A05053 Summary:

BILL NOA05053
 
SAME ASNo Same As
 
SPONSORWeprin
 
COSPNSR
 
MLTSPNSRGottfried, Magee, Peoples-Stokes, Perry
 
Add Art 10-D Title 4 3974 - 3980, Pub Auth L
 
Creates the New York title guaranty authority to initiate and operate a program which shall offer guaranties of real property titles in this state.
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A05053 Actions:

BILL NOA05053
 
02/06/2017referred to corporations, authorities and commissions
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A05053 Committee Votes:

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A05053 Floor Votes:

There are no votes for this bill in this legislative session.
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A05053 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A5053
 
SPONSOR: Weprin (MS)
  TITLE OF BILL: An act to amend the public authorities law, in relation to creating the New York title guaranty authority   PURPOSE OR GENERAL IDEA OF BILL: It creates the New York Title Guaranty Authority.   SUMMARY OF SPECIFIC PROVISIONS: Section 1: Article 10-D of the public authorities law is amended by adding a new title 4. §3975, Section 2: The authority may issue bonds only to finance costs, including the funding of bonds issued by the authority to finance costs,and fund reserves to secure such bonds. §975, Section 3: The authority and its corporate existence shall contin- ue until terminated by law, but not so long as the authority shall have bonds or other outstanding obligations in less adequate provisions for repayment have been made. §3976, Section 1: The authority shall be administered by seven directors appointed by the governor, of whom two members shall be recommended by the president of the senate, and two members shall be recommended by the speak of the assembly. §3976, Section 2: The members of the authority board shall receive no compensation for their services. §3976, Section 3: Outlines conflicts that would prevent an individual from becoming a director, officer, or employee of the authority. §3976, Section 4: Four directors shall constitute a quorum for the tran- saction of business or the exercise of any power of the authority. §3976, Section 5: The authority shall appoint a treasurer and may-ap- point other offices. §3977. Sections 1-11: The authority shall have the powers to do the following, in addition to those conferred elsewhere in the title, subject only to agreement with bondholders: 1.) to sue and be sued; to make and alter by-laws; 2.) to have a seal and alter it; 3.) to make and execute contracts and other agreements; 4.) to act to protects any right conferred to it by law or contract; 5.) to borrow money and issue bonds; 7.) to pledge all or any of its revenues or assets for the payment of principal and interest on bonds; 8.) to accept gifts, grants, loans and aid from the county state or federal government; 9.) to invest any funds held in reserves or sinking funds, or those not required for immediate use in approved financial instruments; 10.) to appoint officers and employees as required, and determine duties, qualifications, and compensation; 11.) to do all things necessary to carry out its purposes, but the authority may not hold legal title, or have any interest in real proper- ty § 3978: The authority shall offer guaranties of real property titles in New York State and shall fix a price for that guarantee. § 3979, Section 1: A title guaranty fund shall be created. § 3979, Section 2: A title guaranty is an obligation of the authority only and payable solely out of the authorities funds. The state cannot be liable for such obligations. § 3979, Section 3: The authority shall consult with the insurance department in developing guaranty contracts. § 3980, Section 1: Participating attorneys may be required to pay an annual fee set by the authority. § 3980, Section 2: The participation of abstractors and attorneys shall be in accordance with rules set by the board. Participants shall main- tain liability insurance, and shall own or lease an up to date abstract title plant. The authority may waive these requirements upon a showing of hardship. § 3980, Section 3: Prior to the issuance of a title guaranty, the authority shall require evidence that an abstract of title to the prop- erty in question is up to date. § 3980, Section 4: The attorney rendering the title opinion shall be authorized to issue a title guaranty certificate subject to the rules of the authority.   JUSTIFICATION: Title insurance guarantees homebuyers against claims of prior liens against property they intend to purchase. Like other forms of insurance, it is regulated by New York State. Currently, title insurance is avail- able only through private entities and costs citizens an average of $1.2 billion, in order to guarantee payments of $50 million, according to 2007 statistics. Because title insurance is a requirement of home purchase, citizens must accept the prices set by private industry, but that require the approval of the New York State Insurance Department. New York State should take a greater interest in protecting citizens from the overpricing of something the state requires of home buyers. For example, the State of Iowa has prohibited the private sale of title insurance, allowing the government to set rates and ensure that its citizens are offered standard price. Reform of the current New York State system, and the establishment of a public authority to continuous- ly research, administer, and oversee title insurance issuance and rates, could preserve the legal and social benefits of guaranteed title while saving New Yorkers hundreds of millions of dollars annually.   PRIOR LEGISLATIVE HISTORY: A.9445-A (2010) 2011: 01/12/11 referred to corporations, authorities, and commissions 2012: 01/04/12 referred to corporations, authorities and commissions   FISCAL IMPLICATIONS: None.   EFFECTIVE DATE: This act shall take effect immediately.
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A05053 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          5053
 
                               2017-2018 Regular Sessions
 
                   IN ASSEMBLY
 
                                    February 6, 2017
                                       ___________
 
        Introduced  by  M.  of A. WEPRIN -- Multi-Sponsored by -- M. of A. GOTT-
          FRIED, MAGEE, PEOPLES-STOKES, PERRY -- read once and referred  to  the
          Committee on Corporations, Authorities and Commissions
 
        AN  ACT to amend the public authorities law, in relation to creating the
          New York title guaranty authority

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  Article  10-D of the public authorities law is amended by
     2  adding a new title 4 to read as follows:
     3                                   TITLE 4
     4                      NEW YORK TITLE GUARANTY AUTHORITY
     5  Section 3974. Short title.
     6          3975. New York title guaranty authority.
     7          3976. Administration of the authority.
     8          3977. General powers of the authority.
     9          3978. Special powers of the authority.
    10          3979. New York title guaranty fund.
    11          3980. Participating attorneys.
    12    § 3974. Short title. This act shall be known and may be cited  as  the
    13  "New York Title Guaranty Authority Act".
    14    §  3975. New York title guaranty authority. 1. There is hereby created
    15  the New York title guaranty authority, to initiate and operate a program
    16  which shall offer guaranties of real property titles in this state.  The
    17  authority  shall  be a corporate governmental agency and instrumentality
    18  of the state constituting a public benefit corporation.
    19    2. In accordance with the provisions of this title, the authority  may
    20  issue bonds only to finance costs, including the funding of bonds issued
    21  by  the  authority  to  finance  costs, and fund reserves to secure such
    22  bonds.
    23    3. The authority and its  corporate  existence  shall  continue  until
    24  terminated  by  law,  provided,  however, that no such termination shall
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD09375-01-7

        A. 5053                             2
 
     1  take effect so long as the authority shall have  bonds  or  other  obli-
     2  gations  outstanding  unless  adequate  provision  has been made for the
     3  payment thereof.
     4    §  3976.  Administration  of  the authority. 1. The authority shall be
     5  administered by seven directors appointed by the governor, of  whom  two
     6  members  shall  be  appointed  upon  the recommendation of the temporary
     7  president of the senate and two members  shall  be  appointed  upon  the
     8  recommendation  of  the speaker of the assembly. The powers as set forth
     9  in the by-laws of the board shall be established and vested  in  and  be
    10  exercised  by  the  members  of the authority at an initial meeting duly
    11  called and held and four members shall constitute a quorum.
    12    2. The members of the New York title guaranty  authority  board  shall
    13  receive  no  compensation for their services but shall be reimbursed for
    14  actual and necessary expenses  incurred  in  the  performance  of  their
    15  duties.
    16    3.  Notwithstanding any inconsistent provision of any general, special
    17  or local law, ordinance, resolution or charter, no  officer,  member  or
    18  employee  of  the  state of New York, any city, county, town or village,
    19  any governmental entity operating any  public  school  or  college,  any
    20  school  district  or  any  other  public agency or instrumentality which
    21  exercises governmental powers under the laws of the state, shall forfeit
    22  his or her office or employment by reason of his or  her  acceptance  of
    23  appointment  as  a  director,  officer or employee of the authority, nor
    24  shall service as such director, officer or employee of the authority  be
    25  deemed incompatible or in conflict with such office or employment.
    26    4. Four directors shall constitute a quorum for the transaction of any
    27  business  or the exercise of any power of the authority. No action shall
    28  be taken by the authority except pursuant to  a  favorable  vote  of  at
    29  least  four directors participating in a meeting at which such action is
    30  taken.
    31    5. The authority shall appoint a treasurer and  may  appoint  officers
    32  and agents as it may require and prescribe their duties.
    33    §  3977.  General powers of the authority. Except as otherwise limited
    34  by this title, the authority shall have the following powers in addition
    35  to those specially conferred elsewhere in this title,  subject  only  to
    36  agreements with bondholders:
    37    1. to sue and be sued;
    38    2. to have a seal and alter the same at pleasure;
    39    3.  to make and alter by-laws for its organization and management and,
    40  subject to agreements with its bondholders, to make and alter rules  and
    41  regulations  governing the exercise of its powers and fulfillment of its
    42  purposes under this title;
    43    4. to make and execute contracts and all other instruments  or  agree-
    44  ments  necessary  or  convenient  to  carry out any powers and functions
    45  expressly given in this title;
    46    5. to commence any action to protect or enforce  any  right  conferred
    47  upon it by any law, contract or other agreement;
    48    6.  to  borrow  money  and  issue bonds, or to refund the same, and to
    49  provide for the rights of the holders of its bonds;
    50    7. as security for the payment of the principal of and interest on any
    51  bonds issued by it pursuant to this title and  any  agreements  made  in
    52  connection  therewith  and for its obligations under bond facilities, to
    53  pledge all or any part of its revenues or assets;
    54    8. to accept gifts, grants, loans or contributions of funds or  finan-
    55  cial  or other aid in any form from the county, state or federal govern-
    56  ment or any agency or instrumentality thereof, or from any other  source

        A. 5053                             3
 
     1  and  to expend the proceeds for any of its corporate purposes in accord-
     2  ance with the provisions of this title;
     3    9.  subject  to  the  provisions  of any contract with bondholders, to
     4  invest any funds held in reserves or sinking funds,  or  any  funds  not
     5  required  for  immediate  use  or disbursement, at the discretion of the
     6  authority, in (a) obligations of the state or the United States  govern-
     7  ment, (b) obligations the principal and interest of which are guaranteed
     8  by the state or the United States government, (c) certificates of depos-
     9  it,  whether  negotiable  or non-negotiable, and banker's acceptances of
    10  any of the fifty largest banks in the United States which bank,  at  the
    11  time  of investment, has an outstanding unsecured, uninsured and unguar-
    12  anteed debt issue ranked in either of the two highest rating  categories
    13  of two nationally recognized independent rating agencies, (d) commercial
    14  paper  of  any  bank or corporation created under the laws of either the
    15  United States or any state of the United States which commercial  paper,
    16  at  the  time  of the investment, has received the highest rating of two
    17  nationally recognized independent rating  agencies,  (e)  bonds,  deben-
    18  tures,  or  other evidences of indebtedness, issued or guaranteed at the
    19  time of the investment by the  federal  national  mortgage  association,
    20  federal  home  loan mortgage corporation, student loan marketing associ-
    21  ation, federal farm credit system, or any other United States government
    22  sponsored agency, provided that at the time of the investment such agen-
    23  cy receives, or its obligations receive, any of the three highest rating
    24  categories of two nationally recognized independent rating agencies, (f)
    25  any bonds or other obligations of any state  or  the  United  States  of
    26  America  or  of any political subdivision thereof or any agency, instru-
    27  mentality or local governmental unit of  any  such  state  or  political
    28  subdivision which bonds or other obligations, at the time of the invest-
    29  ment,  have  received any of the three highest ratings of two nationally
    30  recognized independent rating agencies,  (g)  any  repurchase  agreement
    31  with  any bank or trust company organized under the laws of any state of
    32  the United States of America or  any  national  banking  association  or
    33  government  bond  dealer reporting to, trading with, and recognized as a
    34  primary dealer by the Federal Reserve Bank of New York, which  agreement
    35  is  secured  by any one or more of the securities described in paragraph
    36  (a), (b) or (e) of this subdivision which securities shall at all  times
    37  have  a  market value of not less than the full amount of the repurchase
    38  agreement and be delivered to another bank or  trust  company  organized
    39  under  the  laws  of  New York state or any national banking association
    40  domiciled in New York state, as custodian, and  (h)  reverse  repurchase
    41  agreements  with  any  bank or trust company organized under the laws of
    42  any state of the United States of America or any national banking  asso-
    43  ciation or government bond dealer reporting to, trading with, and recog-
    44  nized as a primary dealer by the Federal Reserve Bank of New York, which
    45  agreement  is  secured by any one or more of the securities described in
    46  paragraph (a), (b) or (e) of this subdivision which securities shall  at
    47  all  times  have  a market value of not less than the full amount of the
    48  repurchase agreement and be delivered to another bank or  trust  company
    49  organized under the laws of New York state or any national banking asso-
    50  ciation domiciled in New York state, as custodian;
    51    10.  to  appoint such officers and employees as it may require for the
    52  performance of its duties and to fix and determine their qualifications,
    53  duties, and compensation, and to retain or employ counsel, auditors  and
    54  private  financial consultants and other services on a contract basis or
    55  otherwise for rendering professional, business or technical services and

        A. 5053                             4
 
     1  advice; and, in taking such actions, the authority  shall  consider  the
     2  financial impact on the county; and
     3    11.  to do any and all things necessary or convenient to carry out its
     4  purposes and exercise the powers expressly given  and  granted  in  this
     5  title;  provided,  however,  such authority shall under no circumstances
     6  acquire, hold or transfer title to, lease, own  beneficially  or  other-
     7  wise,  manage, operate or otherwise exercise control over any real prop-
     8  erty, any improvement to real property or  any  interest  therein  other
     9  than  a  lease or sublease of office space deemed necessary or desirable
    10  by the authority.
    11    § 3978. Special powers of the authority.   The New  York  state  title
    12  guaranty  authority board shall offer guaranties of real property titles
    13  in this state. The terms, conditions and form of the guaranty  contracts
    14  shall  be  forms  approved by the authority.   The authority shall fix a
    15  charge for the guaranty in an amount sufficient to permit the program to
    16  operate on a self-sustaining basis, including payment of  administrative
    17  costs  and  the  maintenance of an adequate reserve against claims under
    18  the title guaranty program.
    19    § 3979. New York title guaranty fund.   1. A title  guaranty  fund  is
    20  created. Funds collected under this program shall be placed in the title
    21  guaranty  fund  and  are available to pay all claims, necessary reserves
    22  and all administrative costs of the title guaranty  program.  Moneys  in
    23  the fund shall not revert to the general fund and interest on the moneys
    24  in  the  fund  shall  require  costs of title insurance to be sufficient
    25  enough to include fifty million dollars annually for affordable housing,
    26  fifty million dollars annually to ensure  that  the  state's  roads  and
    27  bridges  are  in  a state of good repair, fifty million dollars annually
    28  for the purpose of a STAR rebate program and other such purposes as  may
    29  be required by the legislature and the governor.
    30    2. A title guaranty, closing protection letter, or gap coverage issued
    31  under this program is an obligation of the authority only and claims are
    32  payable  solely  and only out of the moneys, assets, and revenues of the
    33  title guaranty fund and are not an  indebtedness  or  liability  of  the
    34  state.  The  state  is  not  liable  on any guaranty, closing protection
    35  letter, or gap coverage.
    36    3. The authority  shall  consult  with  the  department  of  financial
    37  services  in  developing a guaranty contract acceptable to the secondary
    38  market and developing any other feature of the program  with  which  the
    39  insurance  division may have special expertise. The department of finan-
    40  cial services shall establish the amount for a loss reserve fund. Except
    41  as provided in this section, the title guaranty program is  not  subject
    42  to  the  jurisdiction  of  or  regulation by the department of financial
    43  services.
    44    § 3980. Participating attorneys.  1. Each participating  attorney  and
    45  abstractor  may  be  required  to  pay an annual participation fee to be
    46  eligible to participate in the title guaranty program. The fee, if  any,
    47  shall be set by the authority, subject to the approval of the board.
    48    2.  The participation of abstractors and attorneys shall be in accord-
    49  ance with rules established by the board.
    50    a. (1) Each participant shall at all times maintain liability coverage
    51  in amounts approved by the authority.  Upon payment of a  claim  by  the
    52  authority  the authority shall be subrogated to the rights of the claim-
    53  ant against all persons relating to the claim.
    54    (2) Additionally, each participating abstractor is required to own  or
    55  lease,  and  maintain and use in the preparation of abstracts, an up-to-
    56  date abstract title plant including tract indices for  real  estate  for

        A. 5053                             5
 
     1  each  county  in  which  abstracts are prepared for real property titles
     2  guaranteed by the division. The tract indices shall contain a  reference
     3  to  all  instruments affecting the real estate which are recorded in the
     4  office  of  the  county recorder, and shall commence not less than forty
     5  years prior to the date the abstractor commences  participation  in  the
     6  title  guaranty  program.  However,  a  participating attorney providing
     7  abstract services continuously from November twelfth,  nineteen  hundred
     8  eighty-six,  to  the  date  of application, either personally or through
     9  persons under the attorney's supervision and control is exempt from  the
    10  requirements of this subparagraph.
    11    b.  The  authority may waive the requirements of this section pursuant
    12  to an application of an attorney or  abstractor  which  shows  that  the
    13  requirements  impose  a  hardship to the attorney or abstractor and that
    14  the waiver clearly is in the public interest or is absolutely  necessary
    15  to ensure availability of title guaranties throughout the state.
    16    3.  Prior  to  the  issuance  of a title guaranty, the authority shall
    17  require evidence that an abstract of title to the property  in  question
    18  has  been brought up-to-date and certified by a participating abstractor
    19  in a form approved by authority rules and a title opinion  issued  by  a
    20  participating  attorney  in  the  form approved in the rules stating the
    21  attorney's opinion as to the title. The authority shall require evidence
    22  of the abstract being brought up-to-date and the abstractor shall retain
    23  evidence of the abstract as determined by the board.
    24    4. The attorney rendering a title opinion shall be authorized to issue
    25  a title guaranty certificate subject to the rules of the authority.
    26    § 2. This act shall take effect immediately.
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