HB 251 (BR 1264) - J. Draud, J. Callahan, T. Feeley, T. Kerr, P. Marcotte, J. Reinhardt, C. Walton
AN ACT relating to real property transactions.
Amend KRS 376.050 to prohibit a person from willful misappropriation or misapplication of proceeds from a loan to finance improvements to real property; amend KRS 376.070 to prohibit willful misappropriation or misapplication of payments from the owner to the contractor, architect, or other person who builds, repairs, or improves real property of another under circumstances in which a mechanic's or materialman's lien may be imposed on the property; amend KRS 376.990 to establish penalties for such misappropriation or misapplication; create a new section of KRS Chapter 376 to provide that the seller of real property must deliver to the purchaser at the closing an affidavit that the seller has paid, or will pay, each person for all labor and materials used in the construction or improvements on the real property and that the seller is not indebted to any person by reason of the construction; create a new section of KRS Chapter 376 to provide that if any contract to build, repair, or improve real property between the owner and the architect, builder, or other person requires the owner to obtain a mortgage from a third party lender, the contract shall also require that all payments, draws, or advances from the lender must be payable jointly to the owner and the contractor, architect, or other party to the contract; as an alternative, permit the owner to authorize the lender to make payments, draws, or advances directly to the contractor, architect, or other party to the contract; create new sections of KRS 382 to create the Kentucky Real Estate Settlement Protection Act to regulate settlement agents in transactions involving the cash purchase of or lending on the security of real estate in Kentucky consisting of one (1) to four (4) residential dwelling units; require the settlement agent to be a licensed attorney, a licensed title insurance agent, a licensed real estate broker, or a financial institution or subsidiary or affiliate licensed under KRS Chapter 287 or 290; permit the settlement agent to provide escrow, closing, or settlement services; require all contracts involving the purchase of real estate consisting of one (1) to four (4) residential dwelling units to include specific language on the role of the settlement agent, guidelines for escrow, closing and settlement services, and an explanation of title insurance; require funds deposited with a settlement agent to be deposited in a fiduciary trust account in a qualified financial institution; require the funds to be applied only in accordance with the terms of the individual instructions or agreements under which the funds were accepted; allow funds held in a post-closing escrow account to be disbursed only according to written instruction or agreement as to how and to whom the funds may be disbursed; prohibit a settlement agent from intentionally making any materially false or misleading statement or entry on a settlement statement; require the settlement agent to maintain sufficient records to ensure the agent is acting in compliance with this Act; require settlement agents to register with the Department of Financial Institutions; require the Commissioner of Financial Institutions to refer complaints and other information of willful violations of this Act to the appropriate licensing authority, or if the settlement agent does not hold a license from another licensing authority, hold a hearing; create new sections of Subtitle 22 of KRS Chapter 304 to create the Kentucky Title Insurance Agent Act; define "title agent", "title insurance business", "title insurer", and other terms; permit the agent to only sell for an insurer with whom the agent holds an appointment; provide that a currently licensed title agent has ninety (90) days after the effective date of this Act to comply with this Act; direct the commissioner of insurance to require an errors and omissions policy or fidelity bond to be maintained by the title agent and any delegate performing the title search; authorize the commissioner of insurance to examine, audit, and inspect the books and records maintained by the title insurance agent; require a title insurance report to be given to the purchaser-mortgagor prior to the day of closing, unless the agent documents reasons for delay, when constituting an offer to issue an owner's title insurance policy covering resale of owner-occupied residential property; require a title agent who issued a lender's title policy in conjunction with a mortgage loan made simultaneously with the purchase of real estate securing the loan to provide notice to the purchaser-mortgagor at the time the commitment is prepared; require the notice to explain the lender's title insurance policy and that the purchaser-mortgagor may obtain an owner's title insurance policy; permit a title insurance agent to operate as a settlement agent if the title insurance agent complies with Sections 6 to 15 of this Act known as the Kentucky Real Estate Settlement Protection Act; require the title insurance agent to maintain sufficient records for five (5) years.
HB 251 - AMENDMENTS
HFA (1, D. Ford) - Exempt from registration with the Department of Financial Institutions settlement agents who hold a license from a licensing authority.
HFA (2, R. Crimm) - Provide that when an insured property loss exceeds $1000 on a dwelling or other structure which requires restoration due to a loss covered under the owner's property or casualty insurance policy, the insurance company must make payment jointly to the owner and contractor who does the construction.
HFA (3, J. Draud) - Make various amendments to bring the title insurance provisions into conformity with the National Association of Insurance Commissioners model law on title insurance agents.
HFA (4, T. Kerr) - Exempt attorneys acting as title insurance agents from the licensing and appointment requirements.
HFA (5, T. Feeley) - Require the settlement agent to send the owner within 1 week after the closing proof of payment of any liens identified at the closing to be paid; require the person employed to do title work on real estate for the owner or lender to prepare a follow-up report within thirty (30) days after the closing and notify the buyer and lender if title defects are not resolved.
HFA (6, J. Draud) - Make various amendments to bring the title insurance provisions into conformity with the National Association of Insurance Commissioners model law on title insurance agents.
Feb 4-introduced in House
Feb 5-to Banking and Insurance (H); posted in committee
Feb 12-reported favorably, 1st reading, to Calendar; floor amendment (1) filed
Feb 13-2nd reading, to Rules; floor amendments (2) and (3) filed
Feb 14-floor amendment (4) filed
Feb 18-posted for passage in the Regular Orders of the Day for Wednesday, February 19, 2003; floor amendments (5) and (6) filed
Feb 21-3rd reading, passed 93-2 with floor amendments (1) (4) (5) and (6)
Feb 24-received in Senate
Feb 26-to Banking and Insurance (S)