Tennessee § 56-35-131 - Additional requirements for license or certificates — Violation of agreements.

§ 56-35-131. Additional requirements for license or certificates — Violation of agreements.

Except as provided by §§ 56-35-201 and 56-35-204, the commissioner shall refuse to issue any new license or certificate to any title insurance company, title insurance agent, or title insurance agency, unless the applicant therefor shall agree to abide by any one (1) of the following terms and conditions: The gross operating revenues for any fiscal year attributable to the placement or issuance of policies or contracts of title insurance derived from all sources of controlled business shall not exceed forty percent (40%) of the gross operating revenues of the company, agent or agency; The company, agent or agency will be operated as a subsidiary of a financial institution with its primary business being that of accepting deposits and making real estate loans and subject to regulation, inspection, and supervision of the United States government or an agency of the United States; or The title insurance agency or agent is to be operated by an attorney, a single partnership of attorneys, or a single professional corporation of attorneys as an ancillary part of the general practice of law. Any violation of the terms and conditions of the agreement shall serve as grounds for the commissioner to suspend or revoke the license or certificate to which the agreement pertains and to assess a civil penalty as provided by § 56-35-127. Acts 1980, ch. 857, § 15. Attorney General Opinions. T.C.A. § 56-35-131(a)(2) applies only to savings and loan associations, OAG 02-013 (2/1/02). A limited liability corporation with 15 members with equal ownership, each of which is a state or national bank, is not a “subsidiary of a financial institution with its primary business being that of accepting deposits and making real estate loans and subject to regulation, inspection, and supervision of the United States government or an agency thereof” within the meaning of T.C.A. § 56-35-131 , OAG 02-013 (2/1/02). The Tennessee Bank Reform Act of 1996, Acts 1996, Ch. 768, does not prevent the department of commerce and insurance from enforcing the anti-affiliation standards at T.C.A. § 56-6-201 [repealed] or the requirements for licensing of a title insurance agent at T.C.A. § 56-35-131 , OAG 02-013 (2/1/02). Both former T.C.A. § 56-6-201 , prohibiting a bank holding company from owning or controlling an insurance agent, and T.C.A. § 56-35-131(a)(1) , limiting the amount of business income a title insurance agent may receive through owners and affiliates, are preempted by federal law, including the Gramm-Leach-Bliley Financial Modernization Act (GLB), P.L. 106-102, to the extent these statutes prohibit or significantly interfere with a national bank's exercise of its authority to control or own an interest in a title insurance agency; under the state “wild-card” statute, T.C.A. § 45-2-601 , then, state banks may also control or own a financial subsidiary that acts as a title insurance agent under the same conditions national banks would be permitted to engage in the same activity, OAG 02-013 (2/1/02).