07.06.07
Dialogue with Department of Commerce on Closer Licensing
This web log article was approved for publishing by James Pearson, Director of Licensing, MN Department of Commerce.
In order to understand the closer licensing requirements, I have had several excellent conversations with the Department of Commerce.
To quote Mr. Pearson, the Director of Licensing for MN Dept. of Commerce:
“In my view, the licensing requirement is clear, but the confusion begins in reviewing the exception language. Minn. Stat. 82.34, subd. 16 provides for an exception from the licensing requirements (among other things) based on a contractual agency relationship with a title insurance company. In such cases, no closing agent license is necessary, but if a closing agent is involved in a transaction outside of that contractual relationship, a license is required. It my understanding that this is where the confusion stems from.”
Mr. Pearson also stated, “The discussions that I have had with Dave [Welshons, President of the MN Land Title Assoc.] and others was on this point. In my view, it is up to the industry to determine if they (as an industry) want to do anything legislatively to clarify this situation. Currently the only guidance that the Department can provide is for them to consult their specific contractual agreements.”
Comment by Jeanne Johnson: I think Mr. Pearson clearly describes the essence of the licensing issue when he says, “if a closing agent is involved in a transaction outside of that contractual relationship, a license is required.” In other words, to resolve the issue, each title agency must review its contract as it pertains to specific closing liabilities. While Title Underwriters generally cover those closings done with both an Insured Closing Letter and corresponding Title Insurance Policy. in some instances, an Agency Contract may be expanded to cover a broader range of closings. However, closing liability is handled on a case-by-case basis between the Underwriter and Agent.
While typically, there are closings outside the agency contract that would require the license, such as cash closings, any owner’s policy (without an insured closing letter issued to the owner,) assumption closings, closings using an attorney’s opinion, Contract for Deed transactions, etc., that is not always the case. The bottom line appears to be Title Agents need to carefully review their contracts to see if the closings they handle fall outside those covered by their Agency contract.