ATG Settles Litigation with State over DS-1 Disclosure of Financial Interest

New Forms to be Implemented March 1, 2022

ATG successfully settled its litigation with the State of Illinois regarding the state-promulgated DS-1 Disclosure of Financial Interest. Beginning March 1, 2022, the Illinois Department of Financial and Professional Regulation (IDFPR) will require a revised DS-1 Disclosure of Financial Interest for any Producer1 of title business. A "Producer" includes an attorney representing clients in a real estate transaction.

Background: Since its adoption, the Illinois Title Insurance Act has required that a Disclosure of Financial Interest be made by any producer with a financial interest in the title insurance company, independent escrowee, or title insurance agent, to any party paying for the services of any entity to which they are referred. The disclosure is required to be made before the title insurance commitment is issued. [215 ILCS 155/18(b)]

ATG Sues the State over Proposed Disclosure Language: In April 2018, the IDFPR promulgated a new DS-1 form and new Instructions for Completing the Disclosure of Financial Interest Form, which became the subject of a July 2018 lawsuit filed by ATG. ATG objected to the language of both, arguing that the form and its accompanying instructions included language that was beyond the state's statutory authority and that discouraged consumers from using the services of their trusted lawyer. ATG's litigation successfully enjoined the State from implementing the forms while we worked out acceptable language.

ATG and Co-Plaintiff Reach Agreement with IDFPR: In December 2021, working with the IDFPR and our co-plaintiff, the Illinois Land Title Association (ILTA), we reached a settlement of the litigation and agreed on new language.

As part of the settlement, the state removed the language that we felt discouraged consumers from having their lawyers provide title insurance.

  • The new agreed-upon form requires disclosure of much of the same information contained in the current disclosure, including an estimate of the charges for title insurance policies and escrow or closing fees.
  • There are two new requirements. Producers must disclose:
    1. Any "abstracting, searching, or examining fees and any fees for a Preliminary Report or Commitment."
    2. The percentage or the dollar amount retained by the Producer (title agent) for the Owner and Mortgagee policies.

The instructions to the new DS-1 form will require all Producers to keep proof of delivery of the form to sellers and buyers for a period of three (3) years. The form is to be sent via electronic mail, personal delivery, or first-class U.S. Mail.

While the process is not new, the new disclosure contains additional information. Review the new IDFPR DS-1 form and the accompanying instructions (attached below).

ATG Illinois Agents:

ATG will provide easy-to-use instructions on how to generate the form. We welcome your feedback, please feel free to Contact Us about the new DS-1 Disclosure Form.

Now Available OnDemand: Preparing for the New DS-1 Form Implementation.

1. Producer — any person, firm, partnership, association, corporation or other legal entity engaged in this State in the trade, business, occupation or profession of (i) buying or selling interests in real property, (ii) making loans secured by interests in real property, or (iii) acting as broker, agent, attorney, or representative of natural persons or other legal entities that buy or sell interests in real property or that lend money with such interests as security. (Paragraph 4 of (215 ILCS 155/) Title Insurance Act.)

[Last update: 2-18-22; 2-16-22; 2-3-22; 12-8-21; 12-3-21] 

Posted on: Tue, 11/23/2021 - 11:45am