BILL ANALYSIS
SB 1363
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Date of Hearing: August 4, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1363 (Runner) - As Amended: August 2, 2010
Policy Committee: Banking and
Finance Vote: 12-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires new escrow licensees and employees to
complete a course in escrow management conducted by the
Department of Corporations (DOC). Specifically, the bill:
1)Applies to any officer, director, trustee, or escrow manager
of an escrow agent who has access to money or negotiable
securities belonging to the escrow agent, as well as 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.
2)Applies to licensees undergoing a change of ownership, or a
person becoming newly licensed, on or after January 1, 2011.
FISCAL EFFECT
1)DOC estimates that it would incur moderate annual costs, in
the range of $150,000 (special funds) to offer the course. The
estimate includes staffing, publishing class materials,
tracking, and enforcement costs.
2)The bill authorizes the DOC to charge a fee to cover costs.
COMMENTS
1)Rationale . According to the author, the California escrow law
is among the most stringent in the nation for escrow agents.
He asserts that it is vitally important that new licensees
fully understand the various requirements placed on them by
the state's escrow law. The Escrow Institute strongly asserts
SB 1363
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that the long term success of a licensed escrow agent is
enhanced by early efforts undertaken by DOC to monitor and
insure that the new licensee understands the rules and
regulations required for handling escrowed trusts funds.
2)Background . Escrow agents are "third parties" that facilitate
the sale, transfer, or lease of property between two entities.
In such transactions, the seller and buyer deliver money and
evidence of title to the escrow agent, who holds the items
until specified conditions are met, whereupon the items are
delivered to appropriate parties.
3)Related legislation . SB 204 (Benoit), Chapter 568, Statutes
of 2009, capped the Escrow Law annual assessment at $2,800 and
removed the sunset requirement that had periodically required
this amount to be re-visited by the Legislature every four to
five years; streamlined the procedures for Escrow Law
licensees to surrender their licenses; and made changes
intended to increase the availability of fidelity bonds and
errors and omissions insurance for exchange facilitators. A
provision in SB 204 that required indoctrination and
preliminary examinations for licensees was deleted from the
bill, due to opposition from the DOC.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081