Arizona House of Representatives Committee on Regulatory Affairs Special Meeting Minutes for SB 1042

Summary

Minutes of a special meeting of the Arizona House of Representatives Committee on Regulatory Affairs, Fifty-sixth Legislature, Second Regular Session, held Wednesday, March 20, 2024 under Chairman Hendrix. The meeting convened at 3:32 P.M. and adjourned at 3:43 P.M., and the committee action shows SB1042 given a do-pass-amended strike-everything recommendation on a 7-0-0-0 vote. Attachments include the agenda, a Request to Speak report recording support from the Land Title Association of Arizona, an attendance record and a roll call vote. A staff summary and the proposed House amendment state that the strike-everything amendment would amend section 20-1591, Arizona Revised Statutes, to limit when an agreement to indemnify or hold harmless a title insurer over a recorded instrument is enforceable. The amendment adds a legislative intent clause describing the changes as clarifying only.

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ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature - Second Regular Session

COMMITTEE ON REGULATORY AFFAIRS

Report of Special Meeting
Wednesday, March 20, 2024
House Hearing Room 5 -- UPON ADJOURNMENT OF REGULAR RA

Convened 3:32 P.M.
Recessed
Reconvened
Adjourned 3:43 P.M.

Members Present

Representative Crews

Representative Hernandez
Representative Liguori

Representative Payne

Representative Pefia

Representative McGarr, Vice-Chairman
Representative Hendrix, Chairman

Agenda
Original Agenda ~ Attachment 1!

Request to Speak
Report — Attachment 2

Committee Attendance
Report — Attachment 3

Committee Action
Bill Action
SB1042 DPA/SE

MINUTES RECEIVED
CHIEF CLERK’S OFFICE
Wald /) Y
Members Absent
Vote Attachments
7-0-0-0 4,5,6

julie bare. © iad Secretary

March 22, 2024

(Original attachments on file in the Office of the Chief Clerk; video archives available at http://www.azleg.gov)

COMMITTEE ON REGULATORY AFFAIRS

March 20, 2024
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature - Second Regular Session : ie
Conenad VEN ad

SPECIAL MEETING AGENDA 4. hin ital ff 2 ‘ Y3 fr
COMMITTEE ON REGULATORY AFFAIRS

DATE Wednesday, March 20, 2024 ROOM HHR5 TIME Upon adjournment of regular
RA

Members of the public may access a livestream of the meeting here:
https:/Avww.azleg.gov/videoplayer/?clientLD=6361 162879& eventID=202403 1094

Members:
Representative Crews Representative Payne Representative McGarr, Vice-Chairman

Representative Hernandez A Representative Pefia Representative Hendrix, Chairman
Representative Liguori

Bills Short Title Strike Everything Title
SB1042 cremation S/E: title companies; recorded documents;

RA, RULES
700-2

ORDER OF BILLS TO BE SET BY THE CHAIRMAN

VC
03/18/2024

People with disabilities may request reasonable accommodations such as interpreters, alternative formats, or
assistance with physical accessibility. If you require accommodations, please contact the Chief Clerk's Office at
(602) 926-3032 or through Arizona Relay Service 7-1-1.

Page 1 of 1
Attachment ft
Information Registered on the Request to Speak System

House Regulatory Affairs (3/20/2024)

$B1042, cremation

Support:
Lauren King, LAND TITLE ASSOCIATION OF ARIZONA (LTAA)

All Comments:
Lauren King, LAND TITLE ASSOCIATION OF ARIZONA (LTAA}: The LTAA is supportive of the strike-everything
amendment.

Attachment o&
ARIZONA STATE LEGISLATURE
Fifty-sixth Legislature - Second Regular Session

COMMITTEE ATTENDANCE RECORD

COMMITTEE ON REGULATORY AFFAIRS
CHAIRMAN: Laurin Hendrix VICE-CHAIRMAN: _Cory McGarr
DATE 03/20/24 124 124 124 124
CONVENED 32 Pm m m m m
RECESSED
RECONVENED
ADJOURNED Boe pe
MEMBERS
Crews a
Hernandez A oa
Liguori at
Payne rw
Pefia al
McGarr, Vice-Chairman i
Hendrix, Chairman a

Absent exc Excused

V Present --

Attachment 2
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature

Second Regular Session

House: FICO DP 7-0-1-0 | 3rd Read 21-5-4-0

SB 1042: cremation
S/E: DIFI; title companies; recorded documents
Sponsor: Senator Shope, LD 16

Committee on Regulatory Affairs

Summary of the Strike-Everything Amendment to SB 1042

Overview
Prescribes requirements relating to the enforceability of title insurance agreements.

History
The Arizona Department of Insurance and Financial Institutions (DIFD licenses and

regulates the title insurance industry as part of its duties. DIFI stipulates that a business
enterprise must be formed as a corporation or limited liability company and must be licensed
in Arizona to solicit business, collect premiums or countersign policies on a title insurer's
behalf. Additionally, a title insurance agent is a stock corporation or limited liability company
authorized by a title insurer to solicit insurance and collect premiums for insurance that
covers owners of real property or others with interest in the real property against loss or
damage suffered by liens, encumbrances, defects or unmarketability of the title to the
property (A.R.S. § 20-1562).

Provisions
1. Stipulates that an agreement to indemnify or hold harmless from risks that arise from

an instrument that is properly recorded by the county recorder may only be enforced if:

a) the instrument had not been recorded at the time the agreement was executed;

b) the agreement specifically describes the instrument;

c) the title insurance policy specifically exempts the instrument;

d) the agreement indemnifies or holds harmless against liens from completed work or
labor or professional services, materials, machinery, fixtures or tools furnished on the
insured property; or

e) the instrument secures a monetary obligation and remains an outstanding and

enforceable debt. (Sec. 1)

2. States that the enforceability of title warranties that are provided by a person in a deed
or mortgage is not affected by the provisions, (Sec. 1)

Specifies that the agreement must be in writing to be enforceable. (Sec. 1)

4. Adds a legislative intent clause. (Sec. 2)

Makes technical changes. (Sec. 1)

0 Prop 105 (45 votes) [1 Prop 108 (40 votes) (] Emergency (40 votes) Fiscal Note

SB 1042
Initials DC/RP Page 1 Regulatory Affairs

Attachment 4G.
Fifty-sixth Legislature Regulatory Affairs
Second Regular Session S.B. 1042

PROPOSED
HOUSE OF REPRESENTATIVES AMENDMENTS TO S.B. 1042

(Reference to Senate engrossed bill)

1 Strike everything after the enacting clause and insert:

2 "Section. 1. Section 20-1591, Arizona Revised Statutes, is amended
3 to read:

4 20-1591. Forms of policies and other contracts of title

5 insurance; approval or disapproval

6 A. Every title insurer shall file with the director all forms of
7 title policies and other contracts of title insurance before issuance of
8 any policy or contract. A title insurance rating organization may make
9 filings on behalf of all of its members or subscribers. -A title insurer
10 shall not issue any policy or contract until thirty days after the policy
11 or contract has been filed with the director. A policy or contract is
12 approved thirty days after filing unless the director has issued, within
13 the ttirty—tay THIRTY-DAY period, an order affirmatively approving or
14 disapproving the form. On written notice given within the ttirty—day
15 THIRTY-DAY period to the person making the filing, the director may extend
16 the period for up to fifteen additional days to enable the director to
17 complete the review of the filing.

18 B. Forms of title policies and other contracts of insurance, as used
19 in this section, shall specifically exclude:

20 1. Reinsurance contracts or agreements. 7
21 2. All specific defects in title that may be ascertained from an
22 examination of the risk and excepted in reports, binders or policies,
23 together with any affirmative assurance of the title insurer with respect
24 to the defects whether given by endorsement or otherwise. >—atrd¢

Attachment s
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House Amendments to S.B. 1042

3. Further exceptions from coverage by reason of limitations on the
examination of the risk imposed by an applicant for insurance or through
failure of an applicant for insurance to provide the date requisite to a
judgment of insurability.

C. AN AGREEMENT BY A PERSON TO INDEMNIFY OR HOLD HARMLESS A TITLE
INSURER FROM RISKS ARISING FROM AN INSTRUMENT THAT IS OR BECOMES PROPERLY
RECORDED AND INDEXED IN THE OFFICE OF THE COUNTY RECORDER IS ONLY
ENFORCEABLE WITH RESPECT TO THAT INSTRUMENT IF THE AGREEMENT IS IN WRITING
AND ANY OF THE FOLLOWING APPLIES:

1. THE INSTRUMENT WAS NOT OF RECORD AT THE TIME THE AGREEMENT WAS
EXECUTED.

2. THE INSTRUMENT IS SPECIFICALLY DESCRIBED IN THE AGREEMENT.

3. THE INSTRUMENT IS SHOWN AS AN EXCEPTION FROM COVERAGE IN THE
TITLE INSURANCE POLICY.

4. THE AGREEMENT INDEMNIFIES FOR OR HOLDS HARMLESS AGAINST LIENS
ARISING FROM WORK OR LABOR DONE OR PROFESSIONAL SERVICES, MATERIALS,
MACHINERY, FIXTURES OR TOOLS FURNISHED ON THE INSURED PROPERTY.

5. THE INSTRUMENT IS OR SECURES A MONETARY OBLIGATION OF THE PERSON,
AND REMAINS AN OUTSTANDING AND ENFORCEABLE DEBT.

NOTHING IN THIS SUBSECTION SHALL AFFECT THE ENFORCEABILITY OF TITLE
WARRANTIES PROVIDED BY A PERSON IN A DEED OR MORTGAGE.

Sec. 2. Legislative intent

The legislature intends that the amendments to section 20-1591,
Arizona Revised Statutes, as amended by this act, are clarifying changes

only and do not constitute substantive changes to existing law."

Amend title to conform

LAURIN HENDRIX

1O42HENDRIX SE.docx
03/18/2024

03:13 PM

H: DC/1s
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature - Second Regular Session

ROLL CALL VOTE
COMMITTEE ON Regulatory Affairs BILL NO. SB 1042
DATE March 20, 2024 MOTION: {44 ‘S ya

PASS AYE NAY PRESENT | ABSENT
Crews Vi
Hernandez A Va
Liguori ea
Payne a
Pefia va
McGarr, Vice-Chairman va
Hendrix, Chairman ~~

7 “ee V4 ed

APPROVED: ECRETARY

Y ERIN HENDRIX Chairman
0

RY MCGARR, Vice-Chairman

ATTACHMENT @

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