California Assembly Bill AB704 Amended / Bill

 BILL NUMBER: AB 704AMENDED BILL TEXT AMENDED IN SENATE JUNE 15, 2015 AMENDED IN ASSEMBLY APRIL 6, 2015 INTRODUCED BY Assembly Member Cooley FEBRUARY 25, 2015 An act  to amend Section 12340.3 of,  to amend, repeal, and add Section 12389 of, and to add  Sections 12340.12 and   Section  12340.13 to, the Insurance Code, relating to escrow. LEGISLATIVE COUNSEL'S DIGEST AB 704, as amended, Cooley. Escrow services: authorization to transact business.  Existing law provides for the regulation of title insurers and underwritten title companies by the Insurance Commissioner. Existing law, the Escrow Law, defines escrow agents and regulates their activities. Existing law defines escrow as a transaction in which one person, for the purpose of effecting a sale or transfer to another, delivers a thing of value to a 3rd person to be held by that person until the happening of a specified event or the performance of a prescribed condition, when it is then to be delivered.   This bill would define "escrow" as it relates to transactions regarding the sale, transfer, encumbrance, or lease of real or personal property, as the delivery of a thing of value to an insurer, underwritten title company, or controlled escrow company, to be held by that entity until the happening of a specified event or the performance of a prescribed condition, when that thing is then to be delivered to another specified person.  Existing law authorizes an underwritten title company to engage in the escrow business and to act as an escrow agent if the company satisfies specified requirements, including maintenance of specified records, and the deposit of a specified sum of money with the commissioner. Existing law specifies the conditions under which the commissioner may release or return those deposits to the company. This bill would expand the requirements for a company to be authorized to conduct escrow services, to engage in the escrow business, and to act as an escrow agent.  This   The  bill would authorize a company that is a stock corporation to conduct escrow services through a business location, as defined, if the company receives approval of its name from the commissioner, maintains a minimum net worth, obtains a license to transact its business from the commissioner, and furnishes audits to the commissioner, as specified.  This   The  bill would require a company, on and after July 1, 2016, as a condition of engaging in the escrow business or acting as an escrow agent, to maintain a bond  in a specified amount based on its annual trust fund obligations. This  of $50,000. The  bill would authorize a company to, with the approval of the commissioner,  make a cash deposit or  obtain an irrevocable letter of credit in lieu of that bond.  This   The  bill would specify conditions for the issuance of that bond or letters of credit or use of that cash deposit.  This   The  bill would require the commissioner to  promptly  release all escrow-related deposits made with the commissioner before July 1, 2016, under specified conditions, including the deposit of the bond, letter of credit, or cash deposit described above. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:  SECTION 1.   Section 12340.3 of the Insurance Code is amended to read: 12340.3. "Business of title insurance" includes: (a) Issuing or proposing to issue any title policy as insurer, guarantor, or indemnitor; (b) Transacting or proposing to transact any phase of title insurance, including solicitation, negotiation preliminary to execution, or execution of a title policy, insuring and transacting matters subsequent to the execution of a title policy and arising out of such policy, excluding reinsurance; (c) The performance by a title insurer, an underwritten title company or a controlled escrow company of any service in conjunction with the issuance or contemplated issuance of a title policy. (d) The handling of any escrow, settlement, or closing. (e) The doing of or proposing to do any business which is in substance the equivalent of any of the items listed in subdivisions (a) to (d), inclusive. (f) The issuance, by a title insurer, of a letter of indemnity. Any such letter of indemnity shall be limited to and issued solely for the purpose of indemnifying the commissioner on behalf of any member of the public who transacts an escrow with an underwritten title company, with whom the title insurer has an underwriting agreement. A title insurer may charge a reasonable fee in connection with the issuance of any such letter. No rate or form filing shall be required with respect to any such letter of indemnity. (g) The act of an insurer in furnishing in writing to a prospective purchaser of the insurer's title policy a statement which assures, and assumes the liability for, the proper performance of services necessary to the conduct of a real estate closing performed by an underwritten title company with whom the insurer maintains an underwriting agreement. A title insurer may charge a reasonable fee in connection with the furnishing of any such statement. No rate or form filing shall be required with respect to any such statement.   SEC. 2.   Section 12340.12 is added to the Insurance Code, to read: 12340.12. "Escrow" means any transaction in which a person, for the purposes of effecting the sale, transfer, encumbrance, or lease of real or personal property, regardless of the location of the real or personal property, delivers a written instrument, money, evidence of title to real or personal property, or other thing of value to an insurer, underwritten title company, or controlled escrow company, to be held by that insurer, underwritten title company, or controlled escrow company until the happening of a specified event or the performance of a prescribed condition, when it is then to be delivered by that insurer, underwritten title company, or controlled escrow company to a grantee, grantor, promisee, promisor, obligee, obligor, or any agent or employee of any of the latter.   SEC. 3.   SECTION 1.  Section 12340.13 is added to the Insurance Code, to read: 12340.13. "Business location" means a facility or other place of business  in this state  where an underwritten title company or controlled escrow company engages in the business of  receiving an escrow for deposit or delivery.   conducting escrow services.   SEC. 4.   SEC. 2.  Section 12389 of the Insurance Code is amended to read: 12389. (a) An underwritten title company as defined in Section 12340.5, which shall be a stock corporation,  may   may, subject to subdivision (b), (1)  engage in the business of preparing title searches, title reports, title examinations, or certificates or abstracts of title, upon the basis of which a title insurer writes title policies, and  conducting   (2) conduct  escrow services  through   at  business locations, as defined in Section 12340.13, in counties in which the underwritten title company is licensed to  transact business, provided that:   conduct escrow services regardless of the location of the real or personal property involved in the transaction.   (1)   (b)     (1)  Only domestic corporations may be licensed under this section and no underwritten title company, as defined in Section 12340.5, shall become licensed under this section, or change the name under which it is licensed or operates, unless it has first complied with Section 881. (2) (A) Depending upon the county or counties in which the company is licensed to transact business, it shall maintain required minimum net worth as follows: Aggregate number of documents recorded and documents filed in the offices of the county recorders in the preceding calendar year in all counties where the company is licensed to transact business. Amount of required Number of documents minimum net worth Less than 50,000 .............. $ 75,000 50,000 to 100,000 ............. 120,000 100,000 to 500,000 ............ 200,000 500,000 to 1,000,000 .......... 300,000 1,000,000 or more ............. 400,000 (B) "Net worth" is defined as the excess of assets over all liabilities and required reserves. It may carry as an asset the actual cost of its title plant, provided the value ascribed to that asset shall not exceed the aggregate value of all other assets. (C) If a title plant of an underwritten title company is not being currently maintained, the asset value of the plant shall not exceed its asset value as determined in the preceding paragraph as of the date to which that plant is currently maintained, less one-tenth thereof for each succeeding year or part of the succeeding year that the plant is not being currently maintained. For the purposes of this section, a title plant shall be deemed currently maintained so long as it is used in the normal conduct of the business of title insurance, and (i) the owner of the plant continues regularly to obtain and index title record data to the plant or to a continuation thereof in a format other than that previously used, including, but not limited to, computerization of the data, or (ii) the owner of the plant is a participant, in an arrangement for joint use of a title plant system regularly maintained in any format, provided the owner is contractually entitled to receive a copy of the title record data contained in the jointly used title plant system during the period of the owner's participation therein, either periodically or upon termination of that participation, at a cost not to exceed the actual cost of duplication of the title record data. (D) An underwritten title company at all times shall maintain current assets of at least ten thousand dollars ($10,000) in excess of its current liabilities, as current assets and liabilities may be defined pursuant to regulations made by the commissioner. In making the regulations, the commissioner shall be guided by generally accepted accounting principles followed by certified public accountants in this state. (3) (A) An underwritten title company shall obtain from the commissioner a license to transact its business. The license shall not be granted until the applicant conforms to the requirements of this section and all other provisions of this code specifically applicable to  the  applicant. After issuance the holder shall continue to comply with the requirements as to its business set forth in this code, in the applicable rules and regulations of the commissioner and in the laws of this state. (B) An underwritten title company that possesses, or is required to possess, a license pursuant to this section is subject as if an insurer to the provisions of Article 8 (commencing with Section 820) of Chapter 1 of Part 2 of Division 1 of this code and is deemed to be subject to authorization by the Insurance Commissioner within the meaning of subdivision (e) of Section 25100 of the Corporations Code. (C) The license may be obtained by filing an application on a form prescribed by the commissioner accompanied by a filing fee of three hundred fifty-four dollars ($354). The license when issued shall be for an indefinite term and shall expire with the termination of the existence of the holder, subject to the annual renewal fee imposed under Sections 12415 and 12416. (D) An underwritten title company seeking to extend its license to an additional county shall pay a two-hundred-seven-dollar ($207) fee for each additional county, and shall furnish to the commissioner evidence, at least sufficient to meet the minimum net worth requirements of paragraph (2), of its financial ability to expand its business operation to include the additional county or counties. (4) (A) An underwritten title company shall furnish an audit to the commissioner on the forms provided by the commissioner annually, either on a calendar year basis on or before March 31 or, if approved in writing by the commissioner in respect to any individual company, on a fiscal year basis on or before 90 days after the end of the fiscal year. The time for furnishing any audit required by this paragraph may be extended, for good cause shown, on written approval of the commissioner for a period, not to exceed 60 days. Failure to submit an audit on time, or within the extended time that the commissioner may grant, shall be grounds for an order by the commissioner to accept no new business pursuant to subdivision (d). The audits shall be private, except that a synopsis of the balance sheet on a form prescribed by the commissioner may be made available to the public. (B) The audits shall be made in accordance with generally accepted auditing standards by an independent certified public accountant or independent licensed public accountant whose certification or license is in good standing at the time of the preparation. The fee for filing the audit shall be three hundred thirteen dollars ($313). (C) The commissioner may refuse to accept an audit or order a new audit for any of the following reasons: (i) An adverse result in any proceeding before the California Board of Accountancy affecting the auditor's license. (ii) The auditor has an affiliation with the underwritten title company, or any of its officers or directors, that would prevent his or her reports on the company from being reasonably objective. (iii) The auditor has suffered conviction of a misdemeanor or felony based on his or her activities as an accountant. (iv) A judgment adverse to the auditor in any civil action finding him or her guilty of fraud, deceit, or misrepresentation in the practice of his or her profession. (D) A company that fails to file any audit or other report on or before the date it is due shall pay to the commissioner a penalty fee of one hundred eighteen dollars ($118) and on failure to pay that or another fee or file the audit required by this section shall forfeit the privilege of accepting new business until the delinquency is corrected.  (b)   (c)  An underwritten title company may engage in the escrow business and act as escrow agent provided that: (1) The company maintains a record of  all  receipts and disbursements of escrow funds. (2) (A) The company deposits seven thousand five hundred dollars ($7,500) for each county in which it transacts business in some form permitted by Section 12351 with the commissioner who shall immediately make a special deposit of that amount in the State Treasury and that deposit shall be subject to Sections 12353, 12356, 12357, and 12358 and, as long as there are no claims against the deposit, all interest and dividends thereon shall be paid to the depositor. The deposit shall be for the security and protection of persons having lawful claims against the depositor growing out of escrow transactions with it. The deposit shall be maintained until four years after all escrows handled by the depositor have been closed. (B) The commissioner may release the deposits prior to the passage of the four-year period upon presentation of evidence satisfactory to the commissioner of either a statutory merger of the depositor into a licensee or certificate holder subject to the jurisdiction of the commissioner, or a valid assumption agreement under which all liability of the depositor stemming from escrow transactions handled by it is assumed by a licensee or certificate holder subject to the jurisdiction of the commissioner. (C) With the foregoing exceptions, the deposit shall be returned to the depositor or lawful successor in interest following the four-year period, upon presentation of evidence satisfactory to the commissioner that there are no claims against the deposit stemming from escrow transactions handled by the depositor. If the commissioner has evidence of one or more claims against the depositor, and the depositor is not in conservatorship or liquidation, the commissioner may interplead the deposit by special endorsement to a court of competent jurisdiction for distribution on the basis that claims against the depositor stemming from escrow transactions handled by it have priority in the distribution over other claims against the depositor.  (c)   (d)  The commissioner shall, whenever it appears necessary, examine the business and affairs of a company licensed under this section. The examination shall be at the expense of the company.  (d)   (e)  (1) If the commissioner determines, after notice and hearing, that a company licensed under this section has willfully failed to comply with a provision of this section, the commissioner shall make his or her order prohibiting the company from conducting its business for a period of not more than one year. (2) A company violating the commissioner's order is subject to seizure under Article 14 (commencing with Section 1010) of Chapter 1 of Part 2 of Division 1, is guilty of a misdemeanor, and may have the license revoked by the commissioner. Any person aiding and abetting any company in a violation of the commissioner's order is guilty of a misdemeanor.  (e)   (f)  The purpose of this section is to maintain the solvency of the companies subject to this section and to protect the public by preventing fraud and requiring fair dealing. In order to carry out these purposes, the commissioner may make reasonable rules and regulations to govern the conduct of its business of companies subject to this section. The rules and regulations shall be adopted, amended, or repealed in accordance with the procedure provided in Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code.  (f)   (g)  The name under which each underwritten title company is licensed shall at all times be an approved name. The fee for filing an application for a change of name shall be one hundred eighteen dollars ($118). Each such company shall be subject to the provisions of Article 14 (commencing with Section 1010) and Article 14.5 (commencing with Section 1065.1) of Chapter 1 of Part 2 of Division 1.  (g)   (h)  This section is repealed as of July 1, 2016.  SEC. 5.   SEC. 3.  Section 12389 is added to the Insurance Code, to read: 12389. (a) On and after July 1, 2016, an underwritten title company as defined in Section 12340.5 that is a stock corporation  may   may, subject to subdivision (b), (1)  engage in the business of preparing title searches, title reports, title examinations, or certificates or abstracts of title, upon the basis of which a title insurer writes title policies, and  conducting   (2) conduct  escrow services through business locations, as defined in Section 12340.13, in counties in which the underwritten title company is licensed to  transact business, provided that:   conduct escrow services regardless of the location of the real or personal property involved in the transaction.   (1)   (b)     (1)  Only a domestic corporation may be licensed under this section and no underwritten title company, as defined in Section 12340.5, may become licensed under this section, or change the name under which it is licensed or operates, unless it has first complied with Section 881. (2) (A) Depending upon the county or counties in which the company is licensed to transact business, it shall maintain required minimum net worth as follows: Aggregate number of documents recorded and documents filed in the offices of the county recorders in the preceding calendar year in all counties where the company is licensed to transact business. Amount of required Number of documents minimum net worth Less than 50,000 .............. $ 75,000 50,000 to 100,000 ............. 120,000 100,000 to 500,000 ............ 200,000 500,000 to 1,000,000 .......... 300,000 1,000,000 or more ............. 400,000 (B) "Net worth" for the purposes of this section is defined as the excess of assets over all liabilities and required reserves. The company may carry as an asset the actual cost of its title plant, provided the value ascribed to that asset shall not exceed the aggregate value of all other assets. (C) If a title plant of an underwritten title company is not currently maintained, the asset value of the plant shall not exceed its asset value as determined in the preceding paragraph as of the date to which that plant is currently maintained, less one-tenth thereof for each succeeding year or part of the succeeding year that the plant is not being currently maintained. For the purposes of this section, a title plant shall be deemed currently maintained so long as it is used in the normal conduct of the business of title insurance, and (i) the owner of the plant continues regularly to obtain and index title record data to the plant or to a continuation thereof in a format other than that previously used, including, but not limited to, computerization of the data, or (ii) the owner of the plant is a participant, in an arrangement for joint use of a title plant system regularly maintained in any format, provided the owner is contractually entitled to receive a copy of the title record data contained in the jointly used title plant system during the period of the owner's participation therein, either periodically or upon termination of that participation, at a cost not to exceed the actual cost of duplication of the title record data. (D) An underwritten title company shall at all times maintain current assets of at least ten thousand dollars ($10,000) in excess of its current liabilities, as current assets and liabilities may be defined pursuant to regulations made by the commissioner. In making the regulations, the commissioner shall be guided by generally accepted accounting principles followed by certified public accountants in this state. (3) (A) An underwritten title company shall obtain from the commissioner a license to transact its business. The license shall not be granted until the applicant conforms to the requirements of this section and all other provisions of this code specifically applicable to the applicant. After issuance the holder of the license shall continue to comply with the requirements as to its business set forth in this code, in the applicable rules and regulations of the commissioner, and in the laws of this state. (B) An underwritten title company that possesses, or is required to possess, a license pursuant to this section shall be subject as if an insurer to the provisions of Article 8 (commencing with Section 820) of Chapter 1 of Part 2 of Division 1 of this code and is deemed to be subject to authorization by the Insurance Commissioner within the meaning of subdivision (e) of Section 25100 of the Corporations Code. (C) The license may be obtained by filing an application on a form prescribed by the commissioner accompanied by a filing fee of three hundred fifty-four dollars ($354). The license when issued shall be for an indefinite term and shall expire with the termination of the existence of the holder, subject to the annual renewal fee imposed under Sections 12415 and 12416. (D) An underwritten title company seeking to extend its license to an additional county shall pay a two-hundred-seven-dollar ($207) fee for each additional county, and shall furnish to the commissioner evidence, at least sufficient to meet the minimum net worth requirements of paragraph (2), of its financial ability to expand its business operation to include the additional county or counties. (4) (A) An underwritten title company shall furnish an audit to the commissioner on the forms provided by the commissioner annually, either on a calendar year basis on or before March 31 or, if approved in writing by the commissioner in respect to any individual company, on a fiscal year basis on or before 90 days after the end of the fiscal year. The time for furnishing any audit required by this paragraph may be extended, for good cause shown, on written approval of the commissioner for a period, not to exceed 60 days. Failure to submit an audit on time, or within the extended time that the commissioner may grant, is grounds for an order by the commissioner to accept no new business pursuant to subdivision (d). The audits shall be private, except that a synopsis of the balance sheet on a form prescribed by the commissioner may be made available to the public. (B) The audits shall be made in accordance with generally accepted auditing standards by an independent certified public accountant or independent licensed public accountant whose certification or license is in good standing at the time of the preparation. The fee for filing the audit shall be three hundred thirteen dollars ($313). (C) The commissioner may refuse to accept an audit or order a new audit for any of the following reasons: (i) An adverse result in any proceeding before the California Board of Accountancy affecting the auditor's license. (ii) The auditor has an affiliation with the underwritten title company or any of its officers or directors that would prevent his or her reports on the company from being reasonably objective. (iii) The auditor has been convicted of a misdemeanor or felony based on his or her activities as an accountant. (iv) A judgment adverse to the auditor in any civil action finding him or her guilty of fraud, deceit, or misrepresentation in the practice of his or her profession. (D) A company that fails to file an audit or other report on or before the date it is due shall pay to the commissioner a penalty fee of one hundred eighteen dollars ($118) and on failure to pay that or another fee or file the audit required by this section shall forfeit the privilege of accepting new business until the delinquency is corrected.  (b)   (c)  An underwritten title company may engage in the escrow business and act as escrow agent, provided that: (1) It maintains a record of all receipts and disbursements of escrow funds. (2) (A)  Except as provided in subdivision (c), the   The  company shall maintain a bond  satisfactory to the commissioner in the amount of one of the following:   of fifty thousand dollars ($50,000).   (i) Twenty-five thousand dollars ($25,000) if 150 percent of the previous year's average annual trust fund obligations, as calculated in subparagraph (D), does not exceed two hundred fifty thousand dollars ($250,000).   (ii) Thirty-five thousand dollars ($35,000) if 150 percent of the previous year's average annual trust fund obligations, as calculated in subparagraph (D), exceeds two hundred fifty thousand dollars ($250,000), but does not exceed five hundred thousand dollars ($500,000).   (iii) Fifty thousand dollars ($50,000) if 150 percent of the previous year's average annual trust fund obligations, as calculated in subparagraph (D), exceeds five hundred thousand dollars ($500,000).   (B) A deposit given instead of the bond required by this section shall not be deemed an asset of the applicant or licensee.   (C)   (B)  An applicant or licensee may  make a cash deposit or obtain   obtain  an irrevocable letter of credit approved by the commissioner in  lieu   lieu, and in the amount,  of the bond. The  bond, cash deposit, or   bond or  letter of credit, as applicable, shall run to the state for the use of the state, and for any person who has cause against the obligor of the bond or the applicant of a letter of credit, under the  provision   provisions  of this  division.   chapter.   (D) Calculations of trust fund obligations shall be based on the previous calendar year's average of the monthly trust fund liabilities or credit balances occurring on the last day of each calendar month.  (3) (A) The  issuance of a bond or letter of credit of an   bond provided by a surety insurer naming the  underwritten title  company, and   company as principal obligor or  the  use of a cash deposit   letter of credit  of an  underwritten title company,   issuing bank  shall be subject to the following conditions: (i) The licensee shall faithfully conform to and abide by the provisions of this  division   chapter  and all of the rules made by the commissioner under this  division.   chapter concerning the conduct of escrow services.  (ii) The licensee will honestly and faithfully apply all funds received,  and  will faithfully and honestly perform all obligations and undertakings under this  division, and will pay to the state or to the person under the provisions of this division, including the costs in any conservatorship, or liquidation, whether by the commissioner or by a receiver.   chapter, concerning the conduct of escrow services.  (B) In determining the liability of the principal and the sureties under the bond,  the applicant and issuing bank of a letter of credit, or the use of a cash deposit, escrow money held in trust and  any money recovered to restore any deficiency in the trust shall not be considered as an asset of the liquidation subject to the assessment for the cost of the liquidation. (C) The surety under the bond, or the issuing bank of a letter of credit, may pay the full amount of its liability thereunder to the commissioner  or a conservator   as conservator, liquidator, receiver, or anyone  appointed by the commissioner  as a conservator, liquidator, or receiver  in lieu of payment to the state or persons having a cause of action against the principal of a bond or applicant under a letter of credit, and upon such payment the surety  under a   on the  bond, or the issuing bank under a letter of  credit, is   credit shall be  completely  released   released, discharged, and exonerated  from further liability under the bond or letter of credit, as applicable.  The conservator, liquidator, or receiver may use the proceeds of the bond, or letter of credit, for any purposes, including the funding of the costs of conservatorship, receivership, or liquidation.   (D) If there is no reasonable or adequate admitted market for surety bonds as required by this section, the commissioner may act pursuant to Section 1763.1 or, under extraordinary circumstances and for good cause shown, permit a cash deposit in lieu thereof, and in the amount of the bond required by this section. In that case, the commissioner may fashion the deposit requirements as appropriate to the circumstances and cause.  (4) On and after July 1, 2016, the commissioner shall  promptly  release  all individual   to the depositor, upon application, all  escrow-related deposits previously made pursuant to  paragraph (2) of subdivision (b) of Section 12389, as amended by Section 4 of the act that added this section,   paragraph (2) of subdivision (c) of former Section 12389  if any of the following occurs: (A) The underwritten title company has  deposited with   provided to  the commissioner bond coverage  acceptable to the commissioner,   or  an approved irrevocable letter of credit  or a cash deposit in lieu of the letter of credit  as set forth in  subdivision (b).   this subdivision.  (B)  Presentation   Upon presentation  of evidence satisfactory to the commissioner of either a statutory merger of the underwritten title company depositor into a licensee or certificate holder subject to the jurisdiction of the commissioner, or a valid assumption agreement under which all liability of the depositor stemming from escrow transactions handled by it is assumed by a licensee or certificate holder subject to the jurisdiction of the commissioner. (5)  With the foregoing exceptions,  Otherwise  the deposit shall be  promptly  returned to the depositor, its duly appointed trustee in bankruptcy or lawful successor in interest  upon application for release  following the four-year period specified in paragraph (2)  of subdivision (b)  , as that paragraph read on June 30, 2016, unless the commissioner has received claims against the deposit stemming from escrow transactions handled by the depositor. If the commissioner has received one or more claims against the depositor, and the depositor is not in  conservatorship   conservatorship, bankruptcy,  or liquidation, the commissioner may interplead the deposit by special endorsement to a court of competent jurisdiction for distribution on the basis that claims against the depositor stemming from escrow transactions handled by the depositor have priority in the distribution over other claims against the depositor.  (c) A new applicant for an underwritten title company license shall deposit with the commissioner a bond satisfactory to the commissioner in the amount of at least twenty-five thousand dollars ($25,000) or a cash deposit in said amount. After 12 months of operation as a new underwritten title company, the applicant shall comply with the requirements set forth in paragraph (3) of subdivision (b).  (d) The commissioner shall, whenever it appears necessary, examine the business and affairs of a company licensed under this section. The examination shall be at the expense of the company. (e) (1) At any time that the commissioner determines, after notice and hearing, that a company licensed under this section has willfully failed to comply with a provision of this section, the commissioner shall make his or her order prohibiting the company from conducting its business for a period of not more than one year. (2) A company that violates the commissioner's order is subject to seizure under Article 14 (commencing with Section 1010) of Chapter 1 of Part 2 of Division 1, is guilty of a misdemeanor, and may have its license revoked by the commissioner. Any person aiding and abetting any company in a violation of the commissioner's order is guilty of a misdemeanor. (f) The purpose of this section is to maintain the solvency of the companies subject to this section and to protect the public by preventing fraud and requiring fair dealing. In order to carry out these purposes, the commissioner may make reasonable rules and regulations to govern the conduct of its business of companies subject to this section. The rules and regulations shall be adopted, amended, or repealed in accordance with the procedures provided in Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. (g) The name under which each underwritten title company is licensed shall at all times be an approved name. The fee for filing an application for a change of name shall be one hundred eighteen dollars ($118). Each company shall be subject to the provisions of Article 14 (commencing with Section 1010) and Article 14.5 (commencing with Section 1065.1) of Chapter 1 of Part 2 of Division 1. (h) This section does not prohibit an underwritten title company from engaging in escrow, settlement, or closing activities on properties located outside this state if those activities do not violate the laws of that other state or country. (i) This section is operative on July 1, 2016.