2008 Legislation
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HOUSE BILL NO. 448<br /> – Escrow, license, trust fund accts


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Bill Status

H0448...........................................................by BUSINESS
IDAHO ESCROW ACT - Amends and repeals existing law relating to the Idaho
Escrow Act to clarify grounds for application denial; to revise
requirements regarding trust fund accounts; to provide additional remedies;
and to repeal a provision relating to initial licensing and compliance.

02/01    House intro - 1st rdg - to printing
02/04    Rpt prt - to Bus
02/29    Rpt out - rec d/p - to 2nd rdg
03/03    2nd rdg - to 3rd rdg
03/06    3rd rdg - PASSED - 56-10-4
      AYES -- Anderson, Andrus, Bayer, Bell, Bilbao, Block, Bock, Boe,
      Bolz, Bowers, Brackett, Bradford, Chadderdon, Chavez, Chew, Clark,
      Collins, Crane, Durst, Eskridge, Hagedorn, Hart, Henbest, Jaquet,
      Killen, King, Kren, Labrador, Lake, LeFavour, Mathews, McGeachin,
      Mortimer, Nonini, Pasley-Stuart, Patrick, Pence, Raybould, Ringo,
      Roberts, Ruchti, Rusche, Sayler, Schaefer, Shepherd(02), Shirley,
      Shively, Smith(30), Smith(24), Snodgrass, Stevenson, Thomas, Trail,
      Wills, Wood(27), Mr. Speaker
      NAYS -- Barrett, Harwood, Loertscher, Luker, Marriott, Nielsen,
      Shepherd(08), Thayn, Vander Woude, Wood(35)
      Absent and excused -- Bedke, Black, Henderson, Moyle
    Floor Sponsor - Crane
    Title apvd - to Senate
03/07    Senate intro - 1st rdg - to Com/HuRes
03/19    Rpt out - rec d/p - to 2nd rdg
03/20    2nd rdg - to 3rd rdg
    Rls susp - PASSED - 35-0-0
      AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Burkett,
      Cameron, Coiner, Corder, Darrington, Davis, Fulcher, Gannon, Geddes,
      Goedde, Hammond, Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst,
      Little, Lodge, Malepeai(Sagness), McGee, McKague, McKenzie, Pearce,
      Richardson, Schroeder, Siddoway, Stegner, Stennett, Werk
      NAYS -- None
      Absent and excused -- None
    Floor Sponsor - Stegner
    Title apvd - to House
03/21    To enrol - Rpt enrol - Sp signed
03/24    Pres signed
03/25    To Governor
03/31    Governor signed
         Session Law Chapter 311
         Effective: 07/01/08

Bill Text

  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   Second Regular Session - 2008


                              IN THE HOUSE OF REPRESENTATIVES

                                     HOUSE BILL NO. 448

                                   BY BUSINESS COMMITTEE

  1                                        AN ACT

  7    Be It Enacted by the Legislature of the State of Idaho:

  8        SECTION  1.  That  Section  30-907, Idaho Code, be, and the same is hereby
  9    amended to read as follows:

 10        30-907.  DIRECTOR'S ISSUANCE OR DENIAL OF LICENSE. (1) The director  shall
 11    receive and act upon all applications for licenses to engage in business as an
 12    escrow  agency under this chapter. If the director finds that all requirements
 13    of statute and rule have been met and all applicable fees paid, and the appli-
 14    cant is not otherwise unqualified for licensure, the director  shall  issue  a
 15    license to the applicant.
 16        (2)  An  application for a license as an escrow agency shall be in writing
 17    and filed with the director in such form as is  prescribed  by  the  director,
 18    shall  include  such  information  as the director may reasonably require, and
 19    shall be verified on oath by the applicant. Such information shall be  updated
 20    and  filed with the director as necessary to keep the information current. The
 21    application for licensure shall be accompanied by an application fee of  three
 22    hundred  fifty  dollars ($350). When an application for licensure is denied or
 23    withdrawn, the director shall retain all fees paid by the applicant.
 24        (3)  An application for an escrow agency license under this chapter may be
 25    denied if the director finds that:
 26        (a)  The escrow agency's business was or will be formed for  any  business
 27        other  than  legitimate escrow services, or proposes to use a name that is
 28        misleading or in conflict with the name of an existing licensee;
 29        (b)  Any  incorporator,  officer,  director,  member,   general   partner,
 30        employee or agent of the escrow agency applicant has been:
 31             (i)   Convicted  of, or received a withheld judgment for, any felony;
 32             or a misdemeanor involving dishonesty or moral turpitude; or
 33             (ii)  Convicted of, or received a withheld  judgment  for,  a  misde-
 34             meanor involving dishonesty or moral turpitude; or
 35             (iii) Committed  any  crime  or  act  involving  dishonesty, fraud or
 36             deceit, which crime or act is substantially related to the qualifica-
 37             tions, functions or duties of a person engaged in an escrow business;
 38        (c)  There is no natural person possessing a minimum of three (3) years of
 39        supervisory experience in relation to an escrow business supervising  each
 40        escrow agency office;
 41        (d)  The  applicant  or  any  officer,  director, member, general partner,
 42        employee or agent of the applicant has demonstrated  lack  of  fitness  to
 43        transact escrow business;


  1        (e)  The  applicant has made any false statement of a material fact in the
  2        application for a license; or
  3        (f)  The applicant, any officer, director, member, general partner or any
  4        person owning or controlling, directly or indirectly, ten percent (10%) or
  5        more of the outstanding equity securities of the  applicant  has  violated
  6        any provision of this chapter or rules promulgated thereunder, or any sim-
  7        ilar regulatory scheme in this state or in any foreign jurisdiction.

  8        SECTION  2.  That  Section  30-914, Idaho Code, be, and the same is hereby
  9    amended to read as follows:

 12    licensee  shall maintain sufficient books, accounts and records readily acces-
 13    sible to the department for the  department  to  determine  at  any  time  the
 14    licensee's  financial condition, what duties and responsibilities the licensee
 15    has undertaken to perform and whether  it  is  properly  performing  all  such
 16    duties,  and  any  other  information  considered necessary by the director to
 17    determine whether the licensee is operating in a safe,  competent  and  lawful
 18    manner. The books, records and accounts shall be maintained in accordance with
 19    generally accepted accounting principles and sound business practice.
 20        (2)  For  each  individual escrow account, the licensee shall maintain the
 21    escrow agreement and all amendments, all instructions affecting the agreement,
 22    all related correspondence, and an individual ledger reflecting  all  activity
 23    pertinent to that account.
 24        (3)  Each  licensee  shall  continuously  maintain  the  following general
 25    accounts:
 26        (a)  A general ledger reflecting assets, liabilities, income, expenses and
 27        equity accounts;
 28        (b)  An escrow liability control ledger for all escrow accounts;
 29        (c)  A cash receipts and disbursements journal; and
 30        (d)  Copies of all receipts and disbursements used as a medium of  posting
 31        to individual escrow accounts.
 32        (4)  (a) Every  licensee  shall  keep a separate escrow trust fund account
 33        established at a financial institution located in Idaho  approved  by  the
 34        director,  in  which shall be kept separate, distinct and apart and segre-
 35        gated from the licensee's own funds, all funds or moneys of clients  which
 36        are  being  held in trust by the licensee pending the closing of an escrow
 37        transaction or the full performance of the  escrow  agreement.  All  trust
 38        funds  shall  be  deposited not later than the first banking day following
 39        receipt thereof. Such  funds,  when  deposited,  shall  be  designated  as
 40        "escrow  accounts"  or given some other appropriate designation indicating
 41        that the funds are not the funds of the licensee.
 42        (b)  Every licensee shall maintain all other assets or  property  received
 43        pursuant  to  an escrow in accordance with a written escrow agreement in a
 44        manner which will reasonably preserve and protect the property from  loss,
 45        theft  or  damage,  and  which  will  otherwise comply with all duties and
 46        responsibilities of a fiduciary or bailee generally.
 47        (5)  The records referenced in this section shall be reconciled  at  least
 48    monthly.
 49        (6)  All  records  referenced  in  this section shall be maintained by the
 50    licensee for seven (7) years following the close of each account.
 51        (7)  Any interest received on funds deposited with  an  escrow  agency  in
 52    connection  with  an  escrow  must be paid over to the depositing party to the
 53    escrow and may not be transferred to an account of  the  escrow  agency.  This


  1    section  shall  not  limit the right of the escrow agency to contract with the
  2    depositing party with respect to the interest  received  on  the  deposits  by
  3    independent agreement.

  4        SECTION  3.  That  Section  30-920, Idaho Code, be, and the same is hereby
  5    amended to read as follows:

  6        30-920.  REMEDIES. (1) Whenever it appears to the director that any person
  7    has engaged in or is about to engage in any act  or  practice  constituting  a
  8    violation of any provision of this chapter or any rule or order thereunder, is
  9    conducting its business in an unsafe and injurious manner, or that its capital
 10    or assets are impaired, the director may in his discretion:
 11        (a)  Order the person to cease and desist from the violation of any provi-
 12        sion of this chapter, rule or order thereunder;
 13        (b)  Issue  an  order  revoking or suspending the licensee's escrow agency
 14        license;
 15        (c)  After notice and the opportunity for a hearing, except  as  otherwise
 16        provided  in  this chapter, issue an order imposing a civil penalty not to
 17        exceed five thousand dollars ($5,000) for each violation of  this  chapter
 18        or any rule or order thereunder;
 19        (d)  After  notice  and  the  opportunity for a hearing, issue an order of
 20        restitution to any person for loss of money or property resulting  from  a
 21        violation of this chapter; and
 22        (e)  Issue  an  order, pursuant to section 67-5247, Idaho Code, impounding
 23        the accounts, including all operating and trust accounts, of any  licensee
 24        or person required to be licensed under this chapter.
 25        (2)  In addition to such remedies, the director may bring an action in the
 26    fourth  district  court  in  and  for Ada county or in such other court as the
 27    director deems appropriate. Upon a proper showing, the court may:
 28        (a)  Grant Issue a permanent or temporary injunction,  restraining  order,
 29        followed  by  a  preliminary injunction and a permanent injunction for the
 30        department or receiver to exercise control of,  operate  or  liquidate  an
 31        escrow agency's business in this state, or such other injunctive relief as
 32        appropriate; and or declaratory judgment;
 33        (b)  Order other appropriate or ancillary relief, which may include:
 34             (i)   An  asset  freeze, accounting, writ of attachment, writ of gen-
 35             eral or specific execution, and appointment of a receiver or  conser-
 36             vator, that may be the director, for the defendant or the defendant's
 37             assets;
 38             (ii)  Ordering   the  director  to  take  charge  and  control  of  a
 39             defendant's property, including investment accounts and accounts in a
 40             financial institution, rents and profits; to collect  debts;  and  to
 41             acquire and dispose of property;
 42        (c)  Issue  an  order  of  restitution  to any person for loss of money or
 43        property resulting from a violation of this chapter; and
 44        (d)  Except as otherwise provided by this chapter, impose a civil  penalty
 45        not to exceed five thousand dollars ($5,000) for each violation.
 46        (3)  The court may not require the director to post a bond.

 47        SECTION  4.  That  Section  30-935, Idaho Code, be, and the same is hereby
 48    repealed.

Statement of Purpose / Fiscal Impact

                      STATEMENT OF PURPOSE

                           RS 17327C1

The purpose of this bill is to amend the Idaho Escrow Act to 
include consumer restitution and other civil remedies the 
Department can seek against an Escrow agency in an action to 
enforce the Act.  This legislative idea would also provide that 
escrow trust fund accounts may be established at financial 
institutions approved by the director, in place of the current 
requirement that the financial institution be "located" in 

                            FISCAL NOTE

No fiscal impact

Name:	Michael Larsen
Agency:	Finance, Dept. of
Phone:	(208) 332-8060