escrow agents; disbursement
of monies
HB 2074 requires that escrow agents not disburse money from an escrow account until funds related to the transaction have been deposited and available. The legislation specifies which forms of payment are acceptable for deposit.
Many real estate transactions utilize escrow accounts to hold funds relating to the sale, such as earnest money, deposits and loans. These monies are collectively held with other escrow deposits in a single trust. At the time of closing, escrow agents disburse monies to various entities such as mortgage brokers, realtors and sellers. A problem can occur at the time of transaction when deposited funds are not accessible from the account and escrow payments are made. This could jeopardize the funds in the trust account intended to secure the transactions of all other customers. It is of particular concern when a lender is from a different region and timelines established for funds availability vary. The proposed legislation would require escrow agents to disburse monies only when the funds related to the transaction are deposited and readily available. Currently, thirty-five other states have adopted similar statutes that require funds availability.
· Requires that payments made from escrow accounts only occur when funds related to the transaction are available and are equal to the amount deposited.
· Specifies that deposits are to be in the form of wire transfers, checks, drafts, negotiable orders of withdrawal, money orders, depository checks (including certified checks), cashier's checks, tellers' checks and credit transfers through an automated clearing house.
· Establishes that account servicing is not subject to the legislation.
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45th
Legislature
Second
Regular Session 2 January 22, 2002
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