CSHB 13(FIN): "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; authorizing civil actions for violations of certain escrow requirements; and providing for an effective date."
00CS FOR HOUSE BILL NO. 13(FIN) 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; authorizing civil actions for violations of 04 certain escrow requirements; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. LEGISLATIVE PURPOSE. The purpose of this Act is to provide maximum 07 assurance to the public that their money will not be placed in jeopardy when entrusted to a 08 settlement agent in the course of residential real property transactions. 09 * Sec. 2. AS 21.66.250 is amended to read: 10 Sec. 21.66.250. Trust funds. Except as provided in AS 34.80, trust 11 [TRUST] funds or assets held in a fiduciary capacity by a title insurance company that 12 is authorized to do a trust business shall be invested in accordance with AS 06.25. 13 * Sec. 3. AS 34 is amended by adding a new chapter to read: 14 Chapter 80. Escrow Transactions for Residential Real Property.
01 Sec. 34.80.010. Characterization of escrow money. The money that is 02 received by a settlement agent for an escrow transaction is not the property of the 03 settlement agent and is not subject to execution, attachment, or other form of collection 04 for a claim against the settlement agent. Escrow money may not be used for a purpose 05 other than to fulfill the terms of the escrow transaction agreement. 06 Sec. 34.80.020. Segregation and deposit of escrow money. (a) A settlement 07 agent shall segregate on the records of the settlement agent the escrow money from 08 one escrow transaction from all other money, including the escrow money of other 09 escrow transactions. Escrow money from more than one escrow transaction may be 10 deposited into a single depository escrow account. 11 (b) A settlement agent shall deposit escrow money in a depository escrow 12 account of a financial institution located in this state. 13 Sec. 34.80.030. Interest on escrow money. Notwithstanding any other 14 provision of law, interest may not be collected or paid by a settlement agent on 15 money held for an escrow transaction unless authorized in writing by the parties to the 16 escrow transaction, including the settlement agent. 17 Sec. 34.80.040. Disbursement of escrow money. (a) A settlement agent may 18 not disburse escrow money unless items that are at least equal in value to the proposed 19 disbursements have been received by the settlement agent for the escrow transaction, 20 have been deposited as required by AS 34.80.020(b), and are available for withdrawal 21 as a matter of right from the depository escrow account. 22 (b) A settlement agent may not disburse escrow money on the same business 23 day as the items are deposited under AS 34.80.020(b) unless the deposit is made in 24 cash, by interbank electronic transfer, or in a form that permits conversion of the 25 deposit to cash on the same day the deposit is made. 26 (c) A settlement agent may not disburse escrow money on the business day 27 after the business day on which the items are deposited under (a) of this section unless 28 the deposit is made by 29 (1) a cashier's check or a certified check and the cashier's check or 30 certified check is payable in the state and drawn on a financial institution located in 31 the state;
01 (2) a cashier's check, a negotiable order of withdrawal, a money order, 02 or another item and the check, order of withdrawal, money order, or other item has 03 been finally paid before the disbursement; or 04 (3) a depository check, including a cashier's, certified, or teller's check, 05 that is governed by 12 U.S.C. 4001 - 4010 (Expedited Funds Availability Act). 06 (d) In (a) of this section, "available for withdrawal as a matter of right" means 07 (1) when the item has been submitted for collection and payment for 08 the item has been received; 09 (2) when the financial institution where an item has been deposited 10 considers the money represented by the item available for withdrawal; or 11 (3) unless written notification has been received from the financial 12 institution where the item was deposited establishing a longer period for an item drawn 13 on an out-of-state financial institution, after a reasonable time has passed for 14 prohibiting customers from drawing on the item. 15 Sec. 34.80.050. Recording, filing, or delivery of escrow transaction 16 documents. A settlement agent may not record in the office of the recorder in this 17 state or record in an office in another state that is equivalent to the office of the 18 recorder, file under AS 45.09 in this state or file under an equivalent statute in another 19 state, or deliver a conveyance of property, loan documents, documents establishing a 20 security interest in property, or other documents from an escrow transaction until the 21 money required by the escrow transaction agreement to be disbursed at the same time 22 is available for disbursement under AS 34.80.040. 23 Sec. 34.80.060. Civil action. A person who suffers a loss of money or other 24 property as a result of a settlement agent's violation of this chapter may bring a civil 25 action against the agent to recover monetary damages that equal the value of the 26 money or other property lost. A court may not award punitive damages to the person. 27 In this section, "settlement agent" does not include an employee of a person who 28 handles an escrow transaction for compensation. 29 Sec. 34.80.090. Definitions. In this chapter, 30 (1) "depository escrow account" means an account that holds escrow 31 money pending completion of an escrow transaction and that is in a financial
01 institution; 02 (2) "escrow money" means the money that is received by a settlement 03 agent for an escrow transaction; 04 (3) "escrow transaction" means a transaction where, for the purpose of 05 effecting and closing the sale, purchase, exchange, transfer, encumbrance, leasing, or 06 other disposition of an interest in a single piece of residential real property, persons 07 agree that 08 (A) money, written documents, evidence of title to real or 09 personal property, or other things of value will be delivered to a person for 10 retention until the happening of a specific event or the performance of a 11 prescribed condition; and 12 (B) upon the happening of the event or performance of the 13 condition, the person holding the things of value will deliver them to the 14 persons entitled to them under the escrow transaction agreement; 15 (4) "financial institution" means a financial institution 16 (A) whose accounts are insured by an agency of the federal 17 government; 18 (B) that is located in this state and does not meet the 19 requirements of (A) of this paragraph, but is subject to regulation by the 20 division of banking, securities and corporations in the Department of 21 Commerce and Economic Development; or 22 (C) that is located in another state and does not meet the 23 requirements of (A) of this paragraph, but is subject to regulation in the other 24 state by an agency comparable to the division of banking, securities and 25 corporations in the Department of Commerce and Economic Development; 26 (5) "item" means cash, a check, a negotiable order of withdrawal, a 27 share draft, a traveler's check, a money order, or an interbank electronic transfer; in 28 this paragraph, "check" includes a cashier's check; 29 (6) "residential real property" means real property on which there are 30 one to four attached or detached dwelling units, or any number of apartments if the 31 apartments are in a horizontal property regime formed under AS 34.07 or any number
01 of units if the units are in a common interest community created under AS 34.08; 02 (7) "settlement agent" means a person who handles an escrow 03 transaction for compensation, but does not mean a financial institution or other person 04 when the financial institution or other person collects money for the sole purpose of 05 applying the money to the payment of an indebtedness; "settlement agent" includes an 06 employee of a person who handles an escrow transaction for compensation when the 07 employee is carrying out employment duties related to the escrow transaction. 08 Sec. 34.80.095. Short title. This chapter may be cited as the Good Funds Act. 09 * Sec. 4. This Act applies to escrow transactions that begin on or after the effective date 10 of this Act. In this section, "escrow transaction" has the meaning given in AS 34.80.090, 11 enacted by sec. 3 of this Act. 12 * Sec. 5. This Act takes effect July 1, 1999.