Sponsor Statement 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"

At the request of the Alaska State Escrow Association, I introduced House Bill 247 in an effort to assure consumers that their money will be safe and properly accounted for when delivered to a settlement agent for a residential real property transaction. Currently, there are no Alaskan laws addressing these concerns.

Consumers need to be assured that their funds (which can be rather large amounts) will not be jeopardized and will be available as needed during the course of a residential real estate transaction. From the seller’s viewpoint, the execution of a deed and the deposit of that deed will bring forth proceeds upon recording of the deed. Under current Alaskan business practices, a buyer deposits a cashier’s check prior to recording a property deed; however, this is not the case if a lender provides the purchase funds. In the case of a lender, the deed is recorded along with the lender’s lien and the funds are deposited after the deed and other documents have been recorded.

This procedure leaves sellers and settlement agents in the middle. The seller’s interest in the property has been transferred but no funds have been received. This bill requires that before a settlement agent records documents transferring residential property or creating a security interest in the property other than the seller’s current interest that the money required under the escrow agreement must be available for distribution in accordance with AS 34.75.040 as set forth in the bill.

The basic thrust of the bill is to protect Alaskans who are selling their property and to make sure that the funds due those sellers are available in a timely fashion. Alaska will join the states of California, Washington, and Oregon, among others with similar laws.

I would urge your support of this legislation.

ED2:04/30/98

Sponsor Statement for House Bill 247

An Act Relating to Escrow Accounts

"Good Funds"

At the request of the Alaska State Escrow Association, I introduced House Bill 247 in an effort to assure consumers that their money will be safe and properly accounted for when delivered to a settlement agent for a property transaction. Currently, there are no Alaskan laws addressing these concerns.

The bill has the support of the Alaska State Escrow Association. Consumers need to be assured that their funds (which can be rather large amounts) will not be jeopardized and will be available as needed during the course of a real estate transaction. From the seller’s viewpoint, the execution of a deed and the deposit of that deed will bring forth proceeds upon recording of the deed. Under current Alaskan business practices, a buyer deposits a cashier’s check prior to recording a property deed; however, this is not the case if a lender provides the purchase funds. In the case of a lender, the deed is recorded along with the lender’s lien and the funds are deposited after the deed and other documents have been recorded.

This procedure leaves sellers and settlement agents in the middle. The seller’s interest in the property has been transferred but no funds have been received. This bill requires that before a settlement agent records documents transferring property or creating a security interest in the property other than the seller’s current interest that the money required under the escrow agreement must be available for distribution in accordance with AS 34.75.040 as set forth in the bill.

The basic thrust of the bill is to protect Alaskans who are selling their property and to make sure that the funds due those sellers are available in a timely fashion.

I would urge your support of this legislation.

ED1:01/20/98