Texas 2009 - 81st Regular

Texas Senate Bill SB1938 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	81R5428 PMO-D
2	2	By: Watson S.B. No. 1938
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the maintenance of certain interest-bearing accounts by
8	8	escrow officers and the use of the interest on those accounts.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 2652.005, Insurance Code, is amended to
11	11	read as follows:
12	12	Sec. 2652.005. ESCROW ACCOUNT AUDIT. Each escrow account
13	13	used by a licensed escrow officer for closing a transaction,
14	14	including an account established under Section 2652.021, is subject
15	15	to the audit requirements of Subchapter D, Chapter 2651.
16	16	SECTION 2. Chapter 2652, Insurance Code, is amended by
17	17	adding Subchapter A-1 to read as follows:
18	18	SUBCHAPTER A-1. MAINTENANCE OF CERTAIN ACCOUNTS
19	19	Sec. 2652.021. INTEREST-BEARING ACCOUNT FOR CERTAIN FUNDS;
20	20	OTHER ACCOUNTS AND INVESTMENTS AUTHORIZED. (a) An escrow officer
21	21	shall establish and maintain at a financial institution an
22	22	interest-bearing demand account that is functionally equivalent to
23	23	an account commonly known as an Interest on Lawyers Trust Account
24	24	(IOLTA) as described by 12 C.F.R. Section 370.2(h)(3)(i) for the
25	25	deposit of funds that are nominal in amount or that the escrow
26	26	officer reasonably anticipates will be held for a short period of
27	27	time.
28	28	(b) An account established or maintained under Subsection
29	29	(a) may be a single, unsegregated account.
30	30	(c) This section does not prohibit an escrow officer from
31	31	establishing at the request of a purchaser and seller other
32	32	interest-bearing accounts or other investments for a specific
33	33	transaction authorized by this title for the deposit of funds that
34	34	are not required to be deposited under this subchapter.
35	35	Sec. 2652.022. INTEREST ON ACCOUNT. (a) An escrow officer
36	36	establishing an interest-bearing account under Section 2652.021
37	37	shall attempt in good faith to obtain a rate of interest payable on
38	38	the account that is not less than the rate a financial institution
39	39	pays to other depositors with accounts of a similar size and
40	40	duration.
41	41	(b) If a financial institution offers the escrow officer an
42	42	account with a higher interest rate or dividend on a deposit meeting
43	43	certain time or minimum amount requirements, the escrow officer may
44	44	establish that account if the right to withdraw or transfer the
45	45	principal is not materially impaired other than by the statutory
46	46	notification requirements generally applicable to that type of
47	47	account.
48	48	Sec. 2652.023. REMITTANCE OF INTEREST ON ACCOUNT; REPORTS.
49	49	An escrow officer establishing an interest-bearing account under
50	50	Section 2652.021 shall direct the financial institution to:
51	51	(1) remit, at least quarterly, interest earned on the
52	52	average daily balance in the account, less a reasonable service
53	53	charge, to the administrative entity designated by the Texas
54	54	Supreme Court;
55	55	(2) transmit, with the remittance described by
56	56	Subdivision (1), a statement of the name and mailing address of the
57	57	escrow officer maintaining the account, the rate or rates of
58	58	interest applied to the account, and the amount of service charge
59	59	deducted for the period for which the statement is made; and
60	60	(3) transmit to the depositing escrow officer and the
61	61	department, at the same interval under which a remittance is made
62	62	under Subdivision (1), a report showing:
63	63	(A) the amount of the remittance under
64	64	Subdivision (1);
65	65	(B) the rate or rates of interest applied to the
66	66	account;
67	67	(C) the amount of service charge deducted for the
68	68	period for which the report is made; and
69	69	(D) the average daily balance for each month of
70	70	that period.
71	71	Sec. 2652.024. CONSTRUCTION WITH OTHER LAW; OFFICER
72	72	LIABILITY. (a) Nothing in this subchapter affects an escrow
73	73	officer's obligations concerning funds other than funds required to
74	74	be deposited in an interest-bearing account under Section 2652.021.
75	75	(b) An escrow officer is not liable for a good faith
76	76	determination of which funds must be deposited under Section
77	77	2652.021, if the determination is made in accordance with this
78	78	subchapter and any applicable commissioner rules.
79	79	Sec. 2652.025. RULES. The commissioner shall adopt rules to
80	80	ensure compliance with this subchapter, including rules that, for
81	81	the purposes of this subchapter:
82	82	(1) define "nominal" and "short duration";
83	83	(2) prescribe the requirements that a financial
84	84	institution must meet before an escrow officer may establish an
85	85	account under Section 2652.021 at the institution; and
86	86	(3) designate procedures for the collection and
87	87	transmittal of interest funds to the administrative entity
88	88	designated by the Texas Supreme Court.
89	89	SECTION 3. Section 2651.152(a), Insurance Code, is amended
90	90	to read as follows:
91	91	(a) Each title insurance company shall have an annual audit
92	92	made of trust fund accounts, including accounts established under
93	93	Section 2652.021, for each county in which it operates in its own
94	94	name. The company shall pay for the audit.
95	95	SECTION 4. The commissioner of insurance shall adopt rules
96	96	required by Section 2652.025, Insurance Code, as added by this Act,
97	97	not later than the 90th day after the effective date of this Act.
98	98	SECTION 5. The change in law made by this Act applies only
99	99	to funds deposited with an escrow officer on or after the effective
100	100	date of the rules adopted under Section 2652.025, Insurance Code,
101	101	as added by this Act. Funds deposited with an escrow officer before
102	102	the effective date of the rules adopted under Section 2652.025,
103	103	Insurance Code, as added by this Act, are covered by the law in
104	104	effect on the date the funds are deposited, and the former law is
105	105	continued in effect for that purpose.
106	106	SECTION 6. This Act takes effect immediately if it receives
107	107	a vote of two-thirds of all the members elected to each house, as
108	108	provided by Section 39, Article III, Texas Constitution. If this
109	109	Act does not receive the vote necessary for immediate effect, this
110	110	Act takes effect September 1, 2009.