Introduced Version






HOUSE BILL No. 1374

_____


DIGEST OF INTRODUCED BILL



Citations Affected: IC 27-7-3.7.

Synopsis: Escrow transactions. Provides that funds received in connection with an escrow transaction in a real estate transaction must be deposited in an escrow account unless the parties to the escrow transaction agree in writing to another arrangement. Prohibits a closing agent from making disbursements from an escrow account in connection with a real estate transaction unless any funds that: (1) are received from a single party to the transaction; and (2) in the aggregate are at least $10,000; are wired funds that are unconditionally held by and irrevocably credited to the closing agent's escrow account. Sets forth certain types of instruments and other forms of money that constitute "good funds" for purposes of an escrow transaction. Prohibits a closing agent from making disbursements from an escrow account in connection with a real estate transaction unless any funds that: (1) are received from a single party to the transaction; and (2) in the aggregate are less than $10,000; are good funds. Provides that if: (1) the closing agent in a real estate transaction receives wired funds unconditionally held and irrevocably credited to the closing agent's escrow account; and (2) a holder of a mortgage lien so requests; the lien holder is entitled to receive its proceeds from the real estate transaction through funds electronically transferred to an account specified by the holder. Provides that a closing agent may advance up to $500 from an escrow account on behalf of a party to an escrow transaction for the purpose of paying certain incidental fees in connection with the real property that is the subject of the escrow transaction.

Effective: July 1, 2009.





Murphy, Bardon




    January 13, 2009, read first time and referred to Committee on Financial Institutions.







Introduced

First Regular Session 116th General Assembly (2009)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
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HOUSE BILL No. 1374



    A BILL FOR AN ACT to amend the Indiana Code concerning insurance.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 27-7-3.7; (09)IN1374.1.1. -->     SECTION 1. IC 27-7-3.7 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]:
     Chapter 3.7. Escrow Transactions in Real Estate Transactions
    Sec. 1. As used in this chapter, "closing agent" means a person that closes an escrow transaction in connection with the purchase, sale, or financing of an interest in real estate.
    Sec. 2. As used in this chapter, "escrow account" means a checking account established by a closing agent with a federally insured:
        (1) bank;
        (2) savings and loan association;
        (3) credit union; or
        (4) savings bank chartered under the laws of a state or the United States;
that is used exclusively for the deposit and disbursement of funds for an escrow transaction.
    Sec. 3. As used in this chapter, "escrow transaction" means a transaction in which a person deposits with a closing agent funds that are to be held until:
        (1) a specified event occurs; or
        (2) the performance of a prescribed condition;
in connection with the purchase, sale, or financing of an interest in real estate.
    Sec. 4. As used in this chapter, "good funds" means funds in any of the following forms:
        (1) United States currency.
        (2) Wired funds unconditionally held by and irrevocably credited to the escrow account of the closing agent.
        (3) Certified or cashier's checks that are drawn on an existing account at a federally insured:
            (A) bank;
            (B) savings and loan association;
            (C) credit union; or
            (D) savings bank chartered under the laws of a state or the United States.
        (4) A check drawn on the trust account of a real estate broker licensed under IC 25-34.1, if the closing agent has reasonable and prudent grounds to believe that sufficient funds will be available for withdrawal from the account on which the check is drawn at the time of disbursement of funds from the closing agent's escrow account.
        (5) A personal check not to exceed five hundred dollars ($500) per closing.
        (6) A check issued by the state, the United States, or a political subdivision of the state or the United States.
        (7) A check drawn on the escrow account of another closing agent, if the closing agent in the escrow transaction has reasonable and prudent grounds to believe that sufficient funds will be available for withdrawal from the account upon which the check is drawn at the time of disbursement of funds from the escrow account of the closing agent in the escrow transaction.
    Sec. 5. As used in this section, "real estate transaction" refers to any:
        (1) escrow transaction;
        (2) settlement; or
        (3) closing;
conducted in connection with the purchase, sale, or financing of an

interest in real estate.
    Sec. 6. Funds received in connection with an escrow transaction must be deposited in an escrow account unless the parties to the escrow transaction agree in writing to another arrangement.
    Sec. 7. A closing agent may not make disbursements from an escrow account or accounts in connection with a real estate transaction unless any funds that:
        (1) are received from any single party to the real estate transaction; and
        (2) in the aggregate are at least ten thousand dollars ($10,000);
are wired funds that are unconditionally held by and irrevocably credited to the escrow account of the closing agent.
    Sec. 8. A closing agent may not make disbursements from an escrow account or accounts in connection with a real estate transaction unless any funds that:
        (1) are received from any single party to the real estate transaction; and
        (2) in the aggregate are less than ten thousand dollars ($10,000);
are good funds.
    Sec. 9. If:
        (1) the closing agent in a real estate transaction receives wired funds unconditionally held and irrevocably credited to the escrow account of the closing agent; and
        (2) a holder of a mortgage lien encumbering real estate so requests, as part of written closing instructions or a written payoff statement in advance of closing;
the holder of the mortgage lien is entitled to receive its proceeds from the real estate transaction through funds electronically transferred to an account specified by the holder of the mortgage lien.
    Sec. 10. A closing agent may advance an amount not to exceed five hundred dollars ($500) from an escrow account on behalf of a party to an escrow transaction for the purpose of paying incidental fees, including conveyance and recording fees. Incidental fees may be paid in order to:
        (1) effect and close the sale of;
        (2) purchase;
        (3) exchange;
        (4) transfer;
        (5) encumber; or


        (6) lease;
real property that is the subject of the escrow transaction.