BILL NUMBER: SB 1363 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 26, 2010
AMENDED IN SENATE APRIL 12, 2010
INTRODUCED BY Senator Runner
FEBRUARY 19, 2010
An act to amend Section 17405 of, and to add
Section 17405.5 to , the Financial Code, relating
to escrow agents.
LEGISLATIVE COUNSEL'S DIGEST
SB 1363, as amended, Runner. Escrow agents.
Existing law, the Escrow Law, provides for the licensure and
regulation of escrow agents by the Commissioner of Corporations.
Under that law, the commissioner is authorized to conduct an
indoctrination or preliminary examination, or both, of any new
licensee within one year of the issuance of the license, and an
inspection and examination within 2 years of the issuance of the
license. Each person licensed under that law is
required to participate as a member of Fidelity Corporation, a
nonprofit mutual benefit corporation, established to indemnify its
members against loss. Existing law requires a shareholder, officer,
director, trustee, manager, or employee of an escrow agent to obtain
a Fidelity Corporation Certificate as a condition of employment.
This bill would require the commissioner to conduct these
examinations with respect to new licensees and would also apply
these provisions to a change of ownership of a licensee. The bill
would also require an officer, director, trustee, or
employee of a licensee who has access to money or negotiable
securities of the licensee, as specified, and
certain other persons to complete a course in escrow
management conducted by the commissioner, within 12 months following
the issuance of a new license or a change of ownership
their receipt of a Fidelity Corporation
Certificate, as specified .
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 17405.5 is added to the
Financial Code , to read:
17405.5. (a) The following persons shall complete a course in
escrow management conducted by the commissioner within 12 months of
their receipt of a Fidelity Corporation Certificate:
(1) Any officer, director, trustee, or employee of an escrow
agent, whether or not compensated, who has access to money or
negotiable securities belonging to the escrow agent in the regular
discharge of his or her duties.
(2) Any person who may draw checks upon the escrow agent or upon
the trust funds of the escrow agent in the regular discharge of his
or her duties.
(b) The commissioner may charge persons required to comply with
this section a reasonable fee, as determined by the commissioner, to
cover the costs to administer this section.
(c) This section shall apply to all licensees that become newly
licensed or who undergo a change in ownership on or after January 1,
2011, and to all persons described in subdivision (a) who are hired
on or after January 1, 2011, by licensees that were in existence
prior to that date.
(d) For purposes of this section, a "change in ownership" shall be
deemed to have occurred when a licensee is required to file a new
application for licensure pursuant to the requirements of Section
17213, and that license application is approved by the commissioner.
SECTION 1. Section 17405 of the Financial Code
is amended to read:
17405. (a) The business, accounts and records of every person
performing as an escrow agent, whether required to be licensed under
this division or not, are subject to inspection and examination by
the commissioner at any time without prior notice. The provisions of
this section shall not apply to persons specified in Section 17006.
(b) Any person subject to this division shall, upon request,
exhibit and allow inspection and copying of any books and records by
the commissioner or his or her authorized representative.
(c) (1) The commissioner shall conduct an examination of each
licensed escrow agent as described in subdivision (a) as often as the
commissioner deems necessary and appropriate, but not less than once
every 48 months.
(2) The examination shall be conducted for the 12-month period
immediately preceding the date that the examination is commenced
unless the commissioner finds, based on information uncovered in the
examination or in the most recent independent audit report, that the
examination should be extended beyond the 12-month period.
(3) In determining how often an examination shall be conducted,
the commissioner may consider each licensed escrow agent's compliance
with the requirements set forth in this division and other factors
the commissioner may by rule or order designate.
(4) This subdivision shall apply only to examinations commenced
after the effective date established by the rule or order of the
commissioner for the factors described in paragraph (3).
(d) Notwithstanding subdivision (c), the commissioner shall
conduct an indoctrination or preliminary examination, or both, under
this section of any new licensee or of a licensee that has a change
in ownership within one year of the issuance of the license or of the
change of ownership under this division, and an examination
described in subdivision (a) within two years of the issuance of the
license or of the change of ownership under this division.
SEC. 2. Section 17405.5 is added to the
Financial Code, to read:
17405.5. (a) Any officer, director, trustee, or employee of an
escrow agent, whether or not compensated, who has access to money or
negotiable securities belonging to the escrow agent in the regular
discharge of his or her duties, or any person who may draw checks
upon the escrow agent or upon the trust funds of the escrow agent in
the regular discharge of his or her duties shall, within 12 months of
the issuance of a new license to that escrow agent, or a change of
ownership involving that escrow agent, complete a course in escrow
management conducted by the commissioner.
(b) The commissioner may charge persons described in subdivision
(a) a reasonable fee, as determined by the commissioner, to cover the
costs of providing courses in escrow management.