Sectional Analysis for CS for HB 247 (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; and Authorizing the Adoption of Regulations to Implement Certain Escrow Provisions.

"Good Funds"

Section 1: Purpose of the Act is to assure the public that their money will be safe when delivered to a settlement agent for a residential real property transaction.

Section 2. Amends AS 21.66.250 (in the chapter on title insurance companies) to make its trust fund provisions subject to the proposed new chapter on escrow transactions.

Section 3. Establishes a new chapter on escrow transactions.

• Sec. 34.80.010. States that the money in an escrow transaction does not belong to the settlement agent and cannot be used to satisfy a claim against the agent. Prohibits using escrow money for anything other than what the escrow transaction agreement calls for. Prohibits paying out or using escrow money until the conditions for its use are satisfied.
• Sec. 34.80.020. Directs a settlement agent to separate the money of one escrow transaction from all other money and to show this in the records. Requires the settlement agent to deposit escrow money in a bank or other financial institution in this state.
• Sec. 34.80.030. Prohibits collecting or paying interest on escrow money unless the parties agree to do so.
• Sec. 34.80.040. (a) Establishes the circumstances when a settlement agent may pay out escrow money. Prohibits paying out escrow money on the same business day as when the checks, drafts, money orders, and transfers are deposited, unless the money is received for deposit in certain forms, e.g. cash. Describes the circumstances when a settlement agent can pay out escrow money on the business day after the business day the items representing the money are deposited. Defines the phrase "available for withdrawal as matter of right" for this section.
• Sec. 34.80.050. Prohibits a settlement agent from recording, filing, or delivering escrow documents until the money to be paid out is available under AS 34.80.040 for payment.
• Sec. 34.80.060. Subjects a settlement agent who wilfully violates the chapter to a civil penalty.
• Sec. 34.80.070. Directs the Department of Commerce and Economic Development to supervise compliance with this chapter. Limits when the department may audit a settlement agent and limits the scope of the audit.
• Sec. 34.80.080. Allows the Department of Commerce and Economic Development to adopt regulations for the chapter.
• Sec. 34.80.090. Definition section.

Section 4. This applies to escrow transactions that begin on or after the effective date of this Act.

Section 5. Effective date is January 1, 1999.

Note: The original sectional analysis for HB 247 was done by Legislative Legal Services. The sectional analysis above was revised by Rep. Rokeberg to reflect the changes contained in CSHB 247 (L&C).

ED 1:4/30/98