SB 179: "An Act relating to escrow accounts; and providing for an effective date."
00SENATE BILL NO. 179 01 "An Act relating to escrow accounts; and providing for an effective date." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03 * Section 1. LEGISLATIVE PURPOSE. The purpose of this Act is to provide maximum 04 assurance to the public that their money will not be placed in jeopardy when entrusted to a 05 settlement agent in the course of property transactions. 06 * Sec. 2. AS 21.66.250 is amended to read: 07 Sec. 21.66.250. TRUST FUNDS. Except as provided in AS 34.75, trust 08 [TRUST] funds or assets held in a fiduciary capacity by a title insurance company that 09 is authorized to do a trust business shall be invested in accordance with AS 06.25. 10 * Sec. 3. AS 34 is amended by adding a new chapter to read: 11 CHAPTER 75. ESCROW ACCOUNTS. 12 Sec. 34.75.010. CHARACTERIZATION OF ESCROW MONEY. The money 13 that is received by a settlement agent for an escrow account is not the property of the 14 settlement agent and is not subject to execution, attachment, or other form of collection
01 for a claim against the settlement agent. Escrow money may not be used for a purpose 02 other than to fulfill the terms of the escrow account agreement and may not be 03 disbursed or otherwise used until the happening of the event or performance of the 04 condition on which the delivery of the money is conditioned. 05 Sec. 34.75.020. SEGREGATION AND DEPOSIT OF ESCROW MONEY. 06 (a) A settlement agent shall segregate the escrow money from one escrow account 07 from all other money, including the escrow money of other escrow accounts. The 08 records of a settlement agent must reflect this segregation. 09 (b) A settlement agent shall deposit escrow money in a depository account of 10 a financial institution located in this state. 11 Sec. 34.75.030. DISBURSEMENT OF ESCROW MONEY. (a) Unless the 12 parties to the escrow agree otherwise, a settlement agent may not disburse escrow 13 money unless items that are at least equal in value to the proposed disbursements have 14 been received by the settlement agent for the escrow account, have been deposited as 15 required by AS 34.75.020(b), and are available for withdrawal as a matter of right 16 from the depository account. 17 (b) A settlement agent may not disburse escrow money on the same business 18 day as the items are deposited under AS 34.75.020(b), unless the deposit is made in 19 cash, by interbank electronic transfer, or in a form that permits conversion of the 20 deposit to cash on the same day the deposit is made. 21 (c) A settlement agent may not disburse escrow money on the business day 22 after the business day on which the items are deposited under (a) of this section unless 23 the deposit is made by 24 (1) a cashier's check or a certified check, if the cashier's check or 25 certified check is payable in the state and drawn on a financial institution located in 26 the state; 27 (2) a cashier's check, a negotiable order of withdrawal, a money order, 28 or another item, if the check, order of withdrawal, money order, or other item has been 29 finally paid before the disbursement; or 30 (3) a depository check, including a cashier's, certified, or teller's 31 check, that is governed by 12 U.S.C. 4001 - 4010 (Expedited Funds Availability Act).
01 (d) In (a) of this section, "available for withdrawal as a matter of right" means 02 (1) when the item has been submitted for collection and payment for 03 the item has been received; 04 (2) when the financial institution where an item has been deposited 05 considers the money represented by the item available for withdrawal; or 06 (3) unless written notification has been received from the financial 07 institution where the item was deposited establishing a longer period for an item drawn 08 on an out-of-state financial institution, after a reasonable time has passed for permitting 09 customers to draw on the item. 10 Sec. 34.75.040. RECORDING, FILING, OR DELIVERY OF ESCROW 11 DOCUMENTS. A settlement agent may not record in the office of the recorder in this 12 state or record in an office in another state that is equivalent to the office of the 13 recorder, file under AS 45.09 in this state or file under an equivalent statute in another 14 state, or deliver a conveyance of property, loan documents, documents establishing a 15 security interest in property, or other documents from an escrow account until the 16 money required by the escrow agreement to be disbursed at the same time is available 17 for disbursement under AS 34.75.030. 18 Sec. 34.75.050. CIVIL PENALTY. A settlement agent who wilfully violates 19 this chapter is liable to the state for five times the amount of the consideration paid 20 to the agent for the services rendered for the escrow account that is the subject of the 21 violation. In this section, "settlement agent" does not include an employee of a person 22 who engages in the business of handling escrow accounts. 23 Sec. 34.75.060. DEPARTMENT SUPERVISION. The department shall 24 supervise the compliance of settlement agents with the provisions of this chapter. The 25 department may audit settlement agent records and accounts to determine whether the 26 agent is complying with this chapter. 27 Sec. 34.75.070. REGULATIONS. The department may adopt regulations 28 under AS 44.62 (Administrative Procedure Act) to implement this chapter. 29 Sec. 34.75.090. DEFINITIONS. In this chapter, 30 (1) "department" means the Department of Commerce and Economic 31 Development;
01 (2) "depository account" means an account with a financial institution 02 to which items are deposited under AS 34.75.020(b) for the purposes of an escrow 03 account; 04 (3) "escrow" means a transaction where, for the purpose of effecting 05 the sale, transfer, encumbrance, leasing, or other disposition of real or personal 06 property to another person, 07 (A) money, written documents, evidence of title to real or 08 personal property, or other things of value are delivered to a person for 09 retention until the happening of a specific event or the performance of a 10 prescribed condition; and 11 (B) upon the happening of the event or performance of the 12 condition, the person holding the things of value delivers them to the persons 13 entitled to them under the escrow account agreement; 14 (4) "escrow money" means the money that is received by a settlement 15 agent for an escrow account; 16 (5) "financial institution" means a financial institution 17 (A) whose accounts are insured by the Federal Deposit 18 Insurance Corporation, the Federal Savings and Loan Insurance Corporation, 19 or the National Credit Union Administration Board; 20 (B) that is subject to the jurisdiction of either the Comptroller 21 of the Currency, the Federal Home Loan Bank Board, or the National Credit 22 Union Administration Board; or 23 (C) that is located in this state and does not meet the 24 requirements of (A) or (B) of this section, but is subject to regulation by the 25 division of banking, securities and corporations in the Department of 26 Commerce and Economic Development; or 27 (D) that is located in another state and does not meet the 28 requirements of (A) or (B) of this section, but is subject to regulation in the 29 other state by an agency comparable to the division of banking, securities and 30 corporations in the Department of Commerce and Economic Development; 31 (6) "item" means cash, a check, a negotiable order of withdrawal, a
01 share draft, a traveler's check, a money order, an interbank electronic transfer; in this 02 paragraph, "check" includes a cashier's check; 03 (7) "settlement agent" means a person who engages in the business of 04 handling escrow accounts, but does not include a person who collects money for the 05 sole purpose of applying the money to the payment of a loan during the term of the 06 loan; "settlement agent" includes an employee of a person who engages in the business 07 of handling escrow accounts when the employee is carrying out the employee's duties 08 in the business. 09 * Sec. 4. AS 45.55.110(g) is amended to read: 10 (g) The administrator may by regulation or order require as a condition of 11 registration by qualification or coordination that a security issued within the past three 12 years or to be issued to a promoter for a consideration substantially different from the 13 public offering price, or to a person for a consideration other than cash, be deposited 14 in escrow, and that the proceeds from the sale of the registered security in this state 15 be impounded until the issuer receives a specified amount from the sale of the security 16 either in this state or elsewhere. Subject to AS 34.75, the [THE] administrator may 17 by regulation or order determine the conditions of an escrow or impounding required 18 in this subsection but the administrator may not reject a depository solely because of 19 location in another state. 20 * Sec. 5. This Act applies to escrow accounts that are established on or after the effective 21 date of this Act. In this section, "escrow" has the meaning given in AS 34.75.090, enacted 22 by sec. 3 of this Act. 23 * Sec. 6. This Act takes effect January 1, 1996.