BILL REQ. #:  Z-0560.1 

Read first time 01/27/2003.   Referred to Committee on Financial Services, Insurance & Housing.

     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) Each designated escrow officer of a licensed escrow agent and each branch designated escrow officer in a licensed branch of a licensed escrow agent must be licensed as a senior escrow officer as of the effective date of this act, and the department will issue such license to each designated escrow officer and branch designated escrow officer as soon as practicable after that date.

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;
     (b))) (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;
     (((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. Sec. 1601, 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.