AN ACT Relating to escrow; adding a new chapter to Title 19 RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. SHORT TITLE. This chapter may be known and cited as the "collected funds act."

NEW SECTION. Sec. 2. DEFINITIONS. As used in this chapter, the following terms have the meanings indicated unless the context clearly requires otherwise.

(1) "Escrow account" means any depository account with a financial institution related to a transaction as to which items are deposited with respect to such transaction wherein one person, for the purposes of effecting the sale, transfer, encumbering, or leasing of real or personal property to another person, delivers any written instrument, money, evidence of title to real or personal property, or other thing of value to a third person to be held by such third person until the happening of a specified event or the performance of a prescribed condition, when the thing so delivered is then to be delivered by such third person to a grantor, grantee, promisor, promisee, obligee, bailor, or bailee, or any agency or employee thereof.

(2) "Financial institution" means any financial institution:

(a) Whose accounts are insured by either the Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance Corporation, or the National Credit Union Administration; or

(b) Which is subject to the jurisdiction of either the Comptroller of the Currency, the Federal Home Loan Bank Board, or the National Credit Union Administration; or

(c) Which does not meet the requirements of (a) or (b) of this subsection but is headquartered in a state other than Washington and is subject to the jurisdiction of the state wherein it is located by an agency having authority comparable to that of either the division of banking or the division of savings and loan associations in the department of general administration.

(3) "Item" means any check (including cashier's and certified checks), negotiable order of withdrawal, draft, share draft, traveler's check, money order, or wire transfer of funds.

(4) The meaning attributed in chapter 18.44 RCW to the terms "escrow," escrow agent," "certified escrow agent," "person," and "escrow officer" apply equally to the provisions of this chapter.

NEW SECTION. Sec. 3. AVAILABILITY OF FUNDS AS A MATTER OF RIGHT. Funds are available as a matter of right when:

(1) For any item, when the item has been submitted for collection and payment has been received.

(2) For any deposited item, the earlier of:

(a) When final settlement has occurred; or

(b) Unless written notification has been received from the financial institution to which the deposit has been made establishing a longer period for any item drawn on a financial institution located in a state other than Washington, that period established by law or regulation of the department or agency having regulatory authority over the financial institution to which the item was deposited, as a reasonable time for permitting customers to draw on an item drawn on a financial institution located outside Washington state.

NEW SECTION. Sec. 4. COLLECTED FUNDS. No title insurance company, title insurance agent, escrow company, escrow agent, certified escrow agent, escrow officer, limited practice officer, financial institution, or any other person who is licensed to perform escrow services may disburse funds from an escrow account until items in an amount sufficient to fund any disbursements from the account have been received, deposited to the account, and collected.

Where an item has been received and submitted for collection, no title insurance company, title insurance agent, escrow company, escrow agent, certified escrow agent, escrow officer, limited practice officer, financial institution, or any other person who is licensed to perform escrow services may disburse funds from an escrow account with respect to the item until the proceeds of the item have become available for withdrawal as a matter of right from the financial institution to which the item has been submitted for collection.

Where an item drawn on or issued by a financial institution located in a state other than Washington has been received and deposited to the escrow account, no title insurance company, title insurance agent, escrow company, escrow agent, certified escrow agent, escrow officer, limited practice officer, financial institution, or any other person licensed to perform escrow services may disburse funds from the escrow account with respect to the item until the proceeds of the item have become available for withdrawal as a matter of right from the financial institution to which the deposit was made.

NEW SECTION. Sec. 5. SEVERABILITY. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 6. CAPTIONS. As used in this act, captions constitute no part of the law.

NEW SECTION. Sec. 7. LEGISLATIVE DIRECTIVE. Sections 1 through 4 of this act shall constitute a new chapter in Title 19 RCW.