§ 6-834 — Deposit of monies; definitions

A. Unless all of the parties to the escrow otherwise instruct the escrow agent in writing, the escrow agent shall deposit and maintain all monies deposited in escrow to be delivered on the close of the escrow or on any other contingency in a bank, savings bank or savings and loan association doing business in this state and the escrow agent shall keep all of the escrow monies separate, distinct and apart from monies belonging to the escrow agent. Notwithstanding the parties' instructions to the escrow agent, the escrow agent shall not deposit the escrow monies in an institution outside the United States. When deposited, the monies shall be designated as "escrow accounts" or given some other appropriate designation indicating that the monies are not the monies of the escrow agent. These monies shall be deposited immediately on receipt or as soon thereafter as is reasonably practicable.

B. A person shall not knowingly keep or cause to be kept any monies in any bank or savings and loan association under the heading of "escrow accounts" or any other name designating the monies as belonging to the clients of any escrow agent, except actual escrow monies deposited with such escrow agent.

C. Escrow property is not subject to execution or attachment on any claim against the escrow agent.

D. Not later than three business days after receipt of any escrow monies, the escrow agent shall provide to each depositing buyer or seller adequate notice of the buyer's or seller's right to earn interest on all deposited monies. The adequate notice shall accurately set forth the following information with respect to this right:

1. A brief description of the depositor's right to earn interest on escrowed monies through an interest-bearing deposit account.

2. The dollar charge that may be imposed by the escrow agent solely to set up the interest-bearing account.

3. A good faith estimate of the amount of interest that may be earned during the life of the escrow account, or an example of a typical transaction calculated on a $1,000 deposit, using the prevailing savings account interest rate for a thirty-day period.

4. A brief description of how the interest-bearing account can be established, including the name, address and telephone number of the escrow agent to be contacted.

E. An escrow agent shall not receive from any depository institution any interest earned or other benefit from monies deposited with an escrow agent in connection with any escrow. This subsection does not prohibit the escrow agent from receiving accounting, data processing or other services directly related to the administration of escrow accounts.

F. An escrow agent may use a system of reciprocal deposits to provide access to additional insurance with the federal deposit insurance corporation for monies deposited with that escrow agent if both of the following occur:

1. The eligible depository arranges for the deposit of the monies in one or more federally insured banks, savings banks or savings and loan associations, regardless of location, for the escrow agent's account.

2. The eligible depository receives an amount of federally insured deposits from customers of other financial institutions equal to or greater than the amount of the monies initially deposited by the escrow agent.

G. For the purposes of this section:

1. "Adequate notice" means a printed notice to the depositing buyer or seller that sets forth the pertinent facts clearly and conspicuously. The notice shall be printed on the escrow instructions or on an independent document and given to the depositing customer in a manner reasonably assuring the customer's receipt of the notice.

2. "Eligible depository" means a bank, a savings bank or a savings and loan association that has a branch or its principal place of business located in this state and that is insured by the federal deposit insurance corporation or its successor.

3. "Reciprocal deposit" means a deposit that an eligible depository institution receives through a deposit placement network on a reciprocal basis such that:

(a) For any deposit received, the insured depository institution places the same amount with other insured depository institutions through the deposit placement network.

(b) Each member of the deposit placement network sets the interest rate to be paid on the entire amount of monies the member places with other deposit placement network members.