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