P.L. 2003, CHAPTER 234, approved January 9, 2004
Assembly, No. 3176
An Act concerning the disbursement of certain funds by title insurance producers in real estate transactions and amending P.L.1997, c.290.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 2 of P.L.1997, c.290 (C.17:46B-10.1) is amended to read as follows:
2. a. Every title insurance producer licensed pursuant to P.L.1987, c.293 (C.17:22A-1 et seq.) or P.L.2001, c.210 (C.17:22A-26 et seq.), and every title insurance company shall maintain a separate record of all receipts and disbursements as a depository for funds representing closing or settlement proceeds of a real estate transaction, which funds shall be deposited in a separate trust or escrow account, and which shall not be commingled with a producer's or company's own funds or with funds held by a producer or company in any other capacity.
b. No title insurance producer or company shall disburse funds representing closing or settlement proceeds of a real estate transaction unless those funds shall have been deposited in a separate trust or escrow account by cash, electronic wire transfer, or certified, cashier's, teller's or bank check, or other collected funds; provided nevertheless, that nothing contained herein shall be construed to prohibit a title insurance producer or company from disbursing against funds deposited in a separate trust or escrow account other than by cash, electronic wire transfer, or certified, cashier's, teller's or bank check, or other collected funds in an amount not to exceed $1,000. A "bank check" means a negotiable instrument drawn by a state or federally chartered bank, savings bank or savings and loan association on itself or on its account in another state or federally chartered bank, savings bank or savings and loan association doing business in this State. A "teller's check" means a draft drawn by a bank on another bank, or payable at or through a bank. A New Jersey licensed attorney's trust account check and a trust or escrow account check from a New Jersey licensed insurance producer shall be considered "collected funds" for the purposes of this section.
c. The Commissioner of Banking and insurance shall promulgate regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), necessary to effectuate the provisions of this section.
(cf: P.L.1997, c.290, s.2)
2. This act shall take effect immediately.
STATEMENT
This bill allows the use of checks written on the trust account of a licensed New Jersey attorney or a trust or escrow account check from a New Jersey licensed title insurance producer to be considered "collected funds" for the purposes of the statute concerning the disbursement of funds by title insurance producers in real estate transactions.
Currently, mortgage lenders are required to deliver a certified, cashiers, tellers or bank check, or arrange for payment in cash or by wire transfer for a mortgage closing. Pursuant to the statute amended by this bill, licensed title insurance producers must deposit loan proceeds in a separate trust or escrow account, and may not disburse those funds unless they were received as "cash, electronic wire transfer, or certified cashier's, teller's or bank check, or other collected funds...." As a result of opinions of the Supreme Court Committee on Professional Ethics, disbursements from an attorney's trust account must also be written against collected funds.
In a typical real estate closing, the seller at the first closing receives an attorney's trust account check or a title producer's escrow or settlement account check, which the seller then wishes to use at the second closing wherein he is buying. This bill thus allows the title insurance company or agent at the second closing to accept the attorney's trust account checks and title producer's trust or escrow checks from the first closing as collected funds.
Concerns disbursement of certain funds in real estate transactions.