NCGA Approves Legislation to Avert Title Insurance Crisis

The North Carolina State House and Senate yesterday both adopted the conference report on SB 42 (Mech. Liens/Pvt Lien Agent), assuring the continued availability of title insurance in North Carolina. The bill was a top legislative priority for the North Carolina Home Builders Association (NCHBA), which was also a key player in the negotiations. SB 42 is expected to be ratified today and sent to the Governor, averting a major crisis for the building industry.

The continued availability of title insurance in North Carolina was threatened by a May 10 letter from the Fidelity companies to significantly curtail their policy writing on June 15. The Fidelity companies control roughly 40% of the title insurance market in the state. Another significant carrier, First American Title, issued a similar threat. Any curtailment in the issuance of new policies by them would have posed significant risks to the continued availability of title insurance generally and thereby threatened the very modest recovery that seems to be taking hold in Charlotte and other housing markets across the state. NCHBA had reason to suspect that the other major writers of title insurance would not have stepping forward to fill the gap had these companies followed through on their threat. Because of earlier progress in the negotiations, both entities extended these “deadlines” until the end of the legislative session.

Both the land title association and Fidelity have assured NCHBA that the enactment of SB 42 satisfies them and that no curtailment coverage will occur. While the legislation will impose new burdens on contractors and owners, the title industry was very accommodating of the industry’s suggestions and, as a result, the final bill is a more practical and less burdensome approach than the one originally offered. Both the title companies and the legislative leadership have credited NCHBA with playing a key role in defusing this crisis.

The negotiations were made even more difficult as a result of the scope of the legislation which included commercial as well as residential projects. This produced significantly more interest in the bill from all sectors of the construction industry (i.e., contractors, subcontractors, suppliers, credit managers, architects, engineers, and lawyers) who were all represented during the negotiations. Much of the credit for the bill’s passage belongs to Rep. Sarah Stevens and Sen. Pete Brunstetter, who were the key legislators in charge, with assistance from Rep. Jonathan Jordan, Rep. Hugh Blackwell, and Rep. Skip Stam.

Source: NCHBA

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