HB 247: "An Act relating to escrow accounts; and providing for an effective date."
00HOUSE BILL NO. 247 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 that is 13 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. (a) A settlement 06 agent shall segregate the escrow money from one escrow account from all other 07 money, including the escrow money of other escrow accounts. The records of a 08 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. Interest on escrow money. Notwithstanding any other 12 provision of law, interest may not be collected or paid by a settlement agent on 13 money held in escrow unless authorized in writing by the parties to the escrow, 14 including the settlement agent. 15 Sec. 34.75.040. Disbursement of escrow money. (a) A settlement agent 16 may not disburse escrow money unless items that are at least equal in value to the 17 proposed disbursements have been received by the settlement agent for the escrow 18 account, have been deposited as required by AS 34.75.020(b), and are available for 19 withdrawal as a matter of right from the depository account. 20 (b) A settlement agent may not disburse escrow money on the same business 21 day as the items are deposited under AS 34.75.020(b) unless the deposit is made in 22 cash, by interbank electronic transfer, or in a form that permits conversion of the 23 deposit to cash on the same day the deposit is made. 24 (c) A settlement agent may not disburse escrow money on the business day 25 after the business day on which the items are deposited under (a) of this section unless 26 the deposit is made by 27 (1) a cashier's check or a certified check, if the cashier's check or 28 certified check is payable in the state and drawn on a financial institution located in 29 the state; 30 (2) a cashier's check, a negotiable order of withdrawal, a money order, 31 or another item if the check, order of withdrawal, money order, or other item has been
01 finally paid before the disbursement; or 02 (3) a depository check, including a cashier's, certified, or teller's check, 03 that is governed by 12 U.S.C. 4001 - 4010 (Expedited Funds Availability Act). 04 (d) In (a) of this section, "available for withdrawal as a matter of right" means 05 (1) when the item has been submitted for collection and payment for 06 the item has been received; 07 (2) when the financial institution where an item has been deposited 08 considers the money represented by the item available for withdrawal; or 09 (3) unless written notification has been received from the financial 10 institution where the item was deposited establishing a longer period for an item drawn 11 on an out-of-state financial institution, after a reasonable time has passed for permitting 12 customers to draw on the item. 13 Sec. 34.75.050. Recording, filing, or delivery of escrow documents. A 14 settlement agent may not record in the office of the recorder in this state or record in 15 an office in another state that is equivalent to the office of the recorder, file under 16 AS 45.09 in this state or file under an equivalent statute in another state, or deliver a 17 conveyance of property, loan documents, documents establishing a security interest in 18 property, or other documents from an escrow account until the money required by the 19 escrow agreement to be disbursed at the same time is available for disbursement under 20 AS 34.75.040. 21 Sec. 34.75.060. Civil penalty. A settlement agent who wilfully violates this 22 chapter is liable to the state for five times the amount of the consideration paid to the 23 agent for the services rendered for the escrow account that is the subject of the 24 violation. In this section, "settlement agent" does not include an employee of a person 25 who engages in the business of handling escrow accounts. 26 Sec. 34.75.070. Department supervision. The department shall supervise the 27 compliance of settlement agents with the provisions of this chapter, except that the 28 department may not audit a settlement agent's records and accounts unless a person 29 who is a party to an escrow of the settlement agent has complained in writing to the 30 department about the agent's noncompliance with this chapter and the audit is limited 31 to the records and accounts of the escrow to which the person is a party.
01 Sec. 34.75.080. Regulations. The department may adopt regulations under 02 AS 44.62 (Administrative Procedure Act) to implement this chapter. 03 Sec. 34.75.090. Definitions. In this chapter, 04 (1) "department" means the Department of Commerce and Economic 05 Development; 06 (2) "depository account" means an account with a financial institution 07 to which items are deposited under AS 34.75.020(b) for the purposes of an escrow 08 account; 09 (3) "escrow" means a transaction where, for the purpose of effecting 10 the sale, transfer, encumbrance, leasing, or other disposition of real or personal 11 property to another person, 12 (A) money, written documents, evidence of title to real or 13 personal property, or other things of value are delivered to a person for 14 retention until the happening of a specific event or the performance of a 15 prescribed condition; and 16 (B) upon the happening of the event or performance of the 17 condition, the person holding the things of value delivers them to the persons 18 entitled to them under the escrow account agreement; 19 (4) "escrow money" means the money that is received by a settlement 20 agent for an escrow account; 21 (5) "financial institution" means a financial institution 22 (A) whose accounts are insured by the Federal Deposit 23 Insurance Corporation, the Savings Association Insurance Fund, or the National 24 Credit Union Administration Board; 25 (B) that is subject to the jurisdiction of either the Comptroller 26 of the Currency, the Federal Housing Finance Board, or the National Credit 27 Union Administration Board; 28 (C) that is located in this state and does not meet the 29 requirements of (A) or (B) of this paragraph, but is subject to regulation by the 30 division of banking, securities and corporations in the Department of 31 Commerce and Economic Development; or
01 (D) that is located in another state and does not meet the 02 requirements of (A) or (B) of this paragraph, but is subject to regulation in the 03 other state by an agency comparable to the division of banking, securities and 04 corporations in the Department of Commerce and Economic Development; 05 (6) "item" means cash, a check, a negotiable order of withdrawal, a 06 share draft, a traveler's check, a money order, or an interbank electronic transfer; in 07 this paragraph, "check" includes a cashier's check; 08 (7) "settlement agent" means a person who engages in the business of 09 handling escrow accounts, but does not include a person who collects money for the 10 sole purpose of applying the money to the payment of a loan during the term of the 11 loan; "settlement agent" includes an employee of a person who engages in the business 12 of handling escrow accounts when the employee is carrying out the employee's duties 13 in the business. 14 * Sec. 4. AS 45.55.110(g) is amended to read: 15 (g) The administrator may by regulation or order require as a condition of 16 registration by qualification or coordination that a security issued within the past three 17 years or to be issued to a promoter for a consideration substantially different from the 18 public offering price, or to a person for a consideration other than cash, be deposited 19 in escrow, and that the proceeds from the sale of the registered security in this state 20 be impounded until the issuer receives a specified amount from the sale of the security 21 either in this state or elsewhere. Subject to AS 34.75, the [THE] administrator may 22 by regulation or order determine the conditions of an escrow or impounding required 23 in this subsection but the administrator may not reject a depository solely because of 24 location in another state. 25 * Sec. 5. This Act applies to escrow accounts that are established on or after the effective 26 date of this Act. In this section, "escrow" has the meaning given in AS 34.75.090, enacted 27 by sec. 3 of this Act. 28 * Sec. 6. This Act takes effect January 1, 1998.