Land Title Insurance Case Study

Best Business Practices in Land Title Insurance

Law and Risk Management – Spring 2014

Paul Drake

After the housing bubble burst, everyone involved in the process was subject to severe criticism. From the realtors to the land title insurance agents to the banks, the housing industry underwent a major overhaul. In order to make sure that what happened less than a decade ago doesn’t happen again with the same veracity, the American Land Title Association (ALTA), which guides the conduct of land title insurance agents, published a “Best Practices” manual. ALTA seeks to guide its membership on best practices to protect consumers and to meet legal and market requirements. This paper will lay out the best practices used by ALTA for title insurance and settlement.

The first best practice is to establish and maintain current licenses as required to conduct the business of title insurance and settlement services. The purpose of this is to maintain state mandated insurance licenses and corporate registrations to ensure that the company remains in good standing with the state. This best practice is accomplished by establishing and maintaining applicable business licenses and complying with licensing, registration, or similar requirements with the applicable state regulatory department or agency. Also, members of ALTA must complete appropriate compliance with ALTA’s Policy Forms Licensing requirement.

The second best practice is to “adopt and maintain appropriate written procedures and controls for Escrow Trust Accounts allowing for electronic verification of reconciliation.” This helps title and settlement companies meet legal requirements for the safeguarding of client funds. These procedures ensure accuracy and minimize the expos...

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...laints ensures that any instances of poor service or non-compliance do not go undiscovered. To accomplish this, there must be standard procedures for logging and resolving consumer complaints to guarantee that consumers provide the company with sufficient information to understand the nature and scope of the complaint.

These procedures and safeguards are by no means the only things title insurance companies can do in order to make sure that they protect themselves and their clients against unfair and deceptive business practices, as well as market downturn. In fact, many land title insurance companies go above and beyond the practices laid out here, like establishing a time limit on notifying law enforcement of data breaches, as well as establishing a minimum balance in escrow accounts, regardless of the amount of client money that is actually in those accounts.