, Pennsylvania Commercial Manager 1515 Market Street, Suite 1325
Chicago Title and Fidelity National Title are mem- bers of the strongest title insurance family in the industry. Our rich history dates back more than 160 years and includes underwriters who col- lectively insure almost half of all the title insur- ance policies in the U.S. today. That’s the kind of strength that can benefit you and your custom- ers. We are proud of our accomplishments, our posi- tion in the market, the trust that our clients and partners place in us, our expert employees, and our financial strength — but we are never satis- fied. The same effort, dedication, and discipline that has helped us gain our current strength is what will help us maintain it. Call us to learn how our strength, expertise, and service can help your business.
Philadelphia, PA 19102 215-875-4179 (direct) 609-304-2848 (cell) pullmanj@CTT.com (email) Bernie Bittner, Vice President, Commercial Counsel 1515 Market Street, Suite 1325 Philadelphia, PA 19102 215-875-4139 (direct) 609-314-7217 (cell) Bernie.Bittner@FNF.com (email)
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