BILL REQ. #: S-1235.1
| State of Washington | 58th Legislature | 2003 Regular Session |
READ FIRST TIME 02/21/03.
AN ACT Relating to escrow agents and officers; amending RCW 18.44.011, 18.44.031, 18.44.041, 18.44.051, 18.44.071, 18.44.081, 18.44.091, 18.44.101, 18.44.111, 18.44.121, 18.44.127, 18.44.195, 18.44.201, 18.44.410, 18.44.430, and 18.44.450; adding new sections to chapter 18.44 RCW; and repealing RCW 18.44.131.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1 RCW 18.44.011 and 1999 c 30 s 1 are each amended to read
as follows:
Unless a different meaning is apparent from the context, terms used
in this chapter shall have the following meanings:
(1) "Department" means the department of financial institutions.
(2) "Director" means the director of financial institutions, or his
or her duly authorized representative.
(3) "Director of licensing" means the director of the department of
licensing, or his or her duly authorized representative.
(4) "Escrow" means any transaction, except the acts of a qualified
intermediary in facilitating an exchange under section 1031 of the
internal revenue code, wherein any person or persons, for the purpose
of effecting and closing the sale, purchase, exchange, transfer,
encumbrance, or lease of real or personal property to another person or
persons, 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 or conditions, when it is
then to be delivered by such third person, in compliance with
instructions under which he or she is to act, to a grantee, grantor,
promisee, promisor, obligee, obligor, lessee, lessor, bailee, bailor,
or any agent or employee thereof.
(5) "Split escrow" means a transaction in which two or more escrow
agents act to effect and close an escrow transaction.
(6) "Escrow agent" means any person engaged in the business of
performing for compensation the duties of the third person referred to
in subsection (4) of this section.
(7) "Licensed escrow agent" means any sole proprietorship, firm,
association, partnership, limited liability company, limited liability
partnership, or corporation holding a license as an escrow agent under
the provisions of this chapter.
(8) "Person" means a natural person, firm, association,
partnership, corporation, limited liability company, limited liability
partnership, trust, or any other legal entity, or the plural thereof,
whether resident, nonresident, citizen, or not.
(9) "((Licensed)) Escrow officer" means any natural person
((handling escrow transactions and licensed)) who meets the
requirements of RCW 18.44.195(1) and who is granted a license as such
by the director.
(10) "Designated escrow officer" means any ((licensed)) senior
escrow officer designated by a licensed escrow agent and approved by
the director as the ((licensed)) senior escrow officer responsible for
supervising that agent's handling of escrow transactions, management of
the agent's trust account, and supervision of all other ((licensed))
escrow officers and senior escrow officers employed by the agent.
(11) "Escrow commission" means the escrow commission of the state
of Washington created by RCW 18.44.500.
(12) "Controlling person" is any person who owns or controls ten
percent or more of the beneficial ownership of any escrow agent,
regardless of the form of business organization employed and regardless
of whether such interest stands in such person's true name or in the
name of a nominee.
(13) "Applicant" means a person that files an application for a
license as an escrow agent under this chapter, including a natural
person, and in the event the applicant is a legal entity other than a
natural person, including the applicant's proposed designated escrow
officer, executive officers, sole proprietor, owners, partners,
members, and controlling persons, or a natural person who files an
application for an escrow officer license or a senior escrow officer
license.
(14) "Senior escrow officer" means any natural person who meets the
requirements of RCW 18.44.195(2) and who is granted a license as such
by the director.
Sec. 2 RCW 18.44.031 and 1999 c 30 s 3 are each amended to read
as follows:
An application for an escrow agent license shall be in writing in
such form as is prescribed by the director, and shall be verified on
oath by the applicant. An application for an escrow agent license
shall include ((fingerprints for all officers, directors, owners,
partners, and controlling persons, and, unless waived by the
director,)) the following:
(1) The applicant's form of business organization and place of
organization;
(2) If the applicant is a corporation or limited liability company,
the address of its physical location, a list of officers, controlling
persons, and directors of such corporation or company and their
residential addresses, telephone numbers, and other identifying
information as the director may determine by rule. If the applicant is
a sole proprietorship or partnership, the address of its business
location, a list of owners, partners, or controlling persons and their
residential addresses, telephone numbers, and other identifying
information as the director may determine by rule. Any information in
the application regarding the personal residential address or telephone
number of any officer, director, partner, owner, controlling person, or
employee is exempt from the public records disclosure requirements of
chapter 42.17 RCW;
(3) Fingerprints of all officers, directors, partners, sole
proprietors, and controlling persons;
(4) In the event the applicant is doing business under an assumed
name, a copy of the master business license with the registered trade
name shown;
(((4))) (5) The qualifications and business history of the
applicant and all of its officers, directors, owners, partners, and
controlling persons;
(((5))) (6) A personal credit report from a recognized credit
reporting bureau satisfactory to the director on all officers,
directors, owners, partners, and controlling persons of the applicant;
(((6))) (7) Whether any of the officers, directors, owners,
partners, or controlling persons have been convicted of any crime
within the preceding ten years which relates directly to the business
or duties of escrow agents, or have suffered a judgment within the
preceding five years in any civil action involving fraud,
misrepresentation, any unfair or deceptive act or practice, or
conversion;
(((7))) (8) The identity of the ((licensed)) senior escrow officer
designated by the escrow agent as the designated escrow officer
responsible for supervising the agent's escrow activity;
(((8))) (9) Evidence of compliance with the bonding and insurance
requirements of RCW 18.44.201; and
(((9))) (10) Any other information the director may require by
rule. The director may share any information contained within a
license application, including fingerprints, with the federal bureau of
investigation and other regulatory or law enforcement agencies.
NEW SECTION. Sec. 3 A new section is added to chapter 18.44 RCW
to read as follows:
Upon the filing of a complete application for an escrow agent
license, the director shall issue and deliver to the applicant a
license to engage in the business of an escrow agent at the location
set forth on the license when the director finds that the applicant:
(1) Has identified a senior escrow officer, who is not currently
the subject of an investigation or administrative enforcement action by
the department or any other jurisdiction under a similar statute, to
serve as the designated escrow officer for the escrow agent;
(2) Is not the subject of a current investigation or administrative
enforcement action by the department or any other jurisdiction under a
similar statute;
(3) Has not or is not committing acts or engaging in conduct that
demonstrates:
(a) Grounds for enforcement action under this chapter;
(b) That the applicant is incompetent or untrustworthy; or
(c) That the applicant is or may be a source of injury or loss to
the public;
(4) Has not been convicted of any felony during the ten years
preceding the date of the current application and has not suffered a
judgment in any civil or administrative action in the five years
preceding the current application involving fraud, misrepresentation,
any unfair or deceptive act or practice, or conversion of funds;
(5) Has complied with the insurance and bonding requirements in RCW
18.44.201; and
(6) Has paid all fees required in RCW 18.44.121 and in rule by the
director.
Sec. 4 RCW 18.44.041 and 1999 c 30 s 28 are each amended to read
as follows:
(1) A licensed escrow agent shall not operate an escrow business in
a location other than the location set forth on the agent's license or
branch office license issued by the director. The licensed escrow
agent may apply to the director for authority to establish one or more
branch offices under the same name as the main office.
(2) Each branch office operated by a licensed escrow agent shall be
supervised by a ((licensed)) senior escrow officer designated by the
licensed escrow agent as the designated branch escrow officer for that
branch.
(3) Any person desiring to operate a branch escrow office shall
make application on a form provided by the director and pay a fee as
set forth in rule by the director. Such application shall identify the
((licensed)) senior escrow officer designated as the designated branch
escrow officer to supervise the agent's escrow activity at the branch
office.
(4) No escrow agent branch office license shall be issued until the
applicant has satisfied the director that the escrow activity of the
branch meets all financial responsibility requirements governing the
conduct of escrow activity.
Sec. 5 RCW 18.44.051 and 1999 c 30 s 29 are each amended to read
as follows:
Upon the filing of ((the)) a complete application for an escrow
agent branch office and satisfying the requirements of this chapter,
the director shall issue and deliver to the applicant a license to
engage in the business of an escrow agent at the branch location set
forth on the license when the director finds that the applicant:
(1) Has a valid escrow agent license;
(2) Has identified a senior escrow officer to serve as the
designated branch escrow officer for the proposed branch office;
(3) Is not the subject of a current administrative enforcement
action by the department under this chapter, or in any other
jurisdiction under a similar statute;
(4) Has not or is not committing acts or engaging in conduct that
demonstrates;
(a) Grounds for administrative enforcement action under this
chapter;
(b) That the applicant is incompetent or untrustworthy; or
(c) That the applicant is or may be a source of injury or loss to
the public; and
(5) Has paid all fees as required in RCW 18.44.121 and in rule by
the director.
Sec. 6 RCW 18.44.071 and 1999 c 30 s 21 are each amended to read
as follows:
Every licensed escrow agent shall ensure that all escrow
transactions are supervised by a ((licensed)) designated escrow
officer. In the case of a partnership, the designated escrow officer
shall be a partner in the partnership and shall act on behalf of the
partnership. In the case of a corporation, the designated escrow
officer shall be an officer of the corporation and shall act on behalf
of the corporation. The designated escrow officer shall be responsible
for that agent's handling of escrow transactions, management of the
agent's trust account, and supervision of all other licensed escrow
officers ((employed by)) or other persons performing escrow
transactions for the escrow agent. Responsibility for the conduct of
any ((licensed)) escrow officer or senior escrow officer covered by
this chapter shall rest with the designated escrow officer or
designated branch escrow officer having direct supervision of such
person's escrow activities. The ((branch)) designated branch escrow
officer shall bear responsibility for supervision of all other
((licensed)) escrow officers, senior escrow officers, or other persons
performing escrow transactions at a branch escrow office.
Sec. 7 RCW 18.44.081 and 1999 c 30 s 24 are each amended to read
as follows:
(1) Any person desiring to be ((a)) licensed as an escrow officer
shall ((meet the requirements of)) pass an examination as required by
RCW 18.44.195(1) ((as provided in this chapter)). In addition, the
applicant shall make application ((endorsed by a licensed escrow
agent)) to the director on a form to be prescribed and furnished by the
director. Such application must be received by the director within one
year of passing the escrow officer examination. ((With)) This
application ((the applicant shall)) must include:
(((1) Pay a)) (a) The license fee as set forth by rule; ((and))
(2) Furnish such proof as the director may require concerning his
or her honesty, truthfulness, good reputation, and identity, including
but not limited to fingerprints, residential address and telephone
number, qualifications and employment history, a personal credit
report, and any other information required under RCW 18.44.031.
(b) The applicant's residential address and telephone number;
(c) The applicant's business address and telephone number;
(d) Two sets of fingerprints of the applicant;
(e) The applicant's current personal credit report;
(f) The applicant's qualifications and employment history for the
previous ten years; and
(g) Any other information the director may require in rule to
establish the applicant's identity, character, and general fitness to
be licensed as an escrow officer.
(2) Any person desiring to be licensed as a senior escrow officer
must pass an examination as required under RCW 18.44.195(2) and must
submit a complete application for a senior escrow officer license on a
form to be prescribed by the director. A complete application must be
submitted within one year of passing the certified escrow officer
examination. This application must include:
(a) The license fee as provided in rule;
(b) The applicant's residential address and telephone number;
(c) The applicant's business address and telephone number;
(d) Two sets of fingerprints of the applicant;
(e) The applicant's current personal credit report;
(f) The applicant's qualification and employment history for the
previous ten years;
(g) Evidence of three years of experience as an escrow officer or
performing equivalent duties as defined in rule by the director; and
(h) Other information the director may require in rule to establish
the applicant's identity, character, and general fitness to be licensed
as a senior escrow officer.
NEW SECTION. Sec. 8 A new section is added to chapter 18.44 RCW
to read as follows:
(1) The director shall issue and deliver to the applicant an escrow
officer license when the director finds that the applicant:
(a) Has submitted a complete application and paid all fees as
required under RCW 18.44.081(1);
(b) Has successfully passed the escrow officer examination as
required under RCW 18.44.195(1);
(c) Is not the subject of a current administrative enforcement
action by the department or in any other jurisdiction under a similar
statute;
(d) Has not or is not committing acts or engaging in conduct that
demonstrates:
(i) Grounds for enforcement action under this chapter;
(ii) That the applicant is incompetent or untrustworthy; or
(iii) That the applicant is or may be a source of injury or loss to
the public; and
(e) Has not been convicted of any felony during the ten years
preceding the date of the current application and has not suffered a
judgment in any civil or administrative action in the five years
preceding the current application involving fraud, misrepresentation,
any unfair or deceptive act or practice, or conversion of funds.
(2) The director shall issue and deliver to the applicant a senior
escrow officer license when the director finds that the applicant:
(a) Has submitted a complete application and paid all fees as
required under RCW 18.44.081(2);
(b) Has successfully passed the senior escrow officer examination
as required under RCW 18.44.195(2);
(c) Is not the subject of a current administrative enforcement
action by the department or in any other jurisdiction under a similar
statute;
(d) Has not or is not committing acts or engaging in conduct that
demonstrates:
(i) Grounds for enforcement action under this chapter;
(ii) That the applicant is incompetent or untrustworthy; or
(iii) That the applicant is or may be a source of injury or loss to
the public;
(e) Has not been convicted of any felony during the ten years
preceding the date of the current application and has not suffered a
judgment in any civil or administrative action in the five years
preceding the current application involving fraud, misrepresentation,
any unfair or deceptive act or practice, or conversion of funds; and
(f) Has three years of experience as an escrow officer or
performing equivalent duties as defined in rule by the director.
(3) Both an escrow officer and a senior officer license may be
issued in inactive status.
(4) On the effective date of this act, the director shall issue and
deliver a senior escrow officer license to each licensed escrow officer
that:
(a) Is currently licensed as an escrow officer;
(b) Has paid all fees associated with the escrow officer license;
(c) Is not the subject of a current administrative enforcement
action by the department or any other jurisdiction under a similar
statute;
(d) Has not or is not committing acts or engaging in conduct that
demonstrates:
(i) Grounds for enforcement action under this chapter;
(ii) That the licensee is incompetent or untrustworthy; or
(iii) That the licensee is or may be a source of injury or loss to
the public; and
(e) Currently serves as the designated escrow officer of a licensed
escrow agent or serves as a designated branch escrow officer of a
licensed escrow agent.
(5) A licensed escrow officer that is not serving as the designated
escrow officer or designated branch escrow officer of a licensed escrow
agent, as of the effective date of this act, may apply to the director
for a senior escrow officer license without taking the required
examination prior to or upon their next escrow officer license renewal
date. If the director finds that such an applicant meets the
requirements of subsection (4)(a) through (d) of this section, and has
ten years or more of experience as a licensed escrow officer in active
status, the director shall issue such an applicant a senior escrow
officer license.
Sec. 9 RCW 18.44.091 and 1999 c 30 s 25 are each amended to read
as follows:
Every escrow officer and senior escrow officer license issued under
the provisions of this chapter expires on the date one year from the
date of issue which date will henceforth be the renewal date. ((An))
Each escrow officer and senior escrow officer must submit to the
director an application for license renewal and pay an annual license
renewal fee ((in the same amount must be paid)) as required under RCW
18.44.121 and as specified in rule by the director on or before each
renewal date((: PROVIDED, That licenses issued or renewed prior to
September 21, 1977, shall use the existing renewal date as the date of
issue)). If the application for a license renewal ((is)) and the
annual license renewal fee are not received by the director on or
before the renewal date, such license is expired. The license may be
reinstated at any time prior to the next succeeding renewal date
following its expiration upon the payment to the director of the annual
renewal fee then in default and a late payment penalty equal to one-quarter of the annual license renewal fee. Acceptance by the director
of an application for renewal after the renewal date shall not be a
waiver of the delinquency. Licenses not renewed within one year of the
renewal date then in default shall be canceled. A new license may be
obtained by satisfying the procedures and qualifications for initial
licensing, including where applicable successful completion of
examinations.
Sec. 10 RCW 18.44.101 and 1999 c 30 s 26 are each amended to read
as follows:
((The license of a licensed escrow officer shall be retained and
displayed at all times by the licensed escrow agent. When the officer
ceases for any reason to represent the agent, the license shall cease
to be in force. Within three business days of termination of the
licensed escrow officer's employment, the licensed escrow agent shall
notify the director that the terminated escrow officer no longer
represents the escrow agent. Within ten business days of termination
of the licensed escrow officer's employment, the licensed escrow agent
shall deliver the surrendered escrow officer license to the director.
Failure to notify the director within three business days or deliver
the surrendered license to the director within ten business days shall,
at the discretion of the director, subject the escrow agent to
penalties under RCW 18.44.430.))
Upon the request of the escrow officer or senior escrow officer,
the director may issue or hold the ((licensed escrow officer's))
license in inactive ((upon notification of termination by the escrow
agent or designated escrow officer)) status. The ((licensed)) escrow
officer or senior escrow officer shall pay ((the)) an annual renewal
fee ((annually)) as established in rule by the director to maintain an
inactive license. An inactive license may be activated upon
application ((of a licensed escrow agent)) to the director on a form
provided by the director and the payment of a fee as established in
rule by the director. If the ((licensed)) escrow officer or senior
escrow officer continues to meet the requirements ((of licensing in RCW
18.44.081)) for issuance of a license as specified in section 8 of this
act, has met the continuing education requirements in RCW 18.44.195,
and has paid the required fee, the director shall ((thereupon issue a
new license for the unexpired term of the licensed escrow officer. An
escrow officer's first license shall not be issued inactive)) activate
the license.
Sec. 11 RCW 18.44.111 and 1999 c 30 s 30 are each amended to read
as follows:
Each escrow agent license, each escrow agent branch office license,
and each escrow officer or senior escrow officer license shall be
issued in the form and size prescribed by the director and shall state
in addition to any other matter required by the director:
(1) The name of the licensee;
(2) The name under which the applicant will do business;
(3) The address at which the applicant will do business;
(4) The expiration date of the license; and
(5) In the case of ((a corporation, partnership, or branch
office,)) an escrow agent license or escrow agent branch office
license, the name of the designated escrow officer or designated branch
escrow officer.
Sec. 12 RCW 18.44.121 and 2001 c 177 s 3 are each amended to read
as follows:
The director shall charge and collect the following fees as
established by rule by the director:
(1) A fee for filing an original or a renewal application for an
escrow agent license, a fee for each application for an additional
licensed location, a fee for an application for a change of address for
an escrow agent, annual fees for the first office or location and for
each additional office or location, and under RCW 43.135.055 the
director shall set the annual fee for an escrow agent license up to
five hundred sixty-five dollars in fiscal year ((2000)) 2004.
(2) A fee for filing an original or a renewal application for an
escrow officer or senior escrow officer license, a fee for an
application for a change of address for each escrow officer or senior
escrow officer license being so changed, a fee to activate an inactive
escrow officer or senior escrow officer license ((or transfer an escrow
officer license)), and under RCW 43.135.055 ((the director shall set
the)) an annual fee for an escrow officer license and senior escrow
officer license up to two hundred thirty-five dollars in fiscal year
((2000)) 2004.
(3) A fee for filing an application for a duplicate of an escrow
agent license or of an escrow officer or senior escrow officer license
lost, stolen, destroyed, or for replacement.
(4) A fee for providing license examinations.
(5) An hourly audit fee. In setting this fee, the director shall
ensure that every examination and audit, or any part of the examination
or audit, of any person licensed or subject to licensing in this state
requiring travel and services outside this state by the director or by
employees designated by the director, shall be at the expense of the
person examined or audited at the hourly rate established by the
director, plus the per diem compensation and actual travel expenses
incurred by the director or his or her employees conducting the
examination or audit. When making any examination or audit under this
chapter, the director may retain attorneys, appraisers, independent
certified public accountants, or other professionals and specialists as
examiners or auditors, the cost of which shall be borne by the person
who is the subject of the examination or audit.
In establishing these fees, the director shall set the fees at a
sufficient level to defray the costs of administering this chapter.
All fees received by the director under this chapter shall be paid
into the state treasury to the credit of the financial services
regulation fund.
Sec. 13 RCW 18.44.127 and 1997 c 58 s 822 are each amended to
read as follows:
The department shall immediately suspend the ((certificate of
registration)) license of a person who has been certified pursuant to
RCW 74.20A.320 by the department of social and health services as a
person who is not in compliance with a support order or a residential
or visitation order. If the person has continued to meet all other
requirements for ((certification)) licensing during the suspension,
reissuance of the ((certificate)) license shall be automatic upon the
department's receipt of a release issued by the department of social
and health services stating that the person is in compliance with the
order.
Sec. 14 RCW 18.44.195 and 1999 c 30 s 4 are each amended to read
as follows:
(1)(a) Any person desiring to become ((a licensed)) an escrow
officer must successfully pass an examination.
(((2))) (b) The escrow officer examination shall encompass the
following:
(((a) Appropriate knowledge of the English language, including
reading, writing, and arithmetic;)) (i) An understanding of the principles of real estate
conveyancing and the general purposes and legal effects of deeds,
mortgages, deeds of trust, contracts of sale, exchanges, rental and
optional agreements, leases, earnest money agreements, personal
property transfers, and encumbrances;
(b)
(((c))) (ii) An understanding of the obligations between principal
and agent;
(((d))) (iii) An understanding of the meaning and nature of
encumbrances upon real property;
(((e))) (iv) An understanding of the principles and practice of
trust accounting; and
(((f))) (v) An understanding of the escrow agent registration act
and other applicable law such as the real estate settlement procedures
act, 12 U.S.C. Sec. 2601, and regulation X, 24 C.F.R. Sec. 3500.
(((3))) (2)(a) Any person desiring to become a senior escrow
officer must successfully pass an examination.
(b) The senior escrow officer examination must encompass the
following:
(i) All topics listed in subsection (1)(b) of this section;
(ii) Ethics;
(iii) Trust account management; and
(iv) Internal routine and control.
(3) Each escrow officer and senior escrow officer shall complete
continuing education each year as specified in rule by the director.
The continuing education must be in courses approved by the director.
At least four hours of the continuing education required for a senior
escrow officer must be in the areas of ethics, trust account
management, and internal routine and control.
(4) The examination shall be in such form as prescribed by the
director with the advice of the escrow commission, and shall be given
at least annually.
Sec. 15 RCW 18.44.201 and 1999 c 30 s 5 are each amended to read
as follows:
(1) At the time of filing an application for an escrow agent
license, or any renewal or reinstatement of an escrow agent license,
the applicant shall provide satisfactory evidence to the director of
having obtained the following as evidence of financial responsibility:
(a) A fidelity bond providing coverage in the aggregate amount of
((two hundred thousand)) one million dollars with a deductible no
greater than ten thousand dollars covering each corporate officer,
partner, escrow officer, senior escrow officer, and employee of the
applicant engaged in escrow transactions;
(b) 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;
and
(c) A surety bond in the amount of ten thousand dollars executed by
the applicant as obligor and by a surety company authorized to do a
surety business in this state as surety, unless the fidelity bond
obtained by the licensee to satisfy the requirement in (a) of this
subsection does not have a deductible. The bond shall run to the state
of Washington as obligee, and shall run to the benefit of the state and
any person or persons who suffer loss by reason of the applicant's or
its employee's violation of this chapter. The bond shall be
conditioned that the obligor as licensee will faithfully conform to and
abide by this chapter and all rules adopted under this chapter, and
shall reimburse all persons who suffer loss by reason of a violation of
this chapter or rules adopted under this chapter. The bond shall be
continuous and may be canceled by the surety upon the surety giving
written notice to the director of its intent to cancel the bond. The
cancellation shall be effective thirty days after the notice is
received by the director. Whether or not the bond is renewed,
continued, reinstated, reissued, or otherwise extended, replaced, or
modified, including increases or decreases in the penal sum, it shall
be considered one continuous obligation, and the surety upon the bond
shall not be liable in an aggregate amount exceeding the penal sum set
forth on the face of the bond. In no event shall the penal sum, or any
portion thereof, at two or more points in time be added together in
determining the surety's liability. The bond shall not be liable for
any penalties imposed on the licensee, including but not limited to,
any increased damages or attorneys' fees, or both, awarded under RCW
19.86.090.
(2) 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 this line of
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. This 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 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 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.
(3) 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.
(4) Except as provided in RCW 18.44.221, the fidelity bond, surety
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.
Sec. 16 RCW 18.44.410 and 1999 c 30 s 27 are each amended to read
as follows:
(1) The director has the power and broad administrative discretion
to administer and interpret this chapter to facilitate the delivery of
services to citizens of this state by escrow agents and others subject
to this chapter.
(2) The director may ((issue)) adopt rules ((and regulations)) to
govern the activities of licensed escrow agents ((and)), escrow
officers, and senior escrow officers. The director shall enforce all
laws and rules relating to the licensing of escrow agents ((and)),
escrow officers, and senior escrow officers and fix the time and places
for holding examinations of applicants for escrow officer or senior
escrow officer licenses and prescribe the method of conducting the
examinations. The director may hold hearings and suspend or revoke the
licenses of violators and may deny, suspend, or revoke the authority of
((an)) a senior escrow officer to act as the designated escrow officer
of a ((person who commits violations of this chapter or of the rules
under this chapter)) licensed escrow agent.
Except as specifically provided in this chapter, the rules adopted
and the hearings conducted shall be in accordance with the provisions
of chapter 34.05 RCW, the administrative procedure act.
NEW SECTION. Sec. 17 A new section is added to chapter 18.44 RCW
to read as follows:
Each licensed escrow agent shall submit to the director a periodic
report detailing the current status of its trust account, including but
not limited to a summary of recent account reconciliations and the
status of any exceptions noted in the reconciliation. The director
shall specify in rule the content, frequency, and format of the
required report. The director may require more or less frequent
reports from an escrow agent licensee depending upon the licensee's
examination history, reporting history, consumer complaint history, and
administrative enforcement history.
Sec. 18 RCW 18.44.430 and 1999 c 30 s 22 are each amended to read
as follows:
(1) The director may, upon notice to the escrow agent and to the
insurer providing coverage under RCW 18.44.201, deny, suspend, decline
to renew, or revoke the license of any licensed escrow agent, senior
escrow officer, or escrow officer if the director finds that the
applicant or any partner, officer, director, controlling person, escrow
officer, senior escrow officer, or employee has committed any of the
following acts or engaged in any of the following conduct:
(a) Obtaining a license by means of fraud, misrepresentation,
concealment, or through the mistake or inadvertence of the director.
(b) Violating any of the provisions of this chapter or any lawful
rules made by the director pursuant thereto.
(c) The commission of a crime against the laws of this or any other
state or government, involving moral turpitude or dishonest dealings.
(d) Knowingly committing or being a party to, any material fraud,
misrepresentation, concealment, conspiracy, collusion, trick, scheme,
or device whereby any other person lawfully relying upon the word,
representation, or conduct of the licensee or agent or any partner,
officer, director, controlling person, or employee acts to his or her
injury or damage.
(e) Conversion of any money, contract, deed, note, mortgage, or
abstract or other evidence of title to his or her own use or to the use
of his or her principal or of any other person, when delivered to him
or her in trust or on condition, in violation of the trust or before
the happening of the condition; and failure to return any money or
contract, deed, note, mortgage, abstract, or other evidence of title
within thirty days after the owner thereof is entitled thereto, and
makes demand therefor, shall be prima facie evidence of such
conversion.
(f) Failing, upon demand, to disclose any information within his or
her knowledge to, or to produce any document, book, or record in his or
her possession for inspection of, the director or his or her authorized
representatives.
(g) Committing any act of fraudulent or dishonest dealing, and a
certified copy of the final holding of any court of competent
jurisdiction in such matter shall be conclusive evidence in any hearing
under this chapter.
(h) Accepting, taking, or charging any undisclosed commission,
rebate, or direct profit on expenditures made for the principal.
(i) Committing acts or engaging in conduct that demonstrates the
applicant or licensee to be incompetent or untrustworthy, or a source
of injury and loss to the public.
(2) Any conduct of an applicant or licensee that constitutes
grounds for enforcement action under this chapter is sufficient
regardless of whether the conduct took place within or outside of the
state of Washington.
(3) In addition to or in lieu of a license suspension, revocation,
or denial, the director may assess a fine of up to one hundred dollars
per day for each day's violation of this chapter or rules adopted under
this chapter ((and)) against any licensed escrow agent, escrow officer,
senior escrow officer, and any applicant, officer, partner, director,
controlling person, or employee of the escrow agent. In addition, the
director may remove and/or prohibit from participation in the conduct
of the affairs of any licensed escrow agent, any officer, applicant,
partner, controlling person, director, employee, senior escrow officer,
or ((licensed)) escrow officer.
Sec. 19 RCW 18.44.450 and 2000 c 171 s 17 are each amended to
read as follows:
(1) "Real property lender" as used in this section means a bank,
savings bank, savings and loan association, credit union, mortgage
company, or other corporation, association, or partnership that makes
loans secured by real property located in this state.
(2) No real property lender, escrow agent, or officer or employee
of any escrow agent or real property lender may give or agree to pay or
give any money, service, or object of value to any real estate agent or
broker, to any real property lender, or to any officer or employee of
any agent, broker, or lender in return for the referral of any real
estate escrow services. ((Nothing in this subsection prohibits the
payment of fees or other compensation permitted under the federal))
Compliance with the Real Estate Settlement Procedures Act ((as amended
(12 U.S.C. sections 2601 through 2617))), 12 U.S.C. Secs. 2601 through
2617, and Regulation X 24 C.F.R. Part 3500, as now or hereafter
amended, constitutes compliance with the requirements of this
subsection.
(3) The legislature finds that the practices governed by this
subsection are matters vitally affecting the public interest for the
purpose of applying the consumer protection act, chapter 19.86 RCW.
Any violation of this section is not reasonable in relation to the
development and preservation of business and is an unfair and deceptive
act or practice and an unfair method of competition in the conduct of
trade or commerce in violation of RCW 19.86.020. Remedies provided by
chapter 19.86 RCW are cumulative and not exclusive.
NEW SECTION. Sec. 20 RCW 18.44.131 (License application--Issuance) and 1999 c 30 s 11, 1977 ex.s. c 156 s 8, & 1965 c 153 s 9
are each repealed.