Bill Text: CA SB204 | 2009-2010 | Regular Session | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Financial transactions: escrow agents: exchange
Spectrum: Partisan Bill (Republican 4-0)
Status: (Passed) 2009-10-11 - Chaptered by Secretary of State. Chapter 568, Statutes of 2009. [SB204 Detail]
Download: California-2009-SB204-Introduced.html
Bill Title: Financial transactions: escrow agents: exchange
Spectrum: Partisan Bill (Republican 4-0)
Status: (Passed) 2009-10-11 - Chaptered by Secretary of State. Chapter 568, Statutes of 2009. [SB204 Detail]
Download: California-2009-SB204-Introduced.html
BILL NUMBER: SB 204 INTRODUCED
BILL TEXT
INTRODUCED BY Senators Benoit and Runner
FEBRUARY 23, 2009
An act to amend Sections 17202.1, 17207, 17209, 17323, and 17405
of, and to repeal Section 17210 of, the Financial Code, relating to
escrow agents.
LEGISLATIVE COUNSEL'S DIGEST
SB 204, as introduced, Benoit. Escrow agents.
Existing law provides for the licensing and regulation of escrow
agents by the Commissioner of Corporations. Existing law, until
January 1, 2010, requires each escrow agent to pay an annual license
fee of up to $2,800 for each office or location and authorizes the
commissioner to additionally levy a special assessment for each
office or location in certain circumstances. Commencing January 1,
2010, existing law instead requires each escrow agent to pay to the
commissioner the agent's pro rata share of the commissioner's annual
administrative costs and expenses, as specified.
This bill would delay the change in these fee requirements to
January 1, 2016, and would, until that date, lower the maximum amount
of the annual license fee to $2,500 for each office or location.
Existing law requires that escrow agents maintain a specified
tangible net worth, including certain liquid assets.
This bill would eliminate that requirement, and make related
changes.
Existing law requires the commissioner to examine an escrow agent
as often as the commissioner deems necessary, based on factors
designated by the commissioner by rule or order, but not less than
every 48 months. Existing law also authorizes the commissioner to
conduct examinations, as specified, of a new licensee within one year
and within 2 years of the issuance of a license.
This bill would authorize the commissioner to examine an escrow
agent only for cause and would require the commissioner to conduct
the examinations, as specified, of new licensees.
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 17202.1 of the Financial Code is amended to
read:
17202.1. An applicant for an escrow agent's license or a licensee
may, in lieu of and subject to the same conditions as the bond
required by Section 17202, deposit with the commissioner a cash bond
in the sum specified in Section 17202. Evidence of the cash bond
shall be a deposit in the amount specified in Section 17202 in a bank
or investment certificates of industrial loan companies, authorized
to do business in this state and insured by the Federal Deposit
Insurance Corporation, or an investment certificate or share account
in the amount specified in Section 17202 issued by a savings and loan
association doing business in this state and insured by the Federal
Savings and Loan Insurance Corporation. Those deposits, certificates,
or accounts shall be assigned to and accepted and maintained by the
commissioner, upon those terms as the commissioner may prescribe,
until released by the commissioner , and shall not be deemed
an asset of the applicant or licensee for the purpose of complying
with Section 17210 .
SEC. 2. Section 17207 of the Financial Code, as amended by Section
1 of Chapter 257 of the Statutes of 2005, is amended to read:
17207. The commissioner shall charge and collect the following
fees and assessments:
(a) For filing an application for an escrow agent's license, six
hundred twenty-five dollars ($625) for the first office or location
and four hundred twenty-five dollars ($425) for each additional
office or location.
(b) For filing an application for a duplicate of an escrow agent's
license lost, stolen, or destroyed, or for replacement, upon a
satisfactory showing of the loss, theft, destruction, or surrender of
certificate for replacement, two dollars ($2).
(c) For investigation services in connection with each
application, one hundred dollars ($100), and for investigation
services in connection with each additional office application, one
hundred dollars ($100).
(d) For holding a hearing in connection with the application, as
set forth under Section 17209.2, the actual costs experienced in each
particular instance.
(e) (1) Each escrow agent shall pay to the commissioner for the
support of this division for the ensuing year an annual license fee
not to exceed two thousand eight five
hundred dollars ($2,800) ($2,500) for
each office or location.
(2) On or before May 30 in each year, the commissioner shall
notify each escrow agent by mail of the amount of the annual license
fee levied against it, and that the payment of the invoice is payable
by the escrow agent within 30 days after receipt of notification by
the commissioner.
(3) If payment is not made within 30 days, the commissioner may
assess and collect a penalty, in addition to the annual license fee,
of 10 percent of the fee for each month or part of a month that the
payment is delayed or withheld.
(4) If an escrow agent fails to pay the amount due on or before
the June 30 following the day upon which payment is due, the
commissioner may by order summarily suspend or revoke the certificate
issued to the company.
(5) If, after an order is made pursuant to paragraph (4), a
request for a hearing is filed in writing and a hearing is not held
within 60 days thereafter, the order is deemed rescinded as of its
effective date. During any period when its certificate is revoked or
suspended, a company shall not conduct business pursuant to this
division, except as may be permitted by order of the commissioner.
However, the revocation, suspension, or surrender of a certificate
shall not affect the powers of the commissioner as provided in this
division.
(f) Fifty dollars ($50) for investigation services in connection
with each application for qualification of any person under Section
17200.8, other than investigation services under subdivision (c) of
this section.
(g) A fee not to exceed twenty-five dollars ($25) for the filing
of a notice or report required by rules adopted pursuant to
subdivision (a) or Section 17203.1.
(h) (1) If costs and expenses associated with the enforcement of
this division, including overhead, are or will be incurred by the
commissioner during the year for which the annual license fee is
levied, and that will or could result in the commissioner's incurring
of costs and expenses, including overhead, in excess of the costs
and expenses, including overhead, budgeted for expenditure for the
year in which the annual license fee is levied, then the commissioner
may levy a special assessment on each escrow agent for each office
or location in an amount estimated to pay for the actual costs and
expenses associated with the enforcement of this division, including
overhead, in an amount not to exceed five hundred dollars ($500) for
each office or location. The commissioner shall notify each escrow
agent by mail of the amount of the special assessment levied against
it, and that payment of the special assessment is payable by the
escrow agent within 30 days of receipt of notification by the
commissioner. The funds received from the special assessment shall be
deposited into the State Corporations Fund and shall be used only
for the purposes for which the special assessment is made.
(2) If payment is not made within 30 days, the commissioner may
assess and collect a penalty, in addition to the special assessment,
of 10 percent of the special assessment for each month or part of a
month that the payment is delayed or withheld. If an escrow agent
fails to pay the special assessment on or before 30 days following
the day upon which payment is due, the commissioner may by order
summarily suspend or revoke the certificate issued to the company. If
an order is made under this subdivision, the provisions of paragraph
(5) of subdivision (e) of this section shall apply.
(3) If the amount collected pursuant to this subdivision exceeds
the actual costs and expenses, including overhead, incurred in the
administration and enforcement of this division and any deficit
incurred, the excess shall be credited to each escrow agent on a pro
rata basis.
(i) This section shall remain in effect only until January 1,
2010 2016 , and as of that date is
repealed, unless a later enacted statute, that is enacted before
January 1, 2010, deletes or extends that date.
SEC. 3. Section 17207 of the Financial Code, as amended by Section
2 of Chapter 257 of the Statutes of 2005, is amended to read:
17207. The commissioner shall charge and collect the following
fees and assessments:
(a) For filing an application for an escrow agent's license, six
hundred twenty-five dollars ($625) for the first office or location
and four hundred twenty-five dollars ($425) for each additional
office or location.
(b) For filing an application for a duplicate of an escrow agent's
license lost, stolen, or destroyed, or for replacement, upon a
satisfactory showing of the loss, theft, destruction, or surrender of
certificate for replacement, two dollars ($2).
(c) For investigation services in connection with each
application, one hundred dollars ($100), and for investigation
services in connection with each additional office application, one
hundred dollars ($100).
(d) For holding a hearing in connection with the application, as
set forth under Section 17209.2, the actual costs experienced in each
particular instance.
(e) (1) Each escrow agent shall pay to the commissioner its pro
rata share of all costs and expenses reasonably incurred in the
administration of this division, as estimated by the commissioner for
the ensuing year, and of any deficit actually incurred or
anticipated in the administration of this division in the year in
which the assessment is made. Commencing with the assessment for
fiscal year 2010-11 2016-17 , the
assessment shall not increase by more than 25 percent over the amount
assessed in the prior year. The pro rata share shall be the
proportion which a licensee's gross income from escrow operations
bears to the aggregate gross income from escrow operations of all
licensees as compiled by the commissioner. The pro rata share shall
not include the costs of any examinations provided for in Section
17405.1, unless they cannot be collected from the company examined.
If the pro rata assessment collected pursuant to this paragraph
exceeds the actual costs and expenses incurred in the administration
of this division and any deficit incurred, the excess shall be
credited to each escrow agent on a pro rata basis.
(2) On or before May 30 in each year, the commissioner shall
notify each escrow agent by mail of the amount assessed and levied
against it, and that the payment of any invoice for assessments of
the commissioner is payable by the escrow agent in three installments
with the first installment payable within 20 days after receipt of
notification by the commissioner and the second and third
installments payable within 20 days of August 31 and November 30,
respectively, in each year. The first installment payment shall be 50
percent of the amount assessed, and the second and third installment
payments shall each be 25 percent of the amount assessed.
(A) If the first installment payment is not made within 20 days,
the commissioner may assess and collect a penalty, in addition to the
assessment, of 10 percent of the assessment for each month or part
of a month that the payment is delayed or withheld.
(B) If the second installment payment is not made within 20 days
of August 31 in each year, the commissioner may assess and collect a
penalty, in addition to the assessment, of 10 percent of the
assessment for each month or part of a month that the payment is
delayed or withheld.
(C) If the third installment payment is not made within 20 days of
November 30 in each year, the commissioner may assess and collect a
penalty, in addition to the assessment, of 10 percent of the
assessment for each month or part of a month that the payment is
delayed or withheld.
(3) In the levying and collection of the assessment, an escrow
agent shall not be assessed for, nor be permitted to pay less than,
three hundred fifty dollars ($350) per year, per location.
(4) (A) If an escrow agent fails to pay the first assessment on or
before the June 30 following the day upon which payment is due, the
commissioner may by order summarily suspend or revoke the certificate
issued to the company.
(B) If an escrow agent fails to pay the second installment payment
on or before September 30 in each year, the commissioner may by
order summarily suspend or revoke the certificate issued to the
company.
(C) If an escrow agent fails to pay the third installment payment
on or before December 31 in each year, the commissioner may by order
summarily suspend or revoke the certificate issued to the company.
(D) If, after this order is made, a request for a hearing is filed
in writing and a hearing is not held within 60 days thereafter, the
order is deemed rescinded as of its effective date. During any period
when its certificate is revoked or suspended, a company shall not
conduct business pursuant to this division, except as may be
permitted by order of the commissioner. However, the revocation,
suspension, or surrender of a certificate shall not affect the powers
of the commissioner as provided in this division.
(f) Fifty dollars ($50) for investigation services in connection
with each application for qualification of any person under Section
17200.8, other than investigation services under subdivision (c) of
this section.
(g) A fee not to exceed twenty-five dollars ($25) for the filing
of a notice or report required by rules adopted pursuant to
subdivision (a) or Section 17203.1.
(h) This section shall become operative January 1, 2010
2016 .
SEC. 4. Section 17209 of the Financial Code is amended to read:
17209. An application for a license as an escrow agent shall be
signed and verified by an authorized officer of the applicant, and
such that application shall be
accompanied by a certified copy of the articles of incorporation and
a copy of the bylaws of the proposed licensee. The application shall
set forth:
(a) The names and addresses of the incorporators, directors, and
officers.
(b) An itemized statement of the estimated receipts and
expenditures of the proposed first year of operations.
(c) An audited financial statement showing compliance with
Section 17210 .
(d) The name and address of the person, or persons, meeting the
requirements of Section 17200.8, and a statement supporting
such those persons' qualifications.
(e) The type of business for which the license is requested.
(f) Any other matters the commissioner may require.
(g) An application for a license as an escrow agent filed with the
commissioner shall also include a completed statement of identity
and questionnaire, as prescribed by the commissioner, for all
stockholders, directors, officers, trustees, managers, and other
persons participating in the escrow business directly or indirectly
compensated by the escrow agent (other than usual and customary
employees who file pursuant to subdivision (d) of Section 17414.1 and
Section 17419) and shall also include fingerprints and related
information for those persons pursuant to subdivision (h). The
commissioner shall notify the applicant in writing if any of the
information received pursuant to this division shows that a person's
employment, participation, or ownership interest would be in
violation of Section 17414.1, and the escrow agent shall deny the
person the employment or interest. If the application is not
satisfactorily amended to remove the deficiency within six months of
the first notice of deficiency, the application shall be summarily
denied. Persons required to file the employment application pursuant
to Section 17419 are not required to file the statement of identity
and questionnaire described in this section.
(h) (1) The fingerprint images and related information shall be
submitted by the commissioner to the Department of Justice, in a
manner established by the Department of Justice, for the purposes of
obtaining information as to the existence and content of a record of
state or federal convictions, state or federal arrests, and
information as to the existence of and content of a record of state
or federal arrests for which the Department of Justice establishes
that the person is free on bail or on his or her own recognizance
pending trial or appeal.
(2) Upon receipt, the Department of Justice shall forward to the
Federal Bureau of Investigation requests for federal summary criminal
history information received from the commissioner pursuant to this
section. The Department of Justice shall review the information
returned from the Federal Bureau of Investigation and compile and
disseminate a response to the commissioner pursuant to subdivision
(p) of Section 11105 of the Penal Code.
(3) The commissioner shall request from the Department of Justice
subsequent arrest notification service as provided pursuant to
Section 11105.2 of the Penal Code.
(4) The Department of Justice shall charge a fee sufficient to
cover the costs of processing the requests pursuant to this
subdivision.
SEC. 5. Section 17210 of the Financial Code is repealed.
17210. (a) An escrow agent licensed on or after January 1, 1986,
shall maintain at all times a tangible net worth of fifty thousand
dollars ($50,000), including liquid assets of at least twenty-five
thousand dollars ($25,000) in excess of current liabilities.
(b) An escrow agent licensed prior to January 1, 1986, shall
maintain at all times a tangible net worth according to the following
schedule:
(1) Ten thousand dollars ($10,000) from January 1, 1986, through
June 30, 1986, including liquid assets of at least ten thousand
dollars ($10,000) in excess of current liabilities.
(2) Fifteen thousand dollars ($15,000) as of July 1, 1986,
including liquid assets of at least fifteen thousand dollars
($15,000) in excess of current liabilities.
(3) Twenty thousand dollars ($20,000) as of July 1, 1987,
including liquid assets of at least twenty thousand dollars ($20,000)
in excess of current liabilities.
(4) Twenty-five thousand dollars ($25,000) as of July 1, 1988,
including liquid assets of at least twenty-five thousand dollars
($25,000) in excess of current liabilities.
(5) Thirty thousand dollars ($30,000) as of July 1, 1989,
including liquid assets of at least twenty-five thousand dollars
($25,000) in excess of current liabilities.
(6) Thirty-five thousand dollars ($35,000) as of July 1, 1990,
including liquid assets of at least twenty-five thousand dollars
($25,000) in excess of current liabilities.
(7) Forty thousand dollars ($40,000) as of July 1, 1991,
including liquid assets of at least twenty-five thousand dollars
($25,000) in excess of current liabilities.
(8) Forty-five thousand dollars ($45,000) as of July 1, 1992,
including liquid assets of at least twenty-five thousand dollars
($25,000) in excess of current liabilities.
(9) Fifty thousand dollars ($50,000) as of July 1, 1993, and
thereafter, including liquid assets of at least twenty-five thousand
dollars ($25,000) in excess of current liabilities.
(c) The commissioner may determine by rule as to which assets
constitute liquid assets and may also determine in an individual case
by a specific written ruling whether a particular asset is a liquid
asset within the meaning of this section.
(d) In the case of a licensed branch office, a tangible net worth
in addition to that required by subdivision (a) shall be maintained
at an amount equal to 50 percent of the tangible net worth required
by subdivision (a), except that licensees operating or applying for
more than one branch office shall maintain an additional tangible net
worth of at least 25 percent of the amount required by subdivision
(a) for each branch office licensed after the first branch office
location.
SEC. 6. Section 17323 of the Financial Code is amended to read:
17323. (a) In the event If any
member fails to pay an assessment when due, Fidelity Corporation
shall by written demand addressed to the member request the payment
of the assessment within 30 days of the demand letter. If the member
fails to pay an assessment, the commissioner may issue an order
pursuant to subdivision (b).
(b) If a member fails to pay the assessment, or any applicable
late fee, the commissioner may by order summarily suspend the license
issued to the company. If after the order is made, a request for a
hearing is filed in writing and a hearing is not held within 60 days
thereafter, the order is deemed rescinded as of its effective date.
During any period when its license is suspended, a company shall not
conduct business pursuant to this division, except as may be
permitted by order of the commissioner. However, the suspension of a
license shall not affect the powers of the commissioner as provided
in this division.
(c) Fidelity Corporation may bring an action at law or in equity
against the member to recover any assessment or fees.
(d) Fidelity Corporation may be awarded costs and reasonable
attorney's fees, if it prevails in any action against a member, or
against a third party, except the commissioner, to enforce a claim
against the bond or other security posted by the member pursuant to
Section 17202, or in any action against a member pursuant to
subdivision (c). Those costs and attorney's fees may be awarded as an
item of costs, as provided for in paragraph (10) of subdivision (a)
and paragraph (5) of subdivision (c) of Section 1033.5 of the Code of
Civil Procedure, provided that the payment of the costs and attorney'
s fees will not cause the member to be in violation of Section 17202
, or 17202.1 , or 17210
.
SEC. 7. 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 may
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
only for cause .
(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 whether
an examination shall be conducted for cause , 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 may
shall conduct an indoctrination or preliminary
examination, or both, under this section of any new licensee within
one year of the issuance of the license under this division, and an
examination described in subdivision (a) within two years of the
issuance of the license under this division.
