S-2971.1          _______________________________________________

                                 SENATE BILL 6012

                  _______________________________________________

State of Washington              52nd Legislature             1992 Regular Session

By Senator Conner

Read first time 01/13/92.  Referred to Committee on Financial Institutions & Insurance.Protecting the customers of escrow agents.

     AN ACT Relating to protecting the customers of escrow agents; and amending RCW 18.44.050.

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

     Sec. 1.  RCW 18.44.050 and 1979 c 70 s 1 are each amended to read as follows:

     At the time of filing an application as an escrow agent, or any renewal or reinstatement thereof, the applicant shall satisfy the director that it has obtained the following as evidence of financial responsibility:

     (1)(a) A fidelity bond providing coverage in the aggregate amount of two hundred thousand dollars covering each corporate officer, partner, escrow officer, ((and)) employee of the applicant engaged in escrow transactions, and customer of the applicant; and

     (2) An errors and omissions policy issued to the escrow agent providing coverage in the minimum aggregate amount of fifty thousand dollars or, alternatively, cash or securities in the principal amount of fifty thousand dollars deposited in an approved depository on condition that they be available for payment of any claim payable under an equivalent errors and omissions policy in that amount and pursuant to rules and regulations adopted by the department for that purpose.

     For the purposes of this section, a "fidelity bond" shall mean a primary commercial blanket bond or its equivalent satisfactory to the director and written by an insurer authorized to transact surety business in the state of Washington.  Such bond shall provide fidelity coverage for any fraudulent or dishonest acts committed by any one or more of the employees or officers as defined in the bond, acting alone or in collusion with others.  Said bond shall be for the ((sole)) benefit of the escrow agent and ((under no circumstances whatsoever shall the bonding company be liable under the bond to any other party)) the escrow agent's customers.  The bond shall name the escrow agent as obligee and shall protect the obligee against the loss of money or other real or personal property belonging to the obligee or the obligee's customers, or in which the obligee has a pecuniary interest, or for which the obligee is legally liable or held by the obligee in any capacity, whether the obligee is legally liable therefor or not.  The bond may be canceled by the insurer upon delivery of thirty days' written notice to the director and to the escrow agent.

     For the purposes of this section, an "errors and omissions policy" shall mean a group or individual insurance policy satisfactory to the director and issued by an insurer authorized to transact insurance business in the state of Washington.  Such policy shall provide coverage for unintentional errors and omissions of the escrow agent and its employees, and may be canceled by the insurer upon delivery of thirty days' written notice to the director and to the escrow agent.

     Except as provided in RCW 18.44.360, the fidelity bond and the errors and omissions policy required by this section shall be kept in full force and effect as a condition precedent to the escrow agent's authority to transact escrow business in this state, and the escrow agent shall supply the director with satisfactory evidence thereof upon request.