Update: IDFPR Revision to DS-1 Disclosure Form

IDFPR Delays Implementation of the Proposed DS-1 Disclosure for Producers of Title Insurance Business

5-14-2018 Editor's Note: ATG Agents - Until further notice, continue to use the old form.

ATG prevailed in advocating to delay implementation of new state-mandated disclosure form pending further study. Attorneys must be assured the right to represent and protect their clients. — ATG President, Peter Birnbaum

On April 3, 2018, the Title Insurance Division of the Illinois Department of Financial and Professional Regulation (IDFPR or the department) proposed a new disclosure form to be executed by title insurance agents and underwriters when title insurance is referred by a "producer" as defined under the Title Insurance Act. The form had an effective date of April 4, 2018. ATG had a number of serious concerns, including:

  • IDFPR's authority to promulgate the form;
  • Process the IDFPR employed in drafting and implementing the form;
  • Content of the form;
  • Ability to complete the form accurately;
  • Effectiveness of the form in accomplishing its apparent objective — to improve consumer disclosure; and
  • Serious bias against lawyer agents contained in both the disclosure form itself and in the Instructions for completing it.

The last point is among the most important. While we believe that a lawyer representing a client, examining title, and issuing a title insurance policy is not "referring" title insurance to an agency and arguably may not be subject to the provisions of this disclosure requirement under the act, lawyers acting in this capacity do have disclosure obligations under the Illinois Code of Professional Responsibility. The state disclosure form (called the DS-1) is one effective way to fulfill that obligation.

In response to comments from the Illinois Land Title Association (ILTA), ATG, and others in the industry, the department agreed to delay implementation until May 15. Since that time, ILTA and ATG have submitted written comments to the department highlighting our concerns and offering to provide guidance on ways to accomplish the department's objective of improving consumer disclosure.

In response to those comments from ATG and some others the industry, the IDFPR agreed to delay implementation of the form until June 1, 2018. ATG plans to work with the department to help them accomplish their objectives in a fair and effective manner.

ATG has been among the more vocal advocates for the State to take action regarding egregious forms of market conduct, such as "pay to play" real estate brokerage referrals to actives, "junk fees," and irrational splits. These behaviors will be solved only through administrative or judicial prosecutions by the State. We view the current effort to be an actual example of "form over substance."

We believe there is room for improvement in the current system and will work with the IDFPR to ensure that if improved disclosure would be helpful, we can help them accomplish that objective while ensuring that consumers have access to legal counsel in real estate transactions.

We welcome your feedback, please feel free to Contact Us about this important matter.

Posted on: Mon, 05/07/2018 - 6:09pm