CSHB 13(L&C): "An Act relating to the characterization of, use of, segregation of, deposit of, interest on, and disbursement of escrow money; relating to the recording, filing, and delivery of escrow documents; relating to civil penalties for violations of certain escrow provisions by escrow settlement agents; relating to the supervision by the Department of Commerce and Economic Development of escrow settlement agents; authorizing the adoption of regulations to implement certain escrow provisions; and providing for an effective date."
00CS FOR HOUSE BILL NO. 13(L&C) 01 "An Act relating to the characterization of, use of, segregation of, deposit of, 02 interest on, and disbursement of escrow money; relating to the recording, filing, 03 and delivery of escrow documents; relating to civil penalties for violations of 04 certain escrow provisions by escrow settlement agents; relating to the supervision 05 by the Department of Commerce and Economic Development of escrow 06 settlement agents; authorizing the adoption of regulations to implement certain 07 escrow provisions; and providing for an effective date." 08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 09 * Section 1. LEGISLATIVE PURPOSE. The purpose of this Act is to provide maximum 10 assurance to the public that their money will not be placed in jeopardy when entrusted to a 11 settlement agent in the course of residential real property transactions. 12 * Sec. 2. AS 21.66.250 is amended to read: 13 Sec. 21.66.250. Trust funds. Except as provided in AS 34.80, trust 14 [TRUST] funds or assets held in a fiduciary capacity by a title insurance company that
01 is authorized to do a trust business shall be invested in accordance with AS 06.25. 02 * Sec. 3. AS 34 is amended by adding a new chapter to read: 03 Chapter 80. Escrow Transactions for Residential Real Property. 04 Sec. 34.80.010. Characterization of escrow money. The money that is 05 received by a settlement agent for an escrow transaction is not the property of the 06 settlement agent and is not subject to execution, attachment, or other form of collection 07 for a claim against the settlement agent. Escrow money may not be used for a purpose 08 other than to fulfill the terms of the escrow transaction agreement and may not be 09 disbursed or otherwise used until the happening of the event or performance of the 10 condition on which the delivery of the money is conditioned. 11 Sec. 34.80.020. Segregation and deposit of escrow money. (a) A settlement 12 agent shall segregate the escrow money from one escrow transaction from all other 13 money, including the escrow money of other escrow transactions. The records of a 14 settlement agent must reflect this segregation. 15 (b) A settlement agent shall deposit escrow money in a depository escrow 16 account of a financial institution located in this state. 17 Sec. 34.80.030. Interest on escrow money. Notwithstanding any other 18 provision of law, interest may not be collected or paid by a settlement agent on 19 money held for an escrow transaction unless authorized in writing by the parties to the 20 escrow transaction, including the settlement agent. 21 Sec. 34.80.040. Disbursement of escrow money. (a) A settlement agent may 22 not disburse escrow money unless items that are at least equal in value to the proposed 23 disbursements have been received by the settlement agent for the escrow transaction, 24 have been deposited as required by AS 34.80.020(b), and are available for withdrawal 25 as a matter of right from the depository escrow account. 26 (b) A settlement agent may not disburse escrow money on the same business 27 day as the items are deposited under AS 34.80.020(b) unless the deposit is made in 28 cash, by interbank electronic transfer, or in a form that permits conversion of the 29 deposit to cash on the same day the deposit is made. 30 (c) A settlement agent may not disburse escrow money on the business day 31 after the business day on which the items are deposited under (a) of this section unless
01 the deposit is made by 02 (1) a cashier's check or a certified check and the cashier's check or 03 certified check is payable in the state and drawn on a financial institution located in 04 the state; 05 (2) a cashier's check, a negotiable order of withdrawal, a money order, 06 or another item and the check, order of withdrawal, money order, or other item has 07 been finally paid before the disbursement; or 08 (3) a depository check, including a cashier's, certified, or teller's check, 09 that is governed by 12 U.S.C. 4001 - 4010 (Expedited Funds Availability Act). 10 (d) In (a) of this section, "available for withdrawal as a matter of right" means 11 (1) when the item has been submitted for collection and payment for 12 the item has been received; 13 (2) when the financial institution where an item has been deposited 14 considers the money represented by the item available for withdrawal; or 15 (3) unless written notification has been received from the financial 16 institution where the item was deposited establishing a longer period for an item drawn 17 on an out-of-state financial institution, after a reasonable time has passed for 18 prohibiting customers from drawing on the item. 19 Sec. 34.80.050. Recording, filing, or delivery of escrow transaction 20 documents. A settlement agent may not record in the office of the recorder in this 21 state or record in an office in another state that is equivalent to the office of the 22 recorder, file under AS 45.09 in this state or file under an equivalent statute in another 23 state, or deliver a conveyance of property, loan documents, documents establishing a 24 security interest in property, or other documents from an escrow transaction until the 25 money required by the escrow transaction agreement to be disbursed at the same time 26 is available for disbursement under AS 34.80.040. 27 Sec. 34.80.060. Civil penalty. A settlement agent who wilfully violates this 28 chapter is liable to the state for five times the amount of the consideration paid to the 29 agent for the services rendered for the escrow transaction that is the subject of the 30 violation. In this section, "settlement agent" does not include an employee of a person 31 who handles an escrow transaction for compensation.
01 Sec. 34.80.070. Department supervision. The department may supervise the 02 compliance of settlement agents with the provisions of this chapter. However, the 03 department may not audit a settlement agent's records and accounts unless a person 04 who is a party to an escrow transaction of the settlement agent has complained in 05 writing to the department about the agent's noncompliance with this chapter and the 06 audit is limited to the records and accounts of the escrow transaction to which the 07 person is a party. 08 Sec. 34.80.080. Regulations. The department may adopt regulations under 09 AS 44.62 (Administrative Procedure Act) to implement this chapter. 10 Sec. 34.80.090. Definitions. In this chapter, 11 (1) "department" means the Department of Commerce and Economic 12 Development; 13 (2) "depository escrow account" means an account that holds escrow 14 money pending completion of an escrow transaction and that is in a financial 15 institution; 16 (3) "escrow money" means the money that is received by a settlement 17 agent for an escrow transaction; 18 (4) "escrow transaction" means a transaction where, for the purpose of 19 effecting and closing the sale, purchase, exchange, transfer, encumbrance, leasing, or 20 other disposition of an interest in a single piece of residential real property, persons 21 agree that 22 (A) money, written documents, evidence of title to real or 23 personal property, or other things of value will be delivered to a person for 24 retention until the happening of a specific event or the performance of a 25 prescribed condition; and 26 (B) upon the happening of the event or performance of the 27 condition, the person holding the things of value will deliver them to the 28 persons entitled to them under the escrow transaction agreement; 29 (5) "financial institution" means a financial institution 30 (A) whose accounts are insured by an agency of the federal 31 government;
01 (B) that is located in this state and does not meet the 02 requirements of (A) of this paragraph, but is subject to regulation by the 03 division of banking, securities and corporations in the Department of 04 Commerce and Economic Development; or 05 (C) that is located in another state and does not meet the 06 requirements of (A) of this paragraph, but is subject to regulation in the other 07 state by an agency comparable to the division of banking, securities and 08 corporations in the Department of Commerce and Economic Development; 09 (6) "item" means cash, a check, a negotiable order of withdrawal, a 10 share draft, a traveler's check, a money order, or an interbank electronic transfer; in 11 this paragraph, "check" includes a cashier's check; 12 (7) "residential real property" means real property where all of the 13 structures on the real property equal four or fewer attached or detached dwelling units; 14 (8) "settlement agent" means a person who handles an escrow 15 transaction for compensation, but does not mean a financial institution or other person 16 when the financial institution or other person collects money for the sole purpose of 17 applying the money to the payment of an indebtedness; "settlement agent" includes an 18 employee of a person who handles an escrow transaction for compensation when the 19 employee is carrying out employment duties related to the escrow transaction. 20 Sec. 34.80.095. Short title. This chapter may be cited as the Good Funds Act. 21 * Sec. 4. This Act applies to escrow transactions that begin on or after the effective date 22 of this Act. In this section, "escrow transaction" has the meaning given in AS 34.80.090, 23 enacted by sec. 3 of this Act. 24 * Sec. 5. This Act takes effect July 1, 1999.