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Legal Memorandum: States Regulations for Escrow Companies or Agents

Issue: Under state law, to what extent does a state regulate an escrow company or escrow agent?

Area of Law: Administrative Law, Administrative Law & Regulation (Federal and State), Banking & Finance Law, Real Estate Law
Keywords: Escrow companies or agents; Regulatory provisions
Jurisdiction: Federal, Multistate
Cited Cases: None
Cited Statutes: Idaho Code § 30-902(4) (2009); Mont. Code Ann. § 32-107-102(3) (2009); N.M. Stat. Ann. § 58-22-3(C) (2009); Wash. Rev. Code § 18.44.021 (2009); Utah Code § 7-22-101 et seq. (2009); Or. Rev. Stat. §§ 696.505–.590 (2009); Or. Admin. R. § 863-049-0000 et seq., § 863-050-0000 et seq. (2010); Mo. Rev. Stat. §§ 381.400, .403, .405 (2009)
Date: 02/01/2010

A number of states regulate escrow companies or agents.  Nearly all of those states, however, limit the scope of such regulations to transactions

in which any person, for the purpose of effecting the sale, transfer, encumbrance, or lease of real or personal property to another person, delivers any written instrument, money, evidence of title to real or personal property, or other thing of value to a third person to be held by that third person until the happening of a specified event or the performance of a prescribed condition, when the instrument, money, evidence of title or thing of value is then to be delivered by the third person to a grantee, grantor, promisee, promisor, obligee, obligor, bailee, bailor, or any agent or employee of any of the latter, pursuant to written instructions.

 

Idaho Code § 30-902(4) (2009).  See also Mont. Code Ann. § 32-107-102(3) (2009) (same); N.M. Stat. Ann. § 58-22-3(C) (2009) (same): Wash. Rev. Code § 18.44.021 (2009) (specifically exempting “[a]ny transaction in which money or other property is paid to, deposited with, or transferred to a joint control agent for disbursal or use in payment of the cost of labor, material, services, permits, fees, or other items of expense incurred in the construction of improvements upon real property” from Washington’s similarly worded escrow agent licensing statutes).   Several states, however, define escrow transactions more broadly for purposes of their licensing statutes.  For example:

Utah regulates independent escrow agents.  See Utah Code § 7-22-101 et […]

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