text:
(a) Each person licensed pursuant to this division who is engaged in the business of receiving escrows specified in subdivision (c) and whose escrow business location is located within the State of California shall participate as a member in Fidelity Corporation in accordance with this chapter and rules established by the Board of Directors of Fidelity Corporation. Fidelity Corporation shall not deny membership to any escrow agent holding a valid unrevoked license under the Escrow Law who is required to be a member under this subdivision.

(b) Upon filing a new application for licensure as required by Section 17201, persons required to be a member of Fidelity Corporation shall file a copy thereof concurrently with Fidelity Corporation. If an application for licensure submitted to Fidelity Corporation contains personal or confidential information, Fidelity Corporation and its board shall maintain this information in confidence to protect the privacy of the information. The copy of the application shall include the three-thousand-dollar ($3,000) fee specified in subdivision (a) of Section 17320 and all required Fidelity Corporation Certificates set forth in Sections 17331 and 17331.1. Fidelity Corporation shall promptly furnish to the commissioner a compliance letter confirming that the applicant has satisfied the requirements to be a member of Fidelity Corporation.

(c) The required membership in Fidelity Corporation shall be limited to those licensees whose escrow business location is located within the State of California and who engage, in whole or in part, in the business of receiving escrows for deposit or delivery in the following types of transactions:

(1) Real property escrows, including, but not limited to, the sale, encumbrance, lease, transfer of title, loans or other obligations to be secured by a lien upon real property, and exchanges, excluding money or property held or deposited pursuant to paragraph (3) of subdivision (a) of Section 51003.

(2) Bulk sale escrows, including, but not limited to, the sale or transfer of title to a business entity and the transfer of liquor licenses or other types of business licenses or permits.

(3) Fund or joint control escrows, including, but not limited to, transactions specified in Section 17005.1, and contracts specified in Section 10263 of the Public Contract Code.

(4) The sale, transfer of title, or refinance escrows for manufactured homes or mobilehomes.

(5) Reservation deposits required under Article 2 (commencing with Section 11010) of Chapter 1 of Part 2 of Division 4 of the Business and Professions Code or by regulation of the Bureau of Real Estate to be held in an escrow account.

(6) Escrows for sale, transfer, modification, assignment, or hypothecation of promissory notes secured by deeds of trust.

(d) Coverage required to be provided by Fidelity Corporation under this chapter shall be provided to members only for loss of trust obligations with respect to those types of transactions specified in subdivision (c). If a loss covered by Fidelity Corporation is also covered by a member’s general liability, dishonesty, or indemnity policy, or other private insurance policy, then the member’s private policy shall first be applied as the primary indemnity to cover the loss. However, the failure of the member’s private primary policy to indemnify the member’s loss within the time specified for Fidelity Corporation indemnity in subdivision (a) of Section 17314 shall not limit the indemnity obligations of Fidelity Corporation as defined in this chapter. Indemnity coverage for those types of transactions not specified in subdivision (c) shall be provided by escrow agents in accordance with Section 17203.1.

history: (History: Amended by Stats. 2013, Ch. 352, Sec. 88. (AB 1317) Effective September 26, 2013. Operative July 1, 2013, by Sec. 543 of Ch. 352.)

article: 2. Purpose: Scope of Guarantee


kind: section

code: FIN

text: The commissioner shall review and approve the articles of incorporation and bylaws of Fidelity Corporation before they are filed with the Secretary of State.

history: (History: Amended by Stats. 1985, Ch. 1560, Sec. 11. Effective October 2, 1985.)

division: 6. ESCROW AGENTS

article: 2. Purpose: Scope of Guarantee

path: 6. ESCROW AGENTS > 2.5. Escrow Agents’ Fidelity Corporation > 2. Purpose: Scope of Guarantee


text: The fiscal year of Fidelity Corporation shall commence on July 1 of each year.

history: (History: Added by Stats. 1988, Ch. 1458, Sec. 5. Effective September 28, 1988.)

chapter: 2.5. Escrow Agents’ Fidelity Corporation

article: 2. Purpose: Scope of Guarantee


text:
(a) Fidelity Corporation shall pay a member for loss of trust obligations subject to the limitations set forth in this chapter. Fidelity Corporation shall pay or deny the claim within 90 days of receipt of the proof of loss filed by a member, or a member’s successor in interest. Notwithstanding any other provision of this article, the protection to members provided by Fidelity Corporation and by the fidelity bond or insurance policy, if any, shall not extend to any transaction involving any member at any branch or business location outside the State of California, but shall extend only to escrow trust obligations and trust funds located within the State of California.

(b) Coverage shall be provided to members in accordance with the following schedule:MONTHLY AVERAGE ESCROW LIABILITY PER LOCATIONCOVERAGE$0 - $ 1,000,000 $1,000,000over $1,000,000 - $ 3,000,000 $2,000,000over $3,000,000 - $ 5,000,000 $3,000,000over $5,000,000 - $ 7,500,000 $4,000,000over $7,500,000 - $10,000,000 $5,000,000Pursuant to the schedule, the minimum coverage by Fidelity Corporation for each licensed location shall be one million dollars ($1,000,000) and the maximum coverage for each licensed location shall be five million dollars ($5,000,000).

(c) A member shall maintain minimum coverage in accordance with the schedule in subdivision (b) and shall monitor its escrow liability monthly. An increase in escrow liability above the monthly average escrow liability coverage as provided for in subdivision (b) shall be reported immediately to Fidelity Corporation. Upon receipt of this report, Fidelity Corporation shall immediately provide for the increase in coverage, and shall immediately bill and collect pursuant to Section 17321, an amount necessary to provide for the increased coverage.

(d) Any member with a licensed location or locations with a monthly average escrow liability greater than ten million dollars ($10,000,000) shall obtain a bond from a corporate surety which is an admitted insurer in the State of California insuring the balance of trust funds not covered by Fidelity Corporation, in a ratio of one dollar of coverage for every three dollars of trust obligations not covered by Fidelity Corporation. The Fidelity Corporation shall have the authority to obtain the excess coverage bond. The cost of the bond shall be shared pro rata by those members included in the coverage.

(e) If a member establishes, to the satisfaction of the commissioner, that a bond is not available or is impracticable under subdivision (d), then, at the member’s election, either:

(1) The member shall place average trust obligations in excess of ten million dollars ($10,000,000) in a restricted escrow trust account. Each transfer or release of the funds to be made by specific resolution of the member’s board of directors and the signature of a neutral third party; or

(2) The licensed location of the member with average trust balances in excess of ten million dollars ($10,000,000) shall be subject to examinations to be conducted at a frequency as deemed appropriate and necessary by the commissioner or Fidelity Corporation, but not less frequently than once a year.

(f) Any member subject to subdivision (e) shall within 10 business days after the effective date of this section notify Fidelity Corporation of its election. A member who subsequently becomes subject to subdivision (e) shall within a like period of time notify Fidelity Corporation of its election. Fidelity Corporation shall also be notified of any change of election in a like period of time. Fidelity Corporation shall notify the commissioner within 10 business days of receipt of any notice under this subdivision of the elections made. All notices under this subdivision shall be in writing.

history: (History: Amended by Stats. 2004, Ch. 180, Sec. 1. Effective January 1, 2005.)

article: 2. Purpose: Scope of Guarantee


text:
(a) Notwithstanding any other provision of this article, Fidelity Corporation shall not be obligated to pay any claim made by a member unless (1) the claim would, except for the dollar amount thereof, be a valid claim under the bond as prescribed by Section 17203.1 and (2) the claim is made within the time prescribed by Section 17205. The protection to members provided by Fidelity Corporation and by the fidelity bond or insurance policy, if any, shall therefore be deemed to be coextensive except as to the dollar amounts as set forth in Section 17314. All defenses available to the insurer under the fidelity bond or insurance policy, if any, on any claim shall also be a defense to Fidelity Corporation, as either an indemnitor or surety, on any claim brought against the corporation.

(b) No person other than a member, or the member’s successor in interest, who shall be the commissioner, a conservator, receiver, or trustee as designated by a court of competent jurisdiction, is entitled to assert a claim against Fidelity Corporation for losses covered under this article.

history: (History: Amended by Stats. 2006, Ch. 376, Sec. 2. Effective January 1, 2007.)

article: 2. Purpose: Scope of Guarantee


text: Claims filed prior to the effective date of this chapter shall be governed by the provisions in effect when the loss occurred.

history: (History: Added by Stats. 1988, Ch. 1458, Sec. 9. Effective September 28, 1988.)

article: 2. Purpose: Scope of Guarantee


text:
(a) A deductible shall apply to each loss suffered by a member in the amount of five thousand dollars ($5,000), plus 5 percent of the amount by which the loss exceeds five thousand dollars ($5,000). If a member with more than one licensed location suffers a covered loss at more than one location, the deductible shall apply to each location separately in proportion to the amount of the loss suffered at each such licensed location.

(b) Fidelity Corporation shall pay the full amount of any member’s loss to the member or the member’s successor in interest. The member shall be obligated to pay to Fidelity Corporation the amount of the member’s deductible after payment in full of the loss by Fidelity Corporation.

(c) In the event a license is surrendered, suspended, or revoked prior to payment in full by the member of all or any portion of the deductible, the member shall nevertheless be liable to Fidelity Corporation for the amount of the deductible. If the license of the member is surrendered, suspended, or revoked prior to payment in full of the deductible, Fidelity Corporation shall have priority over all other claimants, except the State of California and any conservator or receiver of the member’s estate, against the assets of the licensee, including the bond required under Section 17202.

(d) Nothing in this section shall be construed to give any person or entity not (1) a member of Fidelity Corporation, or (2) a successor in interest of a member, or (3) the commissioner any right of action or any right to make a claim directly against Fidelity Corporation, its officers, directors, agents, or employees. Fidelity Corporation shall be entitled to recover its reasonable costs and attorney’s fees 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, in defending any claim made directly against Fidelity Corporation, not authorized in this division.

(e) If a member fails to pay the deductible within the time set forth in the bylaws of Fidelity Corporation, Fidelity Corporation may bring an action at law or in equity against the member to recover the amount of the deductible. Fidelity Corporation shall recover its reasonable costs and attorney’s fees 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, 17202.1, or 17210.

history: (History: Amended by Stats. 1990, Ch. 1431, Sec. 1.)

article: 2. Purpose: Scope of Guarantee


text: The commissioner may establish rules which are reasonable and necessary to carry out the provisions of this chapter.

history: (History: Added by Stats. 1982, Ch. 1106, Sec. 1.)

article: 2. Purpose: Scope of Guarantee


text:
Fidelity Corporation shall establish and maintain the following funds for payment of claims and for payment of costs of administration: the membership fund, the operations fund, and the fidelity fund.

(a) An applicant or a licensee shall, at the time an application is filed for a license, pay to Fidelity Corporation a membership fee of three thousand dollars ($3,000) for each location for which a license is applied. If the application is denied, withdrawn, or abandoned, Fidelity Corporation may retain two hundred dollars ($200) from the membership fee to cover costs of administration.

(1) The membership fund shall be reserved for payment of claims which exceed the fidelity fund balance and for payment of extraordinary operational costs.

(2) Any member who, on the effective date of this section, has an account balance which exceeds the three thousand dollars ($3,000) membership fee times the number of its licensed locations shall be credited in a special reserve account for the excess amount. This balance shall be credited against future assessments made pursuant to subdivision (b) of Section 17321 in an amount not exceeding four hundred dollars ($400) per licensed location per year. Any member whose account balance is less than three thousand dollars ($3,000) times the number of its licensed locations shall, on or before December 1, 1988, pay to Fidelity Corporation an amount sufficient to allow the member’s account to be maintained at three thousand dollars ($3,000) times the number of licensed locations. Fidelity Corporation shall provide each member with an accounting of the amounts being reserved for the members’ membership account and amounts being held as a special reserve.

(3) The membership fee, less any unpaid assessments and related costs, shall be refunded to the member in accordance with Fidelity Corporation’s bylaws not less than 30 months and no more than 36 months after the effective date of surrender of a license.

(4) Any member who does not engage in any escrow transactions pursuant to subdivision (c) of Section 17312 may terminate its membership in Fidelity Corporation by written notice to Fidelity Corporation and the Department of Financial Protection and Innovation, as provided in the Fidelity Corporation’s bylaws and rules and regulations. The membership fee, less any unpaid assessments and related costs, shall be refunded to the member in accordance with Fidelity Corporation’s bylaws not less than 30 months and no more than 36 months after the effective date of the member’s written request to terminate its membership in Fidelity Corporation. Before a licensee resumes those escrow transactions, it shall first be required to become a member of Fidelity Corporation, as provided in this subdivision.

(b) Fidelity Corporation shall prepare, prior to its fiscal year end, an estimated annual operational budget projecting the costs of operations and administration for the succeeding fiscal year, excluding the amount paid for claims and premiums paid for excess coverage bonding. The amount of the assessment shall be 150 percent of the budgetary projection. In succeeding years, the assessment shall be adjusted by adding the prior year’s deficit or deducting unused surplus from the prior year.

(c) Fidelity Corporation shall establish a fidelity fund for the payment of claims and for the payment of the premium for the fidelity bond or insurance policy, if any. All claims shall be paid from the fidelity fund, provided that, to the extent that the fidelity fund balance is not sufficient to pay claims, the claim shall be paid from the membership fund by charging each member’s membership account a pro rata share of the excess.

(d) All interest earned on the membership fund and the operations fund shall be credited to the fidelity fund.

history: (History: Amended by Stats. 2022, Ch. 452, Sec. 124. (SB 1498) Effective January 1, 2023.)

article: 3. Membership Fee and Assessments

path: 6. ESCROW AGENTS > 2.5. Escrow Agents’ Fidelity Corporation > 3. Membership Fee and Assessments


text:
Fidelity Corporation shall bill and collect from each member an annual premium that in the aggregate shall consist of assessments for the operations fund and the fidelity fund.

(a) The annual assessment for the operations fund shall be assessed no later than October 15 of each year for the current fiscal year in accordance with subdivision (b) of Section 17320. The payment of any invoice for assessments under this subdivision is payable by the member escrow agent in three equal and consecutive monthly installments with the first installment payable at or within 30 days after receipt of the Fidelity Corporation invoice. The assessment shall include:

(1) All costs and expenses of administration as budgeted by the board of directors for the current fiscal year.

(2) Any expenses actually incurred in the preceding fiscal year which exceeded the budgeted costs of expenses and administration except for expenses recovered pursuant to subdivision (a) of Section 17321.1.

Each member’s assessment shall be determined pro rata based upon the ratio of each member’s licensed locations to the total licensed locations of all members as of the preceding June 30.

Members licensed on or after July 1 of each year shall be assessed only for costs and expenses pursuant to paragraph (1) of this subdivision. This assessment shall be prorated on a monthly basis.

(b) The annual assessment for the fidelity fund shall be assessed no later than May 1. The assessment shall include any amount necessary to replenish the membership fund pursuant to Section 17324, and shall be based upon the balances of the membership fund and the fidelity fund as of December 31 of the previous year and the escrow liability schedule of each licensed location as provided in Section 17348, and shall be calculated as follows:

(1) If the membership fund and fidelity fund in the aggregate equal an amount less than five million dollars ($5,000,000), or if the balance in the fidelity fund is less than two million five hundred thousand dollars ($2,500,000), then the assessment shall be the greater of: (A) the amount necessary to bring the membership fund and fidelity fund in the aggregate up to five million dollars ($5,000,000), but not to exceed one million dollars ($1,000,000) per assessment, or (B) the amount necessary to maintain a minimum fidelity fund balance of two million five hundred thousand dollars ($2,500,000), including the amount of the assessment, or (C) four hundred thousand dollars ($400,000).

(2) If the membership fund and fidelity fund in the aggregate equal an amount that is at least five million dollars ($5,000,000), and the balance in the fidelity fund is at least two million five hundred thousand dollars ($2,500,000), then the assessment shall be four hundred thousand dollars ($400,000).

Each member’s fidelity fund assessment for paragraphs (1) and (2) shall be the amount derived by multiplying the amount to be assessed by the ratio that each member’s risk factors bear to the total of all members’ risk factors.

A member’s risk factors shall be computed in accordance with the following formula, except that the total factors of a member shall be reduced by one for each licensed branch location:Coverage per Licensed Location Factors$1,000,0003$2,000,0005$3,000,0007$4,000,0008$5,000,0009(c) Notwithstanding subdivision (b), the assessment for the fidelity fund for the fiscal year beginning July 1, 1989, shall be made immediately upon 90-day notice of cancellation of the fidelity bond or insurance policy permitted by paragraph (2) of subdivision (c) of Section 17310, but in no event later than 60 days prior to the date of cancellation.

(d) Every licensed member as of March 31 shall pay the fidelity fund assessment, without any pro rata adjustment, notwithstanding that the member may have surrendered a license or have a license revoked prior to the date that the assessment is mailed.

history: (History: Amended by Stats. 2004, Ch. 180, Sec. 3. Effective January 1, 2005.)

article: 3. Membership Fee and Assessments


text:
Fidelity Corporation shall levy a special assessment against its members whenever:

(a) Deemed necessary by the board of directors in the event of any extraordinary expenses which would seriously deplete the resources of the operations fund; or

(b) A proof of loss has been submitted by a member which, if paid during that fiscal year, would reduce the membership fund by 10 percent or more.

history: (History: Added by Stats. 1988, Ch. 1458, Sec. 15. Effective September 28, 1988.)

article: 3. Membership Fee and Assessments


text: Fidelity Corporation shall be entitled to collect late fees as specified in Fidelity Corporation’s bylaws for any late payment of assessments under Section 17320, 17321, or 17321.1.

history: (History: Added by Stats. 1988, Ch. 1458, Sec. 16. Effective September 28, 1988.)

article: 3. Membership Fee and Assessments


text: Fidelity Corporation shall report to the commissioner each levy of assessment within 10 business days after the levy.

history: (History: Repealed and added by Stats. 1988, Ch. 1458, Sec. 18. Effective September 28, 1988.)

article: 3. Membership Fee and Assessments


text:
(a) In the event 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, 17202.1, or 17210.

history: (History: Amended by Stats. 1990, Ch. 1431, Sec. 2.)

article: 3. Membership Fee and Assessments


text: Any reduction in the membership fund caused by payment of an extraordinary expense pursuant to subdivision (a) of Section 17320 or payment of claims pursuant to subdivision (c) of Section 17320 shall be replenished by the operations fund or the fidelity fund, as appropriate. The next assessment for the operations fund or the fidelity fund, as appropriate, shall include an amount necessary for that replenishment.

history: (History: Added by Stats. 1988, Ch. 1458, Sec. 20. Effective September 28, 1988.)

article: 3. Membership Fee and Assessments


text: Any member or successor in interest who suffers a loss may file a claim with Fidelity Corporation for the amount of the loss.

history: (History: Amended by Stats. 1988, Ch. 1458, Sec. 21. Effective September 28, 1988.)

article: 4. General Provisions

path: 6. ESCROW AGENTS > 2.5. Escrow Agents’ Fidelity Corporation > 4. General Provisions


text:
(a) An applicant applying for licensure as an escrow agent under this division is required to apply for a Fidelity Corporation Certificate, prepared and issued by Fidelity Corporation, for each proposed shareholder, officer, director, trustee, manager, or employee who is to be directly or indirectly compensated by the escrow agent, prior to licensure of the escrow agent by the commissioner.

(b) A shareholder, officer, director, trustee, manager, or employee of an escrow agent, directly or indirectly compensated by an escrow agent within this state, is required to complete and execute a Fidelity Corporation Certificate application, prepared and issued by Fidelity Corporation, as a condition of their employment or entitlement to compensation, before the person may continue the regular discharge of their duties, or have access to moneys or negotiable securities belonging to or in the possession of the escrow agent, or draw checks upon the escrow agent or the trust funds of the escrow agent.

(c) Fidelity Corporation Certificates may also be known as Escrow Agent’s Fidelity Corporation Certificates or EAFC Certificates. The certificate at all times remains the property of Fidelity Corporation, and is not transferable by either a member or employee. The certificate is not a warranty or guarantee by Fidelity Corporation of the integrity, veracity, or competence of the person.

(d) An application for a Fidelity Corporation Certificate shall be in writing and in the form prescribed by Fidelity Corporation. The application may include (1) a fee not to exceed fifty dollars ($50), (2) two passport-size photographs, and (3) a set of fingerprint images and related information using the process established by the Department of Justice for requesting state summary criminal history information, plus the fee charged by the Department of Justice for processing noncriminal applicant fingerprint images and related information, in a manner established by the Department of Justice pursuant to subdivision (l). The Department of Justice shall honor the Fidelity Corporation report request form and issue a report to Fidelity Corporation, notwithstanding any other provision of law or regulation to the contrary. Fidelity Corporation is also entitled to submit a set of fingerprint images and related information in the Department of Justice specified noncriminal applicant fingerprint format for the purpose of requesting and obtaining a report from the Department of Justice, for the officers and employees of Fidelity Corporation. A member shall cause the filing of applications for all existing employees as required by this section within 30 days of written notice by Fidelity Corporation to the member.

(e) The application form shall include a provision for binding arbitration to allow for arbitration of any appeal or dispute as to a decision by Fidelity Corporation concerning the certificate, as follows:

A DISPUTE AS TO WHETHER THE DENIAL OF THIS CERTIFICATE APPLICATION OR ANY SUBSEQUENT SUSPENSION OR REVOCATION OF THE CERTIFICATE IS UNNECESSARY OR UNAUTHORIZED OR WAS IMPROPERLY, NEGLIGENTLY, OR UNLAWFULLY RENDERED, MAY BE DETERMINED BY SUBMISSION TO ARBITRATION AS PROVIDED BY CALIFORNIA LAW, AND NOT BY A LAWSUIT OR RESORT TO COURT PROCESS EXCEPT AS CALIFORNIA LAW PROVIDES FOR JUDICIAL REVIEW OF ARBITRATION PROCEEDINGS OR EXCEPT AS PROVIDED BY SECTION 17331.3 OF THE FINANCIAL CODE. THE APPLICANT MAY, SUBJECT TO AGREEMENT, SUBMIT ANY ISSUE ARISING FROM A DECISION BY FIDELITY CORPORATION TO DENY THIS CERTIFICATE APPLICATION OR TO SUSPEND OR REVOKE THE CERTIFICATE TO BE DECIDED BY BINDING NEUTRAL ARBITRATION. UPON AN AGREEMENT TO SUBMIT TO BINDING NEUTRAL ARBITRATION, THE APPLICANT HAS NO RIGHT TO HAVE ANY DISPUTE CONCERNING THIS CERTIFICATE APPLICATION LITIGATED IN A COURT OR JURY TRIAL NOR ANY JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, EXCEPT AS SPECIFICALLY PROVIDED IN THE ESCROW LAW. ARBITRATION MAY BE COMPELLED AS PROVIDED BY LAW.

(f) There is no liability on the part of and no cause of action of any nature may arise against Fidelity Corporation or its members, directors, officers, employees, or agents, the State of California, the Department of Financial Protection and Innovation, or any officer, agent, or employee of the state or the Department of Financial Protection and Innovation for statements made by Fidelity Corporation in reports or recommendations made pursuant to this division, or for reports or recommendations made pursuant to this division to Fidelity Corporation by its members, directors, officers, employees, or agents, the State of California, the Department of Financial Protection and Innovation, or any officer, agent, or employee of the state or the Department of Financial Protection and Innovation, unless the information provided is false and the party making the statement or providing the false information does so with knowledge and malice. Reports or recommendations made pursuant to this section, or Section 17331.1, 17331.2, or 17331.3, are not public documents.

(g) There is no liability on the part of and no cause of action of any nature may arise against Fidelity Corporation or its members, directors, officers, employees, or agents, the State of California, the Department of Financial Protection and Innovation, or an officer, agent, or employee of the state or the Department of Financial Protection and Innovation for the release of any information furnished to Fidelity Corporation pursuant to this section unless the information released is false and the party, including Fidelity Corporation, its members, directors, officers, employees, or agents, the state, the Department of Financial Protection and Innovation, or any officer, agent, or employee of the state or the Department of Financial Protection and Innovation, who releases the false information does so with knowledge and malice.

(h) There is no liability on the part of and no cause of action of any nature may arise against Fidelity Corporation or its directors, officers, employees, or agents, for any decision to deny an application for a certificate or to suspend or revoke the certificate of any person or for the timing of any decision or the timing of any notice to persons or members thereof, or for any failure to deny an application under subdivision (a) of Section 17331.2. This subdivision does not apply to acts performed in bad faith or with malice.

(i) Fidelity Corporation, any member of Fidelity Corporation, an agent of Fidelity Corporation or of its members, or any person who uses any information obtained under this section for any purpose not authorized by this chapter is guilty of a misdemeanor.

(j) Section 17331, 17331.1, or 17331.2 does not constitute a restriction or limitation upon the obligation of Fidelity Corporation to indemnify members against loss, as provided in Sections 17310 and 17314. The failure to obtain a certificate, the denial of an application for a certificate, or the suspension, cancellation, or revocation of a certificate does not limit the obligation of Fidelity Corporation to indemnify a member against loss.

(k) Notwithstanding Section 11105 of the Penal Code, Fidelity Corporation is entitled to receive state summary criminal history information and subsequent arrest notification from the Department of Justice as a result of fingerprint images and related information submitted to the Department of Justice by the Department of Financial Protection and Innovation, pursuant to subdivision (g) of Section 17209, Section 17212.1, and subdivision (d) of Section 17414.1, by or on behalf of escrow agents, shareholders, officers, directors, trustees, managers, or employees of an escrow agent, directly or indirectly compensated by an escrow agent. The Department of Justice and Fidelity Corporation shall enter into an agreement to implement this subdivision. The Department of Financial Protection and Innovation shall forward to Fidelity Corporation, weekly, a list of names of individual fingerprints submitted to the Department of Justice.

(l) (1) The fingerprint images and related information required pursuant to subdivision (d) shall be submitted by the Department of Financial Protection and Innovation 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 their 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 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 Department of Financial Protection and Innovation and a fitness determination to Fidelity Corporation pursuant to subdivision (p) of Section 11105 of the Penal Code.

(3) The Department of Justice shall charge a fee sufficient to cover the costs of processing the requests pursuant to this subdivision.

history: (History: Amended by Stats. 2022, Ch. 452, Sec. 125. (SB 1498) Effective January 1, 2023.)

article: 4. General Provisions


text:
(a) Any person not previously issued a certificate must, upon employment with an escrow agent within this state, apply to Fidelity Corporation for a certificate. The member shall submit all applications for certificates to Fidelity Corporation within 10 business days of the date of employment. The person may continue employment until or unless denied a certificate by Fidelity Corporation.

(b) Upon written notice by Fidelity Corporation to any or all members that any person has been denied a certificate, or has had a certificate suspended, canceled, or revoked, no member or person acting on behalf of a member shall authorize that person to have access to money or negotiable securities belonging to or in the possession of the escrow agent, or to draw checks upon the escrow agent or the trust accounts of the escrow agent. Any member or person who commits or who causes a violation of this section, which violation was either known or should have been known by the member or the person committing or causing the violation, may be subject to action by the commissioner and Fidelity Corporation as provided for in this division.

(c) Each member and each person required to have a certificate shall comply with the Fidelity Corporation rules, to be approved by the commissioner, concerning the manner and timing within which Fidelity Corporation shall receive notice of employment, change of the person’s name, mailing address, or employment status, the certificate form, and the procedures for the administration thereof. Fidelity Corporation may collect a fee to cover the cost of processing the notices but no fee shall exceed twenty-five dollars ($25).

(d) Fidelity Corporation shall assess the member a penalty at the rate of twenty-five dollars ($25) for every day that the member has not fully complied with this section, Section 17331, or Section 17331.2.

(e) Any member that suffers a loss of trust obligations caused by any person who is required to have a certificate but has (1) failed to apply for a certificate, (2) has had the application for a certificate denied, (3) has a suspended certificate, or (4) whose certificate has been revoked shall be obligated to pay a deductible in the amount of 100 percent of the amount of the loss, notwithstanding the amount of the statutory deductible as prescribed by Section 17314.3. The failure to obtain a certificate, the denial of an application for a certificate, or the suspension, cancellation, or revocation of a certificate shall not limit the obligation of Fidelity Corporation to indemnify a member against loss of trust obligations as defined in this division.

history: (History: Amended by Stats. 2004, Ch. 180, Sec. 5. Effective January 1, 2005.)

article: 4. General Provisions


text:
(a) Fidelity Corporation shall deny the application for a certificate or revoke the certificate of any person, upon any of the following grounds:

(1) The application contains a material misrepresentation of fact or fails to disclose a material fact so as to render the application false or misleading, or if any fact or condition exists which, if it had existed at the time of the original application for a certificate, reasonably would have warranted Fidelity Corporation to refuse originally to issue that certificate.

(2) That the person has been convicted of a crime or offense, whether a felony, an offense punishable as a felony, or a misdemeanor, that involved dishonesty, fraud, deceit, embezzlement, fraudulent conversion, misappropriation of property, or any other crime reasonably related to the qualifications, functions, or duties of a person engaged in business in accordance with this division. A conviction within the meaning of this section is a plea or verdict of guilty or a conviction following a plea of nolo contendere. A conviction also includes an order granting probation and suspending the imposition of sentence, notwithstanding a subsequent order pursuant to Section 1203.4 or 1203.4a of the Penal Code permitting the person to withdraw his or her plea of guilty and to enter a plea of not guilty, or setting aside the verdict of guilty, or dismissing the accusation, information, or indictment. If, however, the conviction is more than 10 years old, or the conviction has been expunged, or the person has obtained a certificate of rehabilitation or relief under Section 1203.4 or 1203.4a of the Penal Code, or if the conviction was an infraction, then the person may have a Fidelity Corporation certificate upon showing by clear and convincing proof to a reasonable certainty that the conviction is no longer reasonably related to the qualifications, functions, or duties of a person engaged in business in accordance with this division or that person’s employment with a member.

(3) That the person has been held liable in a civil action by final judgment of any court if the judgment involved dishonesty, fraud, deceit, embezzlement, fraudulent conversion, or misappropriation of property or the person has been ordered to make restitution to a victim in any criminal case involving a crime or offense set forth in paragraph (2). The person may have a Fidelity Corporation certificate upon showing by clear and convincing proof to a reasonable certainty that the judgment or restitution order is no longer reasonably related to the qualifications, functions, or duties of a person engaged in business in accordance with this division or that person’s employment with a member.

(4) That the person has (A) committed or caused to be committed an act which caused any member to suffer a loss; (B) committed or caused to be committed or colluded with any other person committing any act which caused a loss, for which Fidelity Corporation or the insurer on any insurance policy or fidelity bond purchased by Fidelity Corporation, or both, to become liable to indemnify any member; or (C) committed or caused to be committed an act of dishonesty, fraud, deceit, embezzlement, fraudulent conversion, or misappropriation of property, to the material damage of a member or for which the member has been held liable to any third party, by final judgment.

(5) That the person has been barred from employment by final order of the commissioner pursuant to Section 17423.

(6) That the person has been deemed not qualified to serve in any capacity as a director or officer or in any other position involving management duties with a financial institution, pursuant to Division 1.8 (commencing with Section 4990).

(7) That the person has been denied coverage or reinstatement by any insurer under any fidelity bond or crime policy, unless a decision of reinstatement of coverage has been made after that denial. A person who obtained a decision of reinstatement of coverage prior to the effective date of this section may have a Fidelity Corporation certificate notwithstanding paragraphs (2) and (3), unless any other ground for denial or revocation applies to that person.

(b) Fidelity Corporation shall suspend the certificate of any person upon either of the following grounds:

(1) That the person has been censured or suspended from any position of employment by final order of the commissioner. The certificate suspension shall be for a term concurrent with the final order of the commissioner.

(2) That the person has been barred from any position of employment or management or control of any escrow agent, for a term of less than permanent, by final order of the commissioner. The certificate suspension shall be for a term concurrent with the final order of the commissioner.

(c) Fidelity Corporation may suspend the certificate of any person under either of the following grounds:

(1) That there is an action commenced by the commissioner to either suspend or bar that person, under Section 17423.

(2) That any member with whom the person was employed has given a proof of loss or a notice of an occurrence which may give rise to a claim for a loss of trust obligations either of which identifies the person as the person responsible for the loss or as a person acting in collusion with the person causing the loss.

(d) Upon denial of an application for, or upon suspension or revocation of the certificate of any person, Fidelity Corporation shall provide written notice to the member with whom that person is employed of the decision, pending any appeal therefrom which might be made. Thereafter, the member shall not allow that person to have access to money or negotiable instruments or securities belonging to or in the possession of the escrow agent, or to draw checks upon the escrow agent or the trust accounts of the escrow agent, but that person may otherwise continue in the performance and discharge of other duties of an employee. Fidelity Corporation shall notify the person in writing of the decision to deny, suspend, or revoke the certificate and of the person’s right of appeal, together with the notice of appeal. The grounds and basis for the decision shall be stated in the notice thereof. All notices may be served either personally or by mail, properly addressed to the address of record for the member and the person.

(e) Any person whose application for a certificate has been denied, or whose certificate has been suspended or revoked, may appeal the decision, as provided in Section 17331.3. While that appeal is pending, the person may not have access to money or negotiable instruments or securities belonging to or in the possession of the escrow agent, or to draw checks upon the escrow agent or the trust accounts of the escrow agent, but that person may otherwise continue in the performance and discharge of other duties of an employee pending final decision of that person’s appeal. Failure to remove the person whose application has been denied, or whose certificate has been suspended or revoked, as a signer on the trust accounts may be subject to action by the commissioner as provided for in this division and shall be subject to penalties as set forth in Section 17331.1.

(f) Upon expiration of the time for an appeal, or upon conclusion of the appeal, the decision to deny an application for or to suspend or revoke the certificate of any person shall become final. Fidelity Corporation shall give written notice to the member and to the person of the final decision within 10 days. Thereafter, Fidelity Corporation shall disclose in writing to all members the identity of persons whose application has been denied or whose certificate has been revoked. The person whose certificate has been denied or revoked may file a certificate reapplication after the period of time specified in Section 11522 of the Government Code, dating from the Fidelity Corporation final decision, provided that the person has satisfied all obligations to Fidelity Corporation under any prior arbitration award or judgment.

history: (History: Amended by Stats. 2008, Ch. 285, Sec. 2. Effective January 1, 2009.)

article: 4. General Provisions


text:
(a) Notice to the person, and to the member with whom the person is employed, of the decision to deny an application for or to revoke or suspend a Fidelity Corporation Certificate, shall be effective immediately upon personal delivery, or by facsimile if written acknowledgment of receipt by the member and the person is returned by facsimile, or within five days of the date of mailing, and shall become final upon expiration of the time for filing a notice of appeal or upon the conclusion of the appeal, as provided for in this section.

(b) The person whose application for a certificate has been denied, or whose certificate has been suspended or revoked may, within 15 days after notice of the decision, file with Fidelity Corporation a notice of appeal and request for a hearing, by binding arbitration or judicial action, as provided herein. Neither the notice of appeal nor the request for a hearing shall stay the decision of Fidelity Corporation under Section 17331.2. A late notice of appeal and request for a hearing may be accepted upon a showing of good cause.

(c) The hearing for the appeal may be resolved by arbitration in accordance with Chapter 1 (commencing with Section 1280) of Title 9 of Part 3 of the Code of Civil Procedure. The notice of the person’s right to appeal and notice of appeal provided by Fidelity Corporation shall contain a schedule of proposed arbitrators or of a proposed arbitration forum which provides a panel of arbitrators and method for appointing an arbitrator. The person filing the notice of arbitration may agree to submit the decision and matter to binding arbitration and accept an arbitrator whose name appears on the notice or may propose, in writing, an alternative arbitrator, but if Fidelity Corporation does not notify the person of acceptance of the proposed alternative arbitrator within 10 days, then either party may within 30 days petition the court to appoint an arbitrator, as provided by law.

(d) If the person does not agree to submit the decision and matter to binding arbitration, then the person may, within 30 days after the notice of the decision, file an action in superior court concerning the decision to deny an application for, or to suspend or revoke the certificate. The court may, on its own motion, or shall, upon the filing of an election by any or either party, order that the action be submitted to arbitration pursuant to Chapter 2.5 (commencing with Section 1141.10) of Title 3 of Part 3 of the Code of Civil Procedure, in which case the action shall be accorded that priority for hearing as circumstances permit, unless the plaintiff may otherwise request.

(e) Either Fidelity Corporation or the person whose application for a certificate has been denied, or whose certificate has been suspended or revoked, may apply to the superior court for relief to compel compliance with this section in accordance with Chapter 2 (commencing with Section 1084) of Title 1 of Part 3 of the Code of Civil Procedure.

(f) Upon the conclusion of the hearing on appeal, either the arbitrator or the court may in its discretion award to the prevailing party as an item of costs, reasonable attorneys’ fees, and costs. All other expenses and fees for the arbitration incurred prior to the decision of the arbitrator or confirmation of the decision by the court shall be shared equally by the parties except for attorneys’ fees, witness fees or other expenses incurred by either party for his or her own benefit.

(g) Upon the filing of any action in the superior court by the person whose application for a certificate has been denied, or whose certificate has been suspended or revoked, Fidelity Corporation at any time within 30 days after service of the summons may upon notice and hearing, move the court for an order requiring the plaintiff to furnish an undertaking to secure an award of costs and attorneys’ fees which may be awarded in the action. The motion shall be supported by affidavit showing that the action filed is frivolous and that there is no reasonable possibility that the prosecution of the action will benefit the plaintiff and that the moving party fully complied with this section and Section 17331.2.

At the hearing upon the motion, the court shall consider any written or oral evidence, by witnesses or affidavit, as may be material (1) to the ground or grounds upon which the motion is based, or (2) to a determination of the probable reasonable expenses, including attorneys’ fees, of the defendant and the moving party, which will be incurred in the defense of the action.

If the court determines, after hearing the evidence adduced by the parties, that the moving party has established a probability in support of any of the grounds upon which the motion is based, the court shall fix the amount of the undertaking, not to exceed twenty-five thousand dollars ($25,000), to be furnished by the plaintiff for reasonable expenses, including attorneys’ fees, which may be incurred by the moving party in connection with the action.

A ruling by the court on the motion shall not be a determination of any issue in the action or of the merits thereof. If the court, upon the motion, makes a determination that a bond shall be furnished by the plaintiff, the action shall be dismissed as to the defendant, unless the bond required by the court has been furnished within a reasonable time as may be fixed by the court. Upon the filing of a motion pursuant to this subdivision, no other pleadings need be filed by the defendant and the prosecution of the action shall be stayed until 10 days after the motion has been disposed of. The motion shall be considered pursuant to this subdivision and in accordance with Chapter 2 (commencing with Section 995.010) of Title 14 of Part 2 of the Code of Civil Procedure.

history: (History: Added by Stats. 1991, Ch. 1217, Sec. 4.)

article: 4. General Provisions


text: When either Fidelity Corporation or the insurer providing the fidelity bond or insurance policy, if any, under Section 17310, or both, pay an obligation on behalf of a member, Fidelity Corporation and the insurer shall be subrogated to the rights, claims, and remedies of the member up to the amount paid by Fidelity Corporation and the insurer on behalf of the member. Independent of any duty or obligation of Fidelity Corporation, the member shall do nothing to prejudice those rights. In any subrogation action filed by Fidelity Corporation, the provider of the fidelity bond or insurance policy if payment was made thereunder, or both, Fidelity Corporation shall have the first right to the proceeds of any judgment or settlement obtained against the principal obligors and any other party who is held liable jointly or severally, in whole or in part, with the principal obligors, up to the amount actually paid on the claim by Fidelity Corporation. Fidelity Corporation and the insurer, as subrogees, shall also recover in the subrogation action reasonable costs and attorney’s fees which may be awarded either as part of any judgment or 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. No member engaged in business pursuant to Section 17200 shall be required to pay those costs and attorney’s fees awarded pursuant to this section. Amounts recouped by Fidelity Corporation through subrogation, minus all costs, attorney’s fees, and other administrative expenses incurred in obtaining that recovery, shall be credited to the fidelity fund.

history: (History: Amended by Stats. 2004, Ch. 180, Sec. 7. Effective January 1, 2005.)

article: 4. General Provisions


text:
The commissioner may forthwith upon written notice and order take possession of the property and business of Fidelity Corporation and retain possession until Fidelity Corporation satisfies the commissioner that it will operate in conformity with this chapter whenever it appears to the commissioner that Fidelity Corporation has done any of the following:

(a) Violated its articles of incorporation or any law of this state.

(b) Invested its funds in violation of Section 17337.

(c) Not levied assessments as required by Sections 17320, 17321 and 17321.1.

(d) Has not diligently prosecuted an action pursuant to Section 17323.

(e) Violated any section of this chapter.

(f) Neglected or refused to submit its books, papers, and affairs to the inspection of the commissioner.

During the time the commissioner has possession the commissioner shall perform the duties and carry out the obligations of Fidelity Corporation.

history: (History: Amended by Stats. 1990, Ch. 1431, Sec. 4.)

article: 4. General Provisions


text: Whenever the commissioner has taken possession of the property and business of Fidelity Corporation, Fidelity Corporation within 10 business days after the taking, if it deems itself aggrieved thereby, may apply to the superior court in the county in which the head office of Fidelity Corporation is located to enjoin further proceedings. The court, after citing the commissioner to show cause why further proceedings should not be enjoined, and after a hearing and a determination of the facts upon the merits, may dismiss the application or enjoin the commissioner from further proceedings and direct the commissioner to surrender the property and business to Fidelity Corporation, or make a further order as may be just.

history: (History: Amended by Stats. 1985, Ch. 1560, Sec. 22. Effective October 2, 1985.)

article: 4. General Provisions


text: An appeal may be taken from the judgment of the court by the commissioner or by Fidelity Corporation in the manner provided by law for appeals from the judgment of a superior court to the court of appeal. An appeal from the judgment of the court does not operate as a stay of the judgment unless the court, on good cause, so orders. No bond need be given if the appeal is taken by the commissioner, but if the appeal is taken by Fidelity Corporation a bond shall be given as required by Sections 917.2 and 917.5 of the Code of Civil Procedure as a condition to any stay.

history: (History: Amended by Stats. 1998, Ch. 931, Sec. 148. Effective September 28, 1998.)

article: 4. General Provisions


text:
(a) Fidelity Corporation shall have independent authority to investigate claims filed by members pursuant to Section 17330.

(b) Fidelity Corporation, upon submitting written notice to the commissioner, may conduct an examination or investigation of the business practices of a member’s handling and processing of trust obligations or the failure to pay an assessment under Section 17320, 17321, or 17321.1. The result of every investigation or examination shall be reported to the commissioner together with the recommendations of the Board of Directors of Fidelity Corporation. The investigation or examination reports prepared by the duly designated representatives of the board of the Escrow Agents’ Fidelity Corporation shall not be public records.

(c) Fidelity Corporation may submit reports and make recommendations to a member on its findings as a result of an examination or investigation conducted pursuant to this section. These reports and recommendations shall not be public documents. A copy of all reports and recommendations shall be furnished to the commissioner by Fidelity Corporation. There shall be no liability on the part of, and no cause of action of any nature shall arise against, Fidelity Corporation or its members, directors, officers, employees, stockholders, or agents or the commissioner or commissioner’s authorized representatives for any statements made by them in any reports or recommendations made hereunder.

(d) Fidelity Corporation, upon the request of the commissioner, may participate in an examination or investigation of the books and records of a member. There shall be no liability on the part of, and no cause of action of any nature shall arise against, the State of California, the commissioner, or members of the commissioner’s staff or the commissioner’s authorized representative for the release of any information furnished to Fidelity Corporation pursuant to this subdivision.

(e) With the written consent of a majority of its directors, Fidelity Corporation, in order to fulfill its obligations under this section, may appoint an independent certified public accountant or public accountant or hire or appoint a specialized committee or employees to conduct an examination or investigation authorized by this section. Any reports as a result thereof shall be furnished to the commissioner pursuant to the provisions of subdivision (c).

(f) For the purposes of conducting an examination or investigation, Fidelity Corporation or its appointee shall have free access to the offices and places of business, books, accounts, bank account records and statements, papers, records, files, safes and vaults of the member.

(g) Fidelity Corporation may cause an examination or audit of the places of business, books, accounts, bank account records, papers, records, files, safes and vaults of a member to be conducted in accordance with Fidelity Corporation’s bylaws and rules.

(h) Costs and expenses for the examination or investigation conducted pursuant to subdivision (b) shall be paid to the Fidelity Corporation by the licensee, its shareholders, directors, and officers, or person examined, each of whom shall be jointly and severally liable therefor. The Fidelity Corporation may maintain an action for recovery of these costs in any court of competent jurisdiction, and shall recover its reasonable costs and attorney’s fees 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, 17202.1, or 17210.

(i) Fidelity Corporation, any member of Fidelity Corporation, an agent of Fidelity Corporation or of its members, or any person who uses any information obtained under this section for any purpose not authorized herein is guilty of a misdemeanor.

(j) Fidelity Corporation may cause an examination or audit of a member, to be conducted in accordance with Fidelity Corporation’s Bylaws and Rules, whenever:

(1) The member has failed to pay an assessment as provided for under Section 17320, 17321, or 17321.1.

(2) Fidelity Corporation has received any information of irregular or improper handling of the trust obligations of the member or of an occurrence which may give rise to a claim for loss of trust obligations.

(3) Fidelity Corporation so elects, either with or without notice.

(k) Costs and expenses for any examination under this section shall be paid for by the member. Fidelity Corporation shall also be entitled to recover costs and expenses for any examination under this section from those persons, if any, who are discovered to be responsible for, or to have caused, any irregular or improper handling of trust obligations of the member or any occurrence which may give rise to a claim for loss of trust obligations, or otherwise by failure to cooperate, unnecessarily increase the cost of the examination. Fidelity Corporation may maintain an action for recovery of these examination costs and expenses in any court of competent jurisdiction, and shall recover its reasonable costs and attorney’s fees 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, 17202.1, or 17210.

history: (History: Amended by Stats. 1993, Ch. 492, Sec. 4. Effective January 1, 1994.)

article: 4. General Provisions


text:
Fidelity Corporation may invest its funds only as provided by rules of the commissioner adopted with a view to preserving reasonable liquidity.

Upon request of the commissioner, Fidelity Corporation shall furnish an authorization for disclosure to the commissioner of financial records of funds pursuant to Section 7473 of the Government Code.

history: (History: Amended by Stats. 1985, Ch. 1560, Sec. 25. Effective October 2, 1985.)

article: 4. General Provisions


text: Prior to incurring any extraordinary or nonrecurring expense, Fidelity Corporation shall first obtain the written consent of the commissioner.

history: (History: Amended by Stats. 1988, Ch. 1458, Sec. 26. Effective September 28, 1988.)

article: 4. General Provisions


text: In the event the board of directors of Fidelity Corporation deem it necessary and prudent to raise additional moneys for payment of claims or expenses of administration, it may, with the commissioner’s written consent, borrow money against its assets, including future assessments.

history: (History: Repealed and added by Stats. 1988, Ch. 1458, Sec. 28. Effective September 28, 1988.)

article: 4. General Provisions


text: The commissioner shall give prompt notice to Fidelity Corporation when the commissioner takes possession of the property and business of a member and shall give further prompt notice when the commissioner determines to liquidate the property and business of a member.

history: (History: Amended by Stats. 1985, Ch. 1560, Sec. 29. Effective October 2, 1985.)

article: 4. General Provisions


text: Memberships issued by Fidelity Corporation shall be nontransferable and shall be exempt from the provisions of the Corporate Securities Law of 1968.

history: (History: Amended by Stats. 1985, Ch. 1560, Sec. 30. Effective October 2, 1985.)

article: 4. General Provisions


text: No provision of the Insurance Code shall apply to Fidelity Corporation.

history: (History: Amended by Stats. 1985, Ch. 1560, Sec. 31. Effective October 2, 1985.)

article: 4. General Provisions


text: The operation of Fidelity Corporation shall at all times be subject to the regulation of the commissioner and the commissioner’s duly designated representatives. The commissioner and the commissioner’s duly designated representatives may at any time investigate the affairs and examine the books, accounts, records, and files used by Fidelity Corporation. The commissioner and the commissioner’s duly designated representatives shall have free access to the offices, books, accounts, papers, records, files, safes, and vaults of Fidelity Corporation.

history: (History: Amended by Stats. 1985, Ch. 1560, Sec. 32. Effective October 2, 1985.)

article: 4. General Provisions


text: Any member aggrieved by any action or decision of Fidelity Corporation may appeal to the commissioner within 30 days from the action or decision, except that all matters relating to claims for loss of trust obligations shall be decided under Section 17345.1. The commissioner’s decision on appeal shall be made within 60 days from the date of the appeal and shall be considered final.

history: (History: Repealed and added by Stats. 1997, Ch. 370, Sec. 3. Effective January 1, 1998.)

article: 4. General Provisions


text:
(a) A member or successor in interest aggrieved by any action or decision of Fidelity Corporation may file a written request for a hearing with the commissioner within 30 days from the action or decision.

(b) (1) Except as provided in subdivision (c), the hearing shall be conducted by an administrative law judge on the staff of the Office of Administrative Hearings and the administrative law judge’s proposed decision shall be made within 120 days from the date of the request for hearing. This time limit does not constitute a jurisdictional deadline and may be extended by stipulation of the parties or by order of the administrative law judge for good cause.

(2) The hearing shall be conducted in accordance with the administrative adjudication provisions of Chapters 4.5 (commencing with Section 11400) and Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, except as specified in this subdivision.

(3) The following sections of the Government Code shall not apply to a hearing under this subdivision: Section 11503 (relating to accusations), Section 11504 (relating to statements of issues), Section 11505 (relating to contents of the statement to respondent), Section 11506 (relating to the notice of defense), Section 11507 (relating to amended or supplemental accusations), and Section 11516 (relating to amendment of accusations after submission of case).

(4) The sole parties to the hearing shall be the member or successor in interest (complainant) and Fidelity Corporation (respondent). Third-party intervention shall not be permitted. The disputes, claims, and interests of third parties shall not be within the jurisdiction of the proceedings. However, nothing in this paragraph prohibits any interested party from submitting an amicus brief upon approval by the administrative law judge, after a duly noticed motion demonstrating good cause.

(5) Within 10 days of receipt of the request for a hearing, the commissioner shall schedule the hearing with the Office of Administrative Hearings and shall serve each party by personal service or mail with notice of the hearing, which is to include the date, time, and place of the hearing.

(A) Within 10 days of service of the notice of hearing, the complainant shall file with the Office of Administrative Hearings, and serve upon the respondent by personal service or mail, a written statement setting forth the matters to be considered at the hearing in sufficient detail to permit the respondent to prepare and present its response. The statement shall contain the following:

(i) A brief statement of the facts that give rise to the hearing.

(ii) A statement of the issues to be considered at the hearing including relevant statutes and rules. If the statement includes issues not raised in the proof of loss claim or considered by respondent in its decision, respondent may move for abatement of the proceedings for consideration of those issues by respondent. The administrative law judge may abate the proceedings for a period not to exceed 60 days from the issuance of the order to abate. The administrative law judge may extend the time period for good cause upon motion by respondent or by stipulation of the parties. If respondent has not issued a revised decision within the period of abatement, the administrative law judge shall reset the matter for hearing.

(B) Within 20 days of service of the statement, respondent may file with the Office of Administrative Hearings, and serve upon the complainant by personal service or mail a written response to the statement.

(C) The statement of issues and response may be amended upon completion of discovery, except that notice of the amendment shall be no later than 30 days before the date set for hearing.

(6) Where the statement of issues includes a claim for a loss of trust obligations that has been denied by respondent, complainant shall bear the burden of establishing by a preponderance of the evidence that a loss as defined in Section 17304 has occurred and that respondent is required to pay the claim in accordance with this chapter. Each legal issue shall be adjudicated in the proposed decision and the commissioner’s decision, except for any issue either withdrawn or waived by complainant or respondent, upon the submission of the case after hearing.

(7) Any party may move for a judgment on the pleadings or summary judgment, as a dispositive motion, pursuant to the Rules of Procedure of the Office of Administrative Hearings. The evidence in support of and standards for deciding the motions shall be as set forth in the Code of Civil Procedure. If the administrative law judge denies the motion, the matter shall be heard on the merits by the administrative law judge. If the administrative law judge grants the motion, the order shall be in the form of a proposed decision to the commissioner pursuant to subdivision (b) of Section 11517 of the Government Code.

(8) Nothing in this section shall be construed to require the losing party to pay the other party’s costs and expenses, including attorney’s fees.

(9) If the statement of issues is abated and respondent issues a revised decision, the parties may amend their pleadings within a reasonable period of time, as ordered by the administrative law judge.

(c) (1) If a request for hearing includes a claim for loss of trust obligations that has been denied by Fidelity Corporation and the claim involves the factors described in paragraph (3), the commissioner, upon the request of Fidelity Corporation and as provided herein, shall abstain from proceeding with a hearing. The matter may be adjudicated in a court of competent jurisdiction upon the filing of an action by the member or successor in interest. Fidelity Corporation shall notify the commissioner, in writing, of the grounds for abstention of jurisdiction within five days of the filing of the request for a hearing by the member or successor in interest. The commissioner shall rule on the abstention of jurisdiction request within 10 days of the notice and the ruling shall be considered final. In making a determination on the request for abstention, the commissioner may examine and investigate all facts connected with the request for abstention and may request information from any person as deemed necessary.

(2) If the commissioner denies the request for abstention of jurisdiction, the hearing shall be conducted in accordance with subdivision (b), except that compliance by the commissioner with paragraph (5) of subdivision (b) shall be within five days of the ruling denying the abstention request.

(3) The factors requiring abstention of jurisdiction by the commissioner are as follows:

(A) The claim for a loss is based upon an alleged escrow transaction in which an officer, director, trustee, stockholder, manager, or employee of the member was a principal to the transaction.

(B) The claim involves (i) the need to determine conflicting claims or disputes to real property and (ii) there is a potential for double recovery by any principal to an escrow.

(4) The commissioner shall abstain if determination of the claim will cause some escrows to have preferable or favorable treatment over the other escrows held by the member or successor in interest.

history: (History: Amended by Stats. 2011, Ch. 296, Sec. 97. (AB 1023) Effective January 1, 2012.)

article: 4. General Provisions


text:
(a) Fidelity Corporation and its members shall not advertise, print, display, publish, distribute, or broadcast, or cause or permit to be advertised, printed, displayed, published, distributed, or broadcast, in any manner any statement or representation with regard to a guarantee of trust obligations in their advertisements that is false or misleading or calculated to deceive or misinform the public. Any statement or representation with regard to a guarantee of trust obligations, except the statement set forth in subdivision (b), shall be reviewed and approved by the commissioner prior to its use.

(b) Any advertising referring to Fidelity Corporation shall state in a clear and conspicuous manner, the following statement:

“MEMBER OF ESCROW AGENTS’ FIDELITY CORPORATION (EAFC). EAFC PROVIDES FIDELITY COVERAGE TO ITS MEMBERS. EAFC IS NOT A GOVERNMENT AGENCY, AND THERE IS NO GUARANTEE OF A PAYMENT OF ANY CLAIM BY THE STATE OF CALIFORNIA.”

(c) Neither Fidelity Corporation nor its members shall advertise that trust obligations of escrow agents are “protected,” “guaranteed,” “insured,” or use words to that effect.

history: (History: Amended by Stats. 2007, Ch. 237, Sec. 2. Effective January 1, 2008.)

article: 4. General Provisions


text:
(a) The Secretary of State shall not file articles for the incorporation of Fidelity Corporation or an amendment to the articles unless the commissioner has issued a written approval of the articles or amendment.

(b) Fidelity Corporation shall not adopt any bylaws or amendments thereto without the written consent of the commissioner. Within 60 calendar days from the receipt of any bylaws or amendments thereto, submitted to the commissioner, the commissioner shall inform Fidelity Corporation, in writing, that the bylaws or amendments are not disapproved, or that those bylaws or amendments are disapproved and specify the information needed to complete the submittal. Within 60 calendar days from the receipt of a complete submittal, the commissioner shall reach a decision on the submittal.

history: (History: Amended by Stats. 1992, Ch. 476, Sec. 6. Effective January 1, 1993.)

article: 4. General Provisions


text: In order to permit Fidelity Corporation to fulfill its obligation under this chapter, the commissioner shall furnish a list of all persons licensed under this division as of December 31 of each year and a copy of an escrow liability schedule filed with the commissioner. Each member on or before February 15 shall furnish to the commissioner and Fidelity Corporation the schedule of its escrow liability for each of its licensed locations as of the last day of each month for the preceding 12 months which ended December 31. A list of officers, directors, stockholders, trustees, agents, managers, and employees as of that date shall also be submitted to Fidelity Corporation, with the schedule. The schedule shall be in the form and contain such information as the commissioner may require.

history: (History: Amended by Stats. 1993, Ch. 492, Sec. 5. Effective January 1, 1994.)

article: 4. General Provisions


text: If Fidelity Corporation is dissolved, subject to the approval of the commissioner, the net assets after settling all liabilities shall be distributed to the members on the basis of the number of each member’s licensed locations compared to the total number of all members’ licensed locations.

history: (History: Amended by Stats. 1985, Ch. 1560, Sec. 36. Effective October 2, 1985.)

article: 4. General Provisions


text: All costs and expenses incurred by the commissioner in the administration of this chapter shall be paid to the commissioner by Fidelity Corporation. The limitation on the total assessment for each year set forth in paragraph (1) of subdivision (e) of Section 17207 shall not apply to Fidelity Corporation’s payment of costs and expenses incurred by the commissioner in the administration of this chapter. The commissioner may institute an action for the recovery of costs and expenses incurred in the administration of this chapter in any court of competent jurisdiction.

history: (History: Amended by Stats. 1985, Ch. 1560, Sec. 37. Effective October 2, 1985.)

article: 4. General Provisions


text: The commissioner may from time to time make, amend, and rescind the rules, forms, and orders that are necessary to carry out the provisions of this division, and define any terms, whether or not used in this division, insofar as the definitions are not inconsistent with the provisions of this division. For the purpose of rules and forms, the commissioner may, among other things, classify persons and matters within the commissioner’s jurisdiction and may prescribe different requirements for different classes. The commissioner may, in the commissioner’s discretion, waive any requirement of any rule or form in situations where in his or her opinion the requirement is not necessary in the public interest or for the protection of the public.

history: (History: Amended by Stats. 1999, Ch. 441, Sec. 8. Effective January 1, 2000.)

chapter: 3. Escrow Regulations

path: 6. ESCROW AGENTS > 3. Escrow Regulations


text: No person subject to this division or any officer thereof shall advertise in any manner or publish any statement of its capital, other than amounts fully paid in and accumulated surplus.

history: (History: Amended by Stats. 1961, Ch. 475.)


text:
(a) No person subject to this division shall issue, circulate, or publish any advertisement by any means of communication, or make use of or circulate any letterheads, billheads, blank notes, blank receipts, blank escrow instructions, certificates, circulars, or any written, printed, partially written or printed paper containing any fictitious or corporate name or other words indicating that the person is in the escrow business, unless the person is a licensed escrow agent.

(b) If, in the opinion of the commissioner, any person has violated this section, the commissioner may order that person to desist and refrain from that violation. If, within 30 days after the order is served, a request for hearing is filed in writing and the hearing is not held within 60 days thereafter, the order is rescinded.

history: (History: Amended by Stats. 1987, Ch. 564, Sec. 1.)


text: No person subject to this division shall describe as an escrow, whether orally, in writing, or electronically, any transaction that is not defined as such in Section 17003.

history: (History: Amended by Stats. 1999, Ch. 441, Sec. 10. Effective January 1, 2000.)


text:
(a) No person subject to this division shall solicit or accept an escrow instruction or amended or supplemental escrow instruction containing any blank to be filled in after signing or initialing of the escrow instruction or amended or supplemental escrow instruction, nor permit any person to make any addition to, deletion from, or alteration of an escrow instruction or amended or supplemental escrow instruction, unless the addition, deletion or alteration is signed or initialed by all persons who had signed or initialed the escrow instruction or amended or supplemental escrow instruction prior to the addition, deletion or alteration.

(b) In addition to subdivision (a), no Internet escrow agent subject to this division shall solicit or accept electronically over the Internet an escrow instruction or amended or supplemental escrow instruction containing any blank to be filled in after executing that escrow instruction or amended or supplemental escrow instruction, nor permit any person to electronically, over the Internet, make any addition to, deletion from, or alteration of an escrow instruction or amended or supplemental escrow instruction, unless that addition, deletion or alteration is executed by all persons who had executed the escrow instruction or amended or supplemental escrow instruction prior to the addition, deletion, or alteration.

history: (History: Amended by Stats. 1999, Ch. 441, Sec. 11. Effective January 1, 2000.)


text:
(a) At the time of execution a copy of each escrow instruction or amended or supplemental escrow instruction shall be delivered to all persons executing the same.

(b) Internet escrow agents shall deliver electronically over the Internet a copy of each executed escrow instruction or amended or supplemental escrow instruction to all persons executing the same. In the event a person is not able to electronically receive the instructions, the Internet escrow agent shall mail a true and correct copy of the instructions to the person within 24 hours of execution.

history: (History: Amended by Stats. 1999, Ch. 441, Sec. 12. Effective January 1, 2000.)


text:
All written escrow instructions and all escrow instructions transmitted electronically over the Internet executed by a buyer or seller, whether prepared by a person subject to this division or by a person exempt from this division under Section 17006, shall contain a statement in not less than 10-point type which shall include the license name and the name of the department issuing the license or authority under which the person is operating. This section shall not apply to supplemental escrow instructions or modifications to escrow instructions.

This section shall become operative on July 1, 1993.

history: (History: Amended by Stats. 1999, Ch. 441, Sec. 13. Effective January 1, 2000.)


text:
(a) All records required by this chapter may be retained by an Internet escrow agent and provided to the commissioner in electronic format.

(b) All transfers by an Internet escrow agent between trust accounts and interest-bearing accounts, and between escrow accounts, may be made electronically.

(c) A statement of account may be delivered by an Internet escrow agent to a customer by electronic mail or via the Internet, unless otherwise requested by the customer.

history: (History: Added by Stats. 2000, Ch. 437, Sec. 5. Effective January 1, 2001.)


text: Every person subject to this division shall keep and use in its business, books, accounts, and records which will properly enable the commissioner to determine whether the escrow functions performed by such person comply with the provisions of this division and with all rules made by the commissioner under this division.

history: (History: Amended by Stats. 1973, Ch. 705.)


text:
(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 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.

(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 an examination shall be conducted, 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 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.

history: (History: Amended by Stats. 2001, Ch. 499, Sec. 3. Effective January 1, 2002.)


text:
The cost of every inspection and examination of a licensee or other person subject to this division shall be paid to the commissioner by the licensee or person examined, and the commissioner may maintain an action for the recovery of these costs in any court of competent jurisdiction. In determining the cost of an inspection or examination, the commissioner may use the estimated average hourly cost for all persons performing inspections or examinations of licensees or other persons subject to this division for the fiscal year.

For the purposes of this section only, no person other than a licensee shall be deemed to be a person subject to this division unless and until the person is determined to be a person subject to this division by an administrative hearing in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code or by a judicial hearing in any court of competent jurisdiction.

history: (History: Amended by Stats. 1981, Ch. 946, Sec. 3.)


text:
(a) Each licensee shall submit to the commissioner, at the licensee’s own expense, an audit report containing audited financial statements covering the calendar year or, if the licensee has an established fiscal year, then for that fiscal year, within 105 days after the close of the calendar or fiscal year, as applicable. At that time, each licensee shall also file additional relevant information as the commissioner may require.

(b) Within 30 days after receipt of a request from the commissioner, a licensee or other person subject to this division shall submit to the commissioner, at the person’s own expense, an audit report containing audited financial statements covering the 12 calendar months next preceding the month of receipt of the request, or for another period as the commissioner may require. Unless the public interest shall otherwise require, the commissioner shall exempt a licensee from the provisions of subdivision (a) in whole or in part if the licensee has complied with a request pursuant to this subdivision as of a date within the calendar or fiscal year for which the exemption is granted.

(c) A licensee whose license has been revoked shall submit to the commissioner, at its own expense, on or before 105 days after the effective date of the revocation, a closing audit report as of that effective date, or for another period as the commissioner may specify. The report shall include the information specified by the commissioner. A licensee who has complied with this subdivision is exempt from subdivision (a) of this section.

(d) The reports and financial statements referred to in subdivisions (a) and (b) shall include at least a balance sheet and a statement of income for the year ended on the balance sheet date together with other relevant information as the commissioner may require. The reports and financial statements referred to in subdivisions (a), (b), and (c) shall be prepared in accordance with generally accepted accounting principles, and shall be accompanied by a report, certificate, or opinion of, an independent certified public accountant or independent public accountant. The audits shall be conducted in accordance with generally accepted auditing standards and the rules of the commissioner.

(e) A licensee shall make other special reports to the commissioner as the commissioner may from time to time require.

(f) For good cause and upon written request, the commissioner may extend the time for compliance with subdivisions (a) and (b).

(g) A licensee shall, when requested by the commissioner, submit its unaudited financial statements, prepared in accordance with generally accepted accounting principles and consisting of at least a balance sheet and statement of income and expense as of the date and for the period specified by the commissioner. The commissioner may require the submission of these reports on a monthly or other periodic basis.

(h) If the report, certificate, or opinion of the independent accountant referred to in subdivision (d) is in any way qualified, the commissioner may require the licensee to take action as he or she deems appropriate to permit an independent accountant to remove the qualifications from the report, certificate, or opinion.

(i) The commissioner may reject any financial statement, report, certificate, or opinion by notifying the licensee or other person required to make the filing of its rejection and the cause of the rejection. Within 30 days after the receipt of the notice, the licensee or other person shall correct the deficiency and the failure so to do shall be deemed a violation of this division. The commissioner shall retain a copy of all rejected filings.

(j) The commissioner may make rules specifying the form and content of the reports and financial statements referred to in this section, and may require that those reports and financial statements be verified by the licensee in the manner as he or she may prescribe.

(k) Upon completion of the reports and financial statements referred to in subdivisions (a), (b), and (c), the independent accountant shall submit to the commissioner complete copies of the reports and financial statements at the same time that copies of the reports and financial statements are submitted to the licensee.

(l) A licensee who engages an independent accountant or other third-party contractor to reconcile trust account records shall request the independent accountant or third-party contractor, at a minimum, to immediately notify the commissioner and Fidelity Corporation in the event of any of the following:

(1) The termination or voluntary withdrawal of the independent accountant or third-party contractor from the engagement.

(2) The discovery by the independent accountant or third-party contractor of an unreconcilable trust account debit balance. A debit balance exists if an escrow agent withdraws, pays out, or transfers money from an escrow account in excess of the amount to the credit of that account at the time of the withdrawal, payment, or transfer.

(3) The discovery by the independent accountant or third-party contractor that trust account reconciliations have not been performed for two months after the end of any calendar month.

(4) The discovery by the independent accountant or third-party contractor of exception items in trust account exception reports, that remain uncorrected for two months after the end of any calendar month.

Notification pursuant to this subdivision may be accomplished by transmitting to the commissioner and Fidelity Corporation, in either electronic or paper form, copies of trust account reconciliation exception reports. Nothing in this subdivision imposes any duty or obligation on an independent accountant or third-party contractor to Fidelity Corporation, members of Fidelity Corporation, or the commissioner.

(m) Nothing in this section shall be deemed to require a licensee to contract with a third party to reconcile trust account records.

history: (History: Amended by Stats. 2008, Ch. 285, Sec. 3. Effective January 1, 2009.)


text:
(a) Whenever the reports and financial statements required pursuant to subdivision (a), (b), or (c) of Section 17406 are to be reported upon or certified by an accountant other than the accountant reporting upon or certifying the licensee’s most recent reports or financial statements, the licensee shall furnish the commissioner with a written notice stating whether there was any disagreement with the former accountant on any matter in connection with the preparation of the most recent reports or financial statements reported upon or certified by that former accountant. If there was any disagreement, the licensee’s written notice shall describe the reasons for the disagreement. The written notice shall be signed by the chief executive officer of the licensee. The licensee shall also request, in writing, that the former accountant furnish the licensee with a letter addressed to the commissioner stating whether the former accountant agrees with the statements contained in the licensee’s written notice. If the former accountant disagrees with any of the licensee’s statements, the former accountant’s letter shall explain the reasons for disagreeing with the licensee’s statements. The written notice of the licensee, along with the former accountant’s letter shall be filed with the commissioner no later than 30 days from the date of engagement of the new accountant.

(b) The written notice of the licensee required by subdivision (a) shall be considered a notice for purposes of Section 17702.

history: (History: Added by Stats. 1994, Ch. 496, Sec. 3. Effective January 1, 1995.)


text:
(a) If any person subject to this division fails to make any report required by law or by the commissioner, the commissioner may immediately cause the books, records, papers, and affairs of said person to be thoroughly examined.

(b) The commissioner may impose, by order, a penalty on any person who fails, within the time specified in any written demand of the commissioner, (1) to make and file with the commissioner any report required by law or requested by the commissioner, or (2) to furnish any material information required by the commissioner to be included in the report. The amount of the penalty may not exceed one hundred dollars ($100) for each day for the first five days the report or information is overdue, and thereafter may not exceed five hundred dollars ($500) for each day the report or information is overdue.

(c) If, after an order has been made under subdivision (b), a request for hearing is filed in writing within 30 days of the date of service of the order by the person to whom the order was directed, a hearing shall be held in accordance with the Administrative Procedure Act, Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the commissioner shall have all the powers granted under that chapter.

(d) If the person fails to file a written request for a hearing within 30 days of the date of service of the order, the order imposing the penalty shall be deemed a final order of the commissioner, and the penalty shall be paid within five business days.

(e) If a hearing is requested, the penalty shall be paid within five business days after the effective date of any decision in the case ordering payment to be made.

history: (History: Amended by Stats. 2005, Ch. 257, second Sec. 2. Effective January 1, 2006.)


text:
(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.

history: (History: Amended by Stats. 2009, Ch. 140, Sec. 72. (AB 1164) Effective January 1, 2010.)


text:
(a) Each person subject to this chapter shall maintain separate escrow trust accounts for each licensed location. Transfers between accounts are prohibited except by the actual writing of a check from one escrow to the other, and by depositing the check for the account of, and the writing of a receipt for the escrow to which the funds are being transferred. Each transfer shall be properly supported and documented in escrow files by inclusion of escrow instructions executed by the principals authorizing the transfer.

(b) With regard to Internet escrow companies, transfers to trust accounts by commercial banks and from operating accounts to cover losses may be made through wire transfer. Receipts for all these transactions may be maintained in electronic form.

history: (History: Amended by Stats. 2000, Ch. 437, Sec. 6. Effective January 1, 2001.)


text:
(a) Escrow or trust funds are not subject to enforcement of a money judgment arising out of any claim against the licensee or person acting as escrow agent, and in no instance shall such escrow or trust funds be considered or treated as an asset of the licensee or person performing the functions of an escrow agent.

(b) Interest paid or payable on funds deposited in escrow by a licensee are not subject to enforcement of a money judgment arising out of any claim against the licensee or person acting as escrow agent.

history: (History: Amended by Stats. 1982, Ch. 497, Sec. 93. Operative July 1, 1983, by Sec. 185 of Ch. 497.)


text: No person shall knowingly keep or cause to be kept any funds or money in any bank or state or federal savings and loan association under the heading of “trust funds” or “escrow accounts” or any other name designating such funds or money as belonging to the clients of any escrow agency, except actual escrow or trust funds deposited with such agency.

history: (History: Amended by Stats. 1979, Ch. 475.)


text: “Trust funds” or “escrow accounts” as used in Sections 17409, 17410, and 17411 shall include all funds required to be held by an escrow agent pursuant to a federal or state law, or requirement of a governmental agency.

history: (History: Added by Stats. 1982, Ch. 663, Sec. 11.)