HB267 Alabama 2011 Session

Summary

Primary Sponsor

Mike Hill

Republican

Session

Regular Session 2011

Title

Title insurers, closing or settlement insurance for settlement agents, issuance authorized, Sec. 27-3-6.1 added

Summary

HB267 lets title insurers offer closing or settlement protection to parties in real estate deals, sets how forms and fees are approved, requires buyer notice about availability, and limits protections to specific losses related to title and mortgage priority.

What This Bill Does

The bill authorizes title insurers to issue closing or settlement protection to people involved in a transaction where a title policy will be issued, with protection forms needing approval from the Insurance Commissioner. It defines what losses the protection can cover (theft or misappropriation of funds, or failure to follow closing instructions) and ties these losses to the title's status or the mortgage lien’s validity and priority. It sets minimum fees per party for the protection, requires notices to purchasers about availability if the lender doesn’t request protection, and allows curing any missing notice by sending a certified letter. It also prohibits other types of coverage beyond closing or settlement protection. The act takes effect immediately after the Governor approves it.

Who It Affects

• Buyers/purchasers: may receive closing protection as part of a real estate transaction and must be notified about its availability; they may pay a minimum fee (not less than $25) if covered.
• Sellers: may pay a higher minimum fee (not less than $50) if they convey title or provide owner financing and do not receive a loan policy.
• Lenders: may be in transactions receiving protections; fees apply to buyers or lenders.
• Settlement agents and title insurers: can issue the protection and must ensure forms and fees are approved; acts of theft or failure to follow instructions by these agents can be covered.

Key Provisions

• A title insurer may issue closing or settlement protection to a party in a transaction where a title policy will be issued (subject to existing law).
• The protection form must be submitted to and approved by the Insurance Commissioner.
• The protection may cover losses from theft/misappropriation or failure to follow written closing instructions by an approved settlement agent, but only to the extent related to title status or mortgage lien validity/enforceability/priority.
• Fees for closing protection must be approved by the commissioner and must be at least $25 per party (buyer or lender) and at least $50 for a seller who conveys title or provides owner financing without a loan policy.
• If lender protection was not requested, a notice must be obtained from the parties indicating whether they want protection, including property details, disclosure of availability and fee, and signatures; if not obtained, the protection can still be offered via a certified-certificate notice.
• The title insurer cannot provide other coverage indemnifying against improper acts by settlement services beyond this closing protection.
• The act becomes effective immediately after the Governor approves it.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Insurance