Title Insurance Agent's Minimum Capitalization Bond - Statewide in Texas

Brief Summary

The minimum capitalization bond lets a Texas title insurance agent meet the unencumbered assets standard in Insurance Code 2651.012 without tying up cash. The amount is set by the population of the county where your principal office sits, from $25,000 up to $150,000, and agents in counties under 10,000 people are exempt unless TDI rules otherwise.

Texas title insurance agents must maintain unencumbered assets in excess of liabilities, and Insurance Code 2651.012 counts a surety bond in the form prescribed by the commissioner as one of those assets. TDI's Texas Title Insurance Agent's Minimum Capitalization Bond runs to the Commissioner of Insurance in an amount set by the county population tiers in Section 2651.012(c): $25,000, $50,000, $100,000 or $150,000.

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How to Apply for a Title Insurance Agent's Minimum Capitalization Bond:

• Identify the county of the agent's principal office and its population tier under Section 2651.012(c).
• If the agent has principal offices in more than one county, use the tier for the largest county where it will hold a license.
• Provide the agent's legal name and TDI license information for the principal line of the bond.
• Complete the bond application and supply the financial information the surety requests.
• Receive the executed bond on TDI's Texas Title Insurance Agent's Minimum Capitalization Bond form.
• Confirm the current filing steps with TDI Title Licensing, and include the bond when certifying unencumbered assets on Form T-S1 between September 1 and September 30 each year.

Detailed Information About the Texas Title Insurance Agent's Minimum Capitalization Bond:

Your county sets the amount

Section 2651.012(c) ties the requirement to the county where the agent maintains its principal office, unless the commissioner sets lesser amounts by rule:

• County population of 10,000 or more but less than 50,000: $25,000
• 50,000 or more but less than 200,000: $50,000
• 200,000 or more but less than one million: $100,000
• One million or more: $150,000

An agent whose principal office is in a county with a population of less than 10,000 is exempt from the section, except as the commissioner provides by rule. An agent with a principal office in more than one county must meet the standard for the largest county in which it will hold a license. A principal office is an office in Texas where the decision makers conduct the organization's daily affairs. Having an agency or representative in a county does not make it a principal office.

A bond is one way to meet the standard

The statute lists what counts as unencumbered assets: cash or cash equivalents, liquid assets with a readily determinable market value and no lien against them, real estate in excess of encumbrances, investments such as mutual funds, certificates of deposit, stocks and bonds, a surety bond in the form the commissioner prescribes, a deposit under Section 2651.102, a qualifying letter of credit, and a solvency account under Section 2651.0121. These assets are reserves for contingencies and can be released only in the situations listed in Section 2651.012(b), such as license surrender, liquidation, revocation or a qualifying merger.

What the TDI bond form says

The Texas Title Insurance Agent's Minimum Capitalization Bond binds the agent and surety to the Commissioner of Insurance in a sum determined by Section 2651.012(c)(1) through (4). The surety agrees to pay the Commissioner pecuniary losses that result from the agent not being in compliance with the minimum capitalization standards. The bond continues until liability is terminated under its terms. The surety may cancel by giving TDI 60 days written notice by certified mail or email, and it stays liable for obligations arising before the 60 days run out. TDI Administrative Rule S-7 covers this surety bond option.

This is not the agent bond

The capitalization bond is separate from the title insurance agent bond required by Section 2651.101 and from the Escrow Officers Schedule Bond required by Section 2652.101. Agents also certify their unencumbered assets on Form T-S1, which TDI Administrative Rule S-1 requires every year between September 1 and September 30.

Eligibility and Requirements for a Texas Title Insurance Agent's Minimum Capitalization Bond:

• Obligee: the Commissioner of Insurance, on TDI's minimum capitalization bond form.
• Penal sum of $25,000, $50,000, $100,000 or $150,000 based on county population.
• Exemption for principal offices in counties under 10,000 people, unless the commissioner provides otherwise by rule.
• 60 days written notice to TDI before the surety's cancellation takes effect.
• Separate from the Section 2651.101 agent bond and the escrow officers bond.

Texas Title Insurance Agent's Minimum Capitalization Bond FAQs:

Official and Additional Resources for the Texas Title Insurance Agent's Minimum Capitalization Bond: