Section 17409 Of Chapter 3. Escrow Regulations From California Financial Code >> Division 6. >> Chapter 3.
17409
. (a) All moneys deposited in escrow to be delivered upon the
close of the escrow or upon any other contingency shall be deposited
and maintained in a noninterest-bearing demand or checking account in
a bank, a state or federal savings bank, or a state or federal
savings association or in a noninterest-bearing account subject to
immediate withdrawal in an industrial loan company insured by the
Federal Deposit Insurance Corporation and approved to receive those
moneys by the commissioner. Thereafter, these moneys may be deposited
in an interest-bearing account in a bank, a state or federal savings
bank, a state or federal savings association, an industrial loan
company approved to receive those moneys by the commissioner, or a
state or federal credit union, if the depositor is qualified for
membership under the bylaws of that credit union, and the moneys are
maintained separate, distinct, and apart from funds belonging to the
escrow agent. Those funds, when deposited, are to be designated as
"trust funds," "escrow accounts," or under some other appropriate
name indicating that the funds are not the funds of the escrow agent.
Upon request of the commissioner, a licensee shall furnish to the
commissioner an authorization for examination of financial records of
any trust funds or escrow accounts, maintained in a financial
institution, in accordance with the procedures set forth in Section
7473 of the Government Code.
(b) A licensee engaged in the business of receiving escrows for
deposit or delivery of the types specified in subdivision (c) of
Section 17312 and of the types not specified therein shall maintain
separate escrow trust accounts, for both types of escrow business in
the same manner as provided in subdivision (a) of this section and
Sections 17409.1, 17410, 17411, and 17411.1.
(c) Any agreement with a financial institution to establish a
trust account pursuant to this section shall be accompanied by a
letter from the licensee authorizing and requesting that the
financial institution immediately notify the commissioner and
Fidelity Corporation, in either electronic or paper form, when it
becomes aware of either of the following:
(1) The closure of any account subject to this section, other than
to transfer the funds to another designated trust account at the
same financial institution in the name of the escrow agent or the
remittance of the funds to the Controller's office for escheat
purposes.
(2) The occurrence of any overdraft balance in an account subject
to this section.
This subdivision does not impose any duty or obligation on a
financial institution to Fidelity Corporation, members of Fidelity
Corporation, or the commissioner.
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