Create State Title Insurance

Section 1. Legislative findings. The legislature finds and declares that a state title guaranty program promotes land title stability and a low-cost mechanism to provide for guaranties of real property titles in New York state. The title guaranty corporation established by this act will facilitate developers', homebuyers', and mortgage lenders' participation and add to the integrity of the land-title transfer system in the state.

§ 2. Article 10-D of the public authorities law is amended by adding a new title 4 to read as follows:

TITLE 4

NEW YORK TITLE GUARANTY PROGRAM Section 3974. New York title guaranty program.

3975. New York title guaranty corporation.

§ 3974. New York title guaranty program. (a) There is hereby created the New York title guaranty program to initiate and operate a program which shall offer guaranties of real property titles in this state. The program shall be authorized and administered by a new state corporation entitled the New York title guaranty corporation. The corporation shall determine the terms, conditions, and form of the guaranty contract. The corporation shall fix a charge for the guaranty in an amount sufficient to permit the program to operate on a self-sustaining basis, including

EXPLANATION--Matter in italics (underscored) is new; matter in brackets

[ ] is old law to be omitted.

LBD03196-01-5

payment of administrative costs and the maintenance of an adequate reserve against claims under the New York title guaranty program.

(b) A title guaranty or gap coverage issued under this program is an obligation of the corporation only and claims are payable solely and only out of the moneys, assets, and revenues of the title guaranty fund established and held by the corporation and are not an indebtedness or liability of the state. The state shall not be liable on any guaranty or gap coverage.

(c) The corporation shall consult with the department of financial services in developing a guaranty contract and developing any other feature of the program with which the department of financial services may have special expertise.

(d) Each participating attorney and abstractor may be required to pay an annual participation fee to be eligible to participate in the New York title guaranty program. The fee, if any, shall be set by the corporation.

(e) The participation of abstractors and attorneys shall be in accordance with rules established by the corporation and adopted by the program pursuant to the state administrative procedure act, including rules for the payment of reasonable fees and costs of necessary services.

(1) (A) Each participant shall at all times maintain liability coverage in amounts approved by the corporation. Upon payment of a claim by the corporation, the corporation shall be subrogated to the rights of the claimant against all persons relating to the claim.

(B) Additionally, the state, through the corporation, shall establish and maintain a statewide electronic database of real property throughout the state. All instruments affecting real property in the state which have heretofore been recorded in the office of a county clerk or other municipal office shall be recorded in the statewide electronic database of real property. The corporation may undertake additional methods to obtain real property title information for purposes of creating and maintaining a comprehensive statewide electronic database of real property. The statewide electronic database of real property shall be accessible to participating abstractors and attorneys under terms determined by the corporation, and the corporation may provide access to all or portions of the database to the public.

(2) The corporation may waive the requirements of this subdivision pursuant to an application of an attorney or abstractor which shows that the requirements impose a hardship to the attorney or abstractor and that the waiver clearly is in the public interest or is absolutely necessary to ensure availability of title guaranties throughout the state.

(f) Prior to the issuance of a title guaranty, the corporation shall require evidence that an abstract of title to the real property in question has been brought up-to-date and certified by a participating abstractor in a form approved by the corporation and a title opinion issued by a participating attorney in the form approved by the corporation stating the attorney's opinion as to the title. The corporation shall require evidence of the abstract being brought up-to-date and the abstractor shall retain evidence of the abstract as determined by the corporation. The information obtained may be included in the statewide electronic database.

(g) The attorney rendering a title opinion shall be authorized to issue a title guaranty certificate subject to the rules of the corporation.

(h) The corporation shall adopt rules and regulations necessary for the implementation of the New York title guaranty program as established by this article.

§ 3975. New York title guaranty corporation. 1. There is hereby established the New York title guaranty corporation for the implementation of the New York title guaranty program. The corporation shall be a body corporate and politic constituting a public benefit corporation. The president of the corporation shall be nominated by the governor and confirmed by the senate. The board of directors shall consist of twelve members as follows: the president of the corporation, or the president's designee, who shall serve as the chairperson of the board; three members appointed by the governor; three members appointed by the temporary president of the senate; three members appointed by the speaker of the assembly; one member appointed by the minority leader of the senate; and one member appointed by the minority leader of the assembly. One of the governor's appointees shall serve an initial term of two years; one of the governor's appointees shall serve an initial term of three years; and one of the governor's appointees shall serve an initial term of four years. One of the appointees of the temporary president of the senate and one of the appointees of the speaker of the assembly shall serve initial terms of two years; and two appointees of the temporary president of the senate and two appointees of the speaker of the assembly shall serve initial terms of four years. The appointees of the minority leader of the senate and the minority leader of the assembly shall serve initial terms of two years. Thereafter, all terms shall be for a period of four years. In the event of a vacancy occurring in the office of trustee by death, resignation or otherwise, the respective appointing officer shall appoint a successor who shall hold office for the unexpired portion of the term.

2. On or before October first, two thousand twenty-seven, the New York title guaranty board shall provide the governor and the legislature a plan for the implementation of the New York title guaranty program.

3. To the maximum extent feasible, the state department of taxation and finance, the department of financial services, the department of housing and community renewal, and the department of finance of the city of New York shall provide the board with such facilities, assistance and data as will enable the board to carry out the powers and duties of the corporation. Additionally, to the maximum extent feasible, all other agencies of the state or subdivisions thereof shall, at the request of the chairperson provide the board with such facilities, assistance, and data as will enable the board to carry out the powers and duties of the corporation.

4. The president shall have the authority to appoint such officers and employees as it may require for the performance of the duties of the corporation and to fix and determine their qualifications, duties, and compensation, and to retain or employ counsel, auditors and private financial consultants and other services on a contract basis or otherwise for rendering professional, business or technical services and advice.

§ 3. The state finance law is amended by adding a new section 92-j to read as follows:

§ 92-j. Title guaranty fund. 1. There is hereby established in the joint custody of the New York title guaranty corporation and the state comptroller a special fund to be known as the "title guaranty fund".

2. The title guaranty fund shall consist of all moneys collected from the New York title guaranty program collected pursuant to title four of article ten-D of the public authorities law, and all other moneys credited or transferred thereto from any other fund or source pursuant to law.

3. The moneys in such fund shall be available for payment of any and all costs and expenditures incurred in performing any of the work required in administering the New York title guaranty program pursuant to title four of article ten-D of the public authorities law, including claims, necessary reserves, staffing, administrative costs and expenses incidental and appurtenant thereto; provided, however, that ten percent of the moneys in such fund shall be used to fund the homeowner protection program established by the office of the attorney general for the purposes of foreclosure defense and homeowner education; and provided, further, that twenty-five percent of the moneys in such fund shall be directed to the New York state division of homes and community renewal to fund such division's consolidated plan submitted to the United States department of housing and urban development pursuant to 24 CFR Part 91.

4. Moneys in the title guaranty fund shall be kept separately from and shall not be commingled with any other moneys in the joint or sole custody of the New York title guaranty corporation and the state comptroller.

§ 4. Article 64 of the insurance law is REPEALED.

§ 5. Any title policy which was issued prior to the effective date of this act pursuant to article 64 of the insurance law shall continue to be governed by such article solely for the purposes of administering, reserving for and paying claims on such pre-existing policies, under the oversight and enforcement of the department of financial services.

§ 6. This act shall take effect January 1, 2027. Effective immediately, the addition, amendment and/or repeal of any rule or regulation necessary for the implementation of this act on its effective date are authorized to be made and completed on or before such effective date.