75th OREGON LEGISLATIVE ASSEMBLY--2009 Regular Session
Enrolled
Senate Bill 141
Printed pursuant to Senate Interim Rule 213.28 by order of the
President of the Senate in conformance with presession filing
rules, indicating neither advocacy nor opposition on the part
of the President (at the request of Governor Theodore R.
Kulongoski for Real Estate Agency)
CHAPTER ................
AN ACT
Relating to the regulation of escrow agents; creating new
provisions; and amending ORS 314.258, 696.505, 696.511,
696.527, 696.530, 696.532, 696.535, 696.578, 696.581 and
696.585.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 696.505 is amended to read:
696.505. As used in ORS 696.505 to 696.590 { - , unless the
context requires otherwise - } :
{ + (1) 'Close an escrow' means the final disbursement of all
funds, property and documents in an escrow as directed by written
escrow instructions from the principals. + }
{ - (1) - } { + (2) + } 'Collection escrow' means an escrow
in which the escrow agent:
(a) Receives:
(A) Installment payments;
(B) Instruments evidencing or securing an obligation; or
(C) Instruments discharging the security interest; and
(b) Disburses the payments or delivers the instruments upon
specified conditions pursuant to the written instructions of an
obligor and obligee.
{ - (2) 'Commissioner' means the Real Estate
Commissioner. - }
(3) 'Compensation' means { - any - } { + a + } fee,
commission, salary, money or valuable consideration for services
rendered or to be rendered as well as the promise thereof and
whether contingent or otherwise.
(4) 'Escrow' means { - any - } { + a + } transaction
{ - wherein - } { + in which + } any written instrument,
money, evidence of title to real or personal property or other
thing of value is delivered, for the purpose of paying an
obligation or effecting the sale, transfer, encumbrance or lease
of real or personal property, to a person not otherwise having
any right, title or interest therein, to be held by that person
as a neutral third party until the happening of a specified event
or the performance of a prescribed condition, when it is then to
be delivered by the neutral third party to a grantee, grantor,
promisee, promisor, obligee, obligor, bailee, bailor or any agent
Enrolled Senate Bill 141 (SB 141-A) Page 1
or employee of any of them pursuant to the written instructions
of the principals to the transaction.
(5) 'Escrow agent' means { - any - } { + a + } person who
engages in the business of receiving escrows for deposit or
delivery and who receives or is promised { - any fee,
commission, salary or other valuable consideration, - }
{ + compensation, + } whether contingent or otherwise, for or in
anticipation of performance.
{ + (6) 'Escrow trust account' means a bank account that
meets all of the following requirements:
(a) Is kept separate, distinct and apart from funds belonging
to the escrow agent;
(b) Is designated as an escrow trust account; and
(c) Is used to deposit trust funds received by an escrow agent
on behalf of a principal. + }
{ - (6) 'Principal' means: - }
{ - (a) The buyer and seller, lessor and lessee and the
exchanging parties in an escrow transaction involving the sale,
lease, lease-option or exchange of real property or personal
property; and - }
{ - (b) The borrower in an escrow transaction involving the
refinancing of real or personal property, including but not
limited to the refinancing of an obligation secured by a land
sale contract requiring a deed to be delivered as part of such
refinancing. - }
{ + (7) 'Principal' means:
(a) The buyer, seller, lessor, lessee or exchanging party in an
escrow transaction involving the sale, lease, lease-option or
exchange of real property or personal property;
(b) The borrower in an escrow transaction involving the
refinancing of real property or personal property, including but
not limited to the refinancing of an obligation secured by a land
sale contract requiring a deed to be delivered as part of the
refinancing;
(c) The buyer, seller, lender, borrower, vendor or vendee in a
collection escrow;
(d) A person directing the escrow agent to hold back funds from
a closing escrow for payment of obligations related to the
closing or the financing of real property or personal property;
(e) A person who deposits funds, property or documents in a
one-sided escrow, as defined by rule of the Real Estate
Commissioner; or
(f) A subservicer. + }
{ - (7) - } { + (8) + } 'Real estate closing escrow' means
an escrow
{ - where - } { + in which:
(a) + } The escrow fee is paid in whole or in part by the
principals to a real estate transaction { + ; + } and
{ - wherein - }
{ + (b) + } The unpaid purchase price is delivered to an
escrow agent for disbursal pursuant to the written instructions
of the principals to the transaction simultaneously on the
transfer of specified title to the real property.
{ - (8) - } { + (9) + } 'Subservicer' means an escrow
agent, a financial institution or a trust company, as those terms
are defined in ORS 706.008, or a collection agency registered
under ORS 697.015 when providing, pursuant to written
instructions, a portion of the escrow services for an escrow to
an escrow agent, or a person in the business of receiving escrows
Enrolled Senate Bill 141 (SB 141-A) Page 2
under the laws of another state, that would otherwise provide the
escrow services directly to the principals.
{ + (10) 'Trust funds' means funds held by an escrow agent on
behalf of a principal. + }
SECTION 2. ORS 696.511 is amended to read:
696.511. (1) A person may not directly or indirectly engage in
or carry on, or purport to engage in or carry on, { + within
this state, + } the business of an escrow agent, or act in the
capacity of an escrow agent, unless the person holds an active
license as an escrow agent under the provisions of ORS 696.505 to
696.590.
{ - (2)(a) Every escrow agent before engaging in the escrow
business shall file in the office of the Real Estate Commissioner
an application for a license, in writing, verified by the
applicant and in the form prescribed by the commissioner. The
application must include the location of the agent's main office
and all branch offices in this state, the name or style of doing
business, the names, resident and business addresses of all
persons interested in the business as principals, partners,
elected officers, trustees and directors, specifying as to each
the person's capacity and title, the general plan and character
of business and the length of time the agent has been engaged in
business. Notification of changes in the information contained in
the application or in the ownership of the business must be
immediately filed with the commissioner. - }
{ + (2)(a) The Real Estate Commissioner shall establish by
rule a system for licensing escrow agents. The system shall
establish, at a minimum, the following:
(A) The form and content of applications for initial licensing
and license renewal.
(B) The requirements for submitting surety bonds under ORS
696.525 or evidence of deposits in lieu of a bond under ORS
696.527.
(C) The form and content of applications for changes in any of
the following:
(i) Ownership interest in an escrow agent.
(ii) Corporate officers in charge of escrow operations for an
escrow agent.
(iii) Other individuals in charge of escrow operations for an
escrow agent.
(D) Schedules and procedures for issuing and renewing licenses.
(E) Schedules and procedures for approving changes in ownership
interest in an escrow agent, changes in corporate officers in
charge of escrow operations or changes in other individuals in
charge of escrow operations.
(F) The term of a license.
(G) The requirements for an escrow agent to notify the Real
Estate Agency of changes in the information contained in an
application, including but not limited to office location
changes, branch office establishment, office closure and business
operations cessation.
(H) The requirements for an applicant that is not an individual
to provide a certificate of existence or similar
documentation. + }
(b) If { - the - } { + an + } applicant { + for a license
as an escrow agent + } is an individual, the applicant must be 18
years of age or older.
(3) For the initial license of an escrow agent, the
commissioner may require information and evidence the
commissioner considers necessary to demonstrate the applicant's
Enrolled Senate Bill 141 (SB 141-A) Page 3
qualifications to transact escrow business including, but not
limited to, information regarding the applicant's financial
resources, the applicant's escrow business in another state or
the experience or training of employees in escrow business, or a
testimonial of an escrow agent licensed in this state. Subject to
subsection (4) of this section, an applicant:
(a) Who is an individual must demonstrate a minimum of three
years of experience in the administration of escrows within
Oregon or a state with comparable escrow laws; or
(b) Who is not an individual must demonstrate a minimum
collective experience among its personnel of three years in the
administration of escrows within Oregon or a state with
comparable escrow laws.
(4) The commissioner may waive the three-year experience
requirement in subsection (3) of this section for an applicant
who demonstrates other qualifications sufficient to ensure the
protection of the public.
{ + (5)(a) For the purpose of this subsection, an escrow
agent that is not an individual may satisfy the requirements for
fingerprints and a criminal records check by providing the
fingerprints of and conducting a criminal records check on an
individual who:
(A) Has more than five percent ownership interest in the escrow
agent;
(B) Is a corporate officer in charge of escrow operations for
the escrow agent; or
(C) Is in charge of escrow operations for the escrow agent. + }
{ - (5) - } { + (b) + } For { - the - } { + an + }
initial { + escrow agent + } license { - or license renewal of
an escrow agent - } , the commissioner shall require fingerprints
and a state or nationwide criminal records check under ORS
181.534 of { - an - } { + the + } applicant { - for an
initial license and may require fingerprints and a state or
nationwide criminal records check under ORS 181.534 of an
applicant for license renewal - } . The commissioner may require
additional information { - for an initial license or license
renewal under this subsection - } { + from the applicant + }
that the commissioner considers necessary for protecting the
public. { - For purposes of requiring fingerprints and a
criminal records check, 'applicant ' means an individual who has
more than five percent ownership interest in the escrow agency
and the corporate officers in direct control of escrow
operations. - }
{ + (c) For license renewal as an escrow agent, the
commissioner may require fingerprints and a state or nationwide
criminal records check under ORS 181.534 of the applicant. The
commissioner may require additional information from the
applicant that the commissioner considers necessary for
protecting the public.
(d) For a change in individuals who will have ownership
interest in an escrow agent, the individuals who will be
corporate officers in charge of escrow operations or any other
individuals who will be in charge of escrow operations, the
commissioner shall require fingerprints and a state or nationwide
criminal records check under ORS 181.534 of the individuals who
will have the ownership interest or who will be in charge. The
commissioner may require additional information from the
individuals that the commissioner considers necessary for
protecting the public. + }
Enrolled Senate Bill 141 (SB 141-A) Page 4
(6) For license renewal, an { + applicant that is an + }
escrow agent shall provide:
(a) A certification of training, by which the applicant
certifies that the applicant provides escrow agency staff within
Oregon with an average of six hours or more of training per year
per permanent, full-time employee in subjects that bear directly
on the administration of escrows; { - and - }
(b) A statement identifying by name, address and telephone
number one or more individuals who can respond to the inquiries
of or referrals by the commissioner or the commissioner's
authorized representative regarding the applicant's escrow
business { - . - } { + ; and
(c) Other documents and information that the commissioner may
require by rule. + }
(7) { - The commissioner, if satisfied that the applicant
should not be refused a license under ORS 696.535, - } { + The
commissioner + } shall issue or renew an escrow agent
license { + , approve a change in ownership interest in an escrow
agent, approve a change in corporate officers in charge of escrow
operations of the escrow agent or approve a change in any other
individuals in charge of escrow operations of the escrow agent
+ }for an applicant that complies with the requirements of ORS
696.505 to 696.590 { + and the rules adopted under ORS 696.505
to 696.590 + }.
(8) To qualify for issuance or renewal of an escrow agent
license, an applicant shall pay any outstanding civil penalties
or other moneys due and owing to the Real Estate Agency except
civil penalties or other moneys due that are the subject of
judicial or administrative review on the date of the application
for license or license renewal.
SECTION 3. { + The amendments to ORS 696.511 by section 2 of
this 2009 Act apply to:
(1) Applications for an initial escrow agent license or escrow
agent license renewal that are filed on or after the effective
date of this 2009 Act.
(2) Changes in individuals who will have an ownership interest
in an escrow agent, changes in corporate officers who will be in
charge of escrow operations for an escrow agent and changes of
any other individuals who will be in charge of escrow operations
for an escrow agent that become effective on or after the
effective date of this 2009 Act. + }
SECTION 4. ORS 696.527 is amended to read:
696.527. (1) Any escrow agent may satisfy the requirements of
ORS 696.525 by depositing with the State Treasurer, in an amount
equal to the surety bond required, a deposit consisting only of
the following:
(a) Cash;
(b) Ample secured obligations of the United States, a state or
a political subdivision thereof;
(c) Certificates of deposit { + , assignments of certificates
of deposit + } or other investments described in ORS 733.650 (4),
to the extent that such investments are insured by the Federal
Deposit Insurance Corporation; { - or - }
{ + (d) A certified, annually renewable letter of credit
executed by a financial institution and satisfactory to the Real
Estate Commissioner in the amount of the surety bond required by
ORS 696.525; or + }
{ - (d) - } { + (e) + } Any combination of paragraphs (a),
(b) { - or - } { + , + } (c) { + and (d) + } of this
subsection.
Enrolled Senate Bill 141 (SB 141-A) Page 5
(2) The State Treasurer shall accept and hold the deposit for
the faithful performance of escrow activity by the escrow agent.
No claimant or judgment creditor or the escrow agent shall have
the right to attach or levy upon any of the assets or securities
held on deposit.
(3) The { - Real Estate - } commissioner, by order, may
authorize the State Treasurer to use such deposit, as follows:
(a) To satisfy any final judgment entered against the escrow
agent for actual damages suffered by any person by reason of the
violation of any of the provisions of ORS 696.505 to 696.590, now
or hereafter enacted, or by reason of any fraud, dishonesty,
misrepresentation or concealment of material fact growing out of
any escrow transaction;
(b) For use in the liquidation of the escrow agent under the
provisions of ORS 696.555; or
(c) To release any or all of such deposit to the escrow agent
when, in the opinion of the commissioner, such deposit is no
longer necessary to protect the public.
(4) The commissioner may waive the requirement of the surety
bond or deposit for any escrow agent that:
(a) Demonstrates to the commissioner's satisfaction that the
capital and surplus or net worth, of such escrow agent as of the
end of the previous business accounting year of the agent is
equal to, or greater than, the average month-end balance of
custodial funds held by such agent during the previous business
accounting year; { + or + }
{ - (b) Provides a certified, annually renewable letter of
credit executed by a financial institution and satisfactory to
the commissioner in the amount of the surety bond required by ORS
696.525; or - }
{ - (c) - } { + (b) + }Provides a certified, personal
guarantee executed by one or more owners of the escrow agency and
satisfactory to the commissioner in the amount of the surety bond
required by ORS 696.525.
(5) All other claims against the bond or deposit of an escrow
agent must be paid by the commissioner only upon the receipt of a
final court judgment against the escrow agent and only in the
amount of actual damages as ordered by the court.
SECTION 5. ORS 696.530 is amended to read:
696.530. (1) The license of an escrow agent expires on { +
the + } June 30 { - next - } after the date of issuance or on
{ - such - } { + a + } date { - as may be - } specified by
rule of the Real Estate Commissioner. A license may be renewed
{ - by filing a renewal application in writing, verified by the
applicant and in the form - } { + as + } prescribed by
{ + rule of + } the commissioner, { - and - } { + which may
include + } paying { - the annual license fee for the next
succeeding fiscal year - } { + any required fees + }.
(2) The filing fees are:
(a) For filing an original or a renewal application, $300 for
the main office and $150 for each branch office.
(b) For filing an application for a duplicate copy of a
license, upon satisfactory showing of loss of the license, the
sum of $20.
(c) For a name change or a change of address of an escrow
agent, $10 for the main office plus $10 for each affected branch
office.
(3) The commissioner, by rule, may provide an opportunity for
the late renewal of an expired escrow agent license by an
Enrolled Senate Bill 141 (SB 141-A) Page 6
applicant who fails to renew the license by the date specified
under subsection (1) of this section.
SECTION 6. ORS 696.532 is amended to read:
696.532. (1) The Real Estate Commissioner may issue or renew a
limited escrow agent license if { - : - } { + the commissioner
determines it is in the public interest. + }
{ - (a) An applicant elects not to apply for an escrow agent
license; or - }
{ - (b) An applicant does not qualify for an escrow agent
license. - }
(2) The commissioner may limit a license issued under this
section:
(a) By term;
(b) To activities subject to supervision by a specific escrow
agent;
(c) By conditions to be observed in the exercise of the
privileges granted; or
(d) In other ways determined by the commissioner as necessary
or appropriate to protect the public.
(3) A limited licensee { - shall - } { + must + } comply
with { + the limitations of the license and + } the requirements
of ORS 696.505 to 696.590 { + and rules adopted under ORS
696.505 to 696.590. + } { - and shall: - }
{ - (a) Restrict the escrow business of the licensee to those
escrows specified in the application; or - }
{ - (b) Limit its escrow business to collection escrows. - }
SECTION 7. ORS 696.535 is amended to read:
696.535. { - (1) The Real Estate Commissioner may refuse to
issue or may suspend or revoke any license by entering an order
to that effect with the commissioner's findings in respect
thereto if, upon examination into the affairs of the applicant or
licensee in the performance of routine duties, upon field
examination or upon hearing, the commissioner determines that the
applicant or licensee: - }
{ + (1) The Real Estate Commissioner may suspend or revoke
the license of an escrow agent, reprimand an escrow agent who is
licensed, refuse to issue an escrow agent license to an applicant
or refuse to renew the license of an escrow agent, if the escrow
agent or applicant: + }
(a) { - Has, - } { + Is insolvent + } under generally
accepted accounting principles { - , a deficit net worth - } ;
(b) { - Has demonstrated unworthiness - } { + Demonstrated
untrustworthiness or incompetence + } to transact the business of
an escrow agent;
(c) { - Does not - } { + Failed to + } conduct business in
accordance with law or { - has - } violated any
{ - provisions - } { + provision + } of ORS 696.505 to
696.590 { + or any rule adopted under ORS 696.505 to
696.590 + };
(d) { - Has - } Committed fraud in connection with any
transaction governed by ORS 696.505 to 696.590 { + or the rules
adopted under ORS 696.505 to 696.590 + };
(e) { - Has - } Made any misrepresentations or false
statement of an essential or material fact to, or concealed any
essential or material fact from, any person in the course of the
escrow business;
(f) { - Has - } Knowingly made or caused to be made to the
commissioner any false representation of a material fact, or
{ - has - } suppressed or withheld from the commissioner any
information the applicant or licensee possesses that, if
Enrolled Senate Bill 141 (SB 141-A) Page 7
submitted, would have disqualified the applicant or licensee from
original or renewed licensing under ORS 696.505 to 696.590 { +
or rules adopted under ORS 696.505 to 696.590 + };
(g) { - Has - } { + In a real estate transaction, + }
failed to account to the principals or persons entitled
{ - thereto in a real estate transaction for the moneys, - }
{ + to an accounting of the funds, property or + } documents or
other things of value received in the transaction;
(h) { - Has not delivered, after - } { + Failed to deliver
within + } a reasonable time { - , - } to persons entitled
{ - thereto, moneys, - } { + to receive funds, property or + }
documents or other things of value held or agreed to be delivered
by the licensee, as and when paid for and due to be delivered;
(i) { - Has - } Caused uncompensated material loss to
principals by engaging in a pattern of failures to act with
neutrality between principals in multiple escrows;
(j) { - Has - } Refused to permit { - an examination
by - } the commissioner { - of - } { + to examine + } the
escrow agent's books and affairs, or { - has - } refused or
failed, within a reasonable time, to furnish any information,
records or files or make any report that may be required by the
commissioner under the provisions of ORS 696.505 to 696.590 { +
or rules adopted under ORS 696.505 to 696.590 + }; { - or - }
(k) Has been convicted of a { - felony or any misdemeanor - }
{ + crime + } that is substantially related to the escrow
agent's competency or trustworthiness to engage in the business
of an escrow agent { - . - } { + ;
(L) Committed an act of fraud or engaged in dishonest conduct
substantially related to the fitness of the applicant or licensee
to conduct the activities of an escrow agent, without regard to
whether the act or conduct occurred in the course of escrow
activity; or
(m) Failed to maintain a surety bond required under ORS 696.525
or other surety required under ORS 696.527. + }
(2) It is sufficient cause for refusal or revocation of a
license in case of a partnership or corporation or any
unincorporated association, if any member of a partnership or any
officer or director of the corporation or association has been
guilty of any act or omission which would be cause for refusing
or revoking the registration of an individual agent.
SECTION 8. ORS 696.585 is amended to read:
696.585. (1) Any person who violates any provision of ORS
696.505 to { - 696.545 - } { + 696.590 + }, or any lawful
rule or final order of the Real Estate Commissioner or any final
judgment made by any court upon application of the commissioner,
may be required to forfeit and pay to the General Fund of the
State Treasury, a civil penalty in an amount determined by the
commissioner of not more than $3,000 for each offense. Each
violation shall be deemed a separate offense.
(2) In addition to the civil penalty set forth in subsection
(1) of this section, any person who violates any provision of ORS
696.505 to 696.590, any lawful rule or final order of the
commissioner or any final judgment made by a court upon
application to the commissioner, may be required to forfeit and
pay to the General Fund of the State Treasury, a civil penalty in
an amount determined by the commissioner but not to exceed the
amount by which such person profited in any transaction
{ - which - } { + that + } violates any such provision, rule,
order or judgment.
Enrolled Senate Bill 141 (SB 141-A) Page 8
(3) Civil penalties under this section { - are - } { +
shall be + } imposed
{ - as - } { + in the manner + } provided { - in - }
{ + by + } ORS 183.745.
(4) The provisions of this section are in addition to and not
in lieu of any other enforcement provision contained in ORS
696.505 to 696.590.
SECTION 9. { + The amendments to ORS 696.535 and 696.585 by
sections 7 and 8 of this 2009 Act apply to conduct occurring on
or after the effective date of this 2009 Act. + }
SECTION 10. ORS 696.578 is amended to read:
696.578. (1) All { - money deposited in escrow - }
{ + funds received by an escrow agent + } to be delivered upon
the close of the escrow or upon any other contingency { - shall
be - } { + are trust funds that must be + } deposited and
maintained in a bank authorized to do business within this
state { + . The funds must be deposited in a federally insured
account designated as an escrow trust account + }and kept
separate, distinct and apart from funds belonging to the escrow
agent. { - Such funds, when deposited, are to be designated as
trust funds, escrow accounts, or under some other appropriate
name indicating - } { + The designation of an account as an
escrow trust account indicates + } that the funds are not the
funds of the escrow agent.
(2) Trust funds received by an escrow agent may be placed by
the agent in a federally insured interest-bearing bank account,
designated { - a clients' - } { + as an escrow + } trust
account, but only with the prior written approval of all parties
having an interest in the trust funds. The earnings of
{ - such - } { + the + } interest-bearing account may inure to
the benefit of the escrow agent if expressly approved in writing
before deposit of the trust funds by all parties having an
interest in the trust funds.
(3) With prior written notice to all parties who have an
interest in the trust funds, an escrow agent may place trust
funds received by the escrow agent in a federally insured
interest-bearing bank account that is designated { - a
clients' - } { + as an escrow + } trust account and the
earnings of which inure to the benefit of a public benefit
corporation, as defined in ORS 65.001, for distribution to
organizations and individuals for first-time homebuying
assistance and for development of affordable housing. The escrow
agent shall select a qualified public benefit corporation to
receive the interest earnings.
(4) Any bank services, as defined by rule by the Real Estate
Commissioner, provided to the escrow agent { - shall - }
{ + may + } not be considered to affect the impartiality or
neutrality of the escrow agent. Such services are permitted with
approval in the written closing instructions of the principals.
(5) { - Clients' - } Trust funds may be invested in secured
obligations of the United States, if:
(a) The depositing principal gives prior written approval to
the escrow agent for such investment after receiving written
disclosure as may be required by rule adopted by the
commissioner;
(b) The depositing principal releases the escrow agent from any
liability for loss of { - such - } { + the trust + } funds;
(c) The depositing principal agrees that any loss of
{ + trust + } funds { - shall - } { + may + } not be a claim
against the bond, deposit { - , letter of credit - } or
Enrolled Senate Bill 141 (SB 141-A) Page 9
personal guarantee of the agent under ORS 696.525 and 696.527;
and
(d) The escrow agent does not have any interest in the
investment or earnings from the investment.
(6) If the { + trust + } funds to be invested represent
earnest money in a transaction, both principals in the
transaction must give prior written approval for the investment
and are both considered depositing principals.
SECTION 11. ORS 696.581, as amended by section 2, chapter 54,
Oregon Laws 2008, is amended to read:
696.581. (1) An escrow agent may not accept funds, property or
documents in any escrow transaction without dated, written escrow
instructions from the principals to the transaction or a dated
executed agreement in writing between the principals to the
transaction.
{ + (2) Except as provided in this section, an escrow agent
must follow dated, written escrow instructions executed by the
principals or a dated executed written agreement between the
principals to a transaction. + }
{ - (2) - } { + (3) + } Except as provided in ORS 314.258,
an escrow agent may not close an escrow or disburse any funds or
property in an escrow without obtaining dated, separate escrow
instructions in writing from the principals to the transaction
adequate to administer and close the transaction or, in the case
of disbursement, to disburse the funds and property.
{ - (3) - } { + (4) + } The following statement or its
substantial equivalent shall appear on or be attached to all
written escrow instructions prepared by an escrow agent for
signature of the principals to a transaction. The statement shall
be in at least 10-point bold type. The statement shall either
appear immediately above the signatures of the principals or be
separately initialed by the principals:
_________________________________________________________________
It is understood by the parties signing the above or attached
instructions that the instructions are the complete instructions
between this firm as an escrow agent and you as a principal to
the escrow transaction. These instructions may not include all
the terms of the agreement which is the subject of this escrow.
Read these instructions carefully, and do not sign them unless
they are acceptable to you.
_________________________________________________________________
{ - (4) - } { + (5) + } An escrow agent may not solicit or
accept any original, amended or supplemental escrow instructions
containing any blank to be filled in after signing. An escrow
agent { - shall - } { + may + } not allow any alteration of
original, amended or supplemental escrow instructions, unless the
alteration is signed or initialed by all principals who signed or
initialed the instructions before the alteration.
{ - (5) - } { + (6) + } An escrow agent may accept
{ - client - } { + trust + } funds, in excess of earnest money
required in transaction documents to be held, as individual funds
of the principal who has paid them into escrow. Such individual
{ + trust + } funds may be disbursed with only the separate
written instructions of the principal who deposited the funds
into escrow.
{ - (6) - } { + (7) + } An escrow agent may open a
one-sided escrow, as defined by rule by the Real Estate
Commissioner { + , by receiving the funds, property or documents
Enrolled Senate Bill 141 (SB 141-A) Page 10
for an escrow + }. Such escrow funds may be disbursed with only
the separate written instructions of the principal who deposited
the funds into escrow.
{ - (7) - } { + (8) + } Except as authorized in ORS
105.475, notwithstanding the requirement for dated, separate
escrow instructions to close an escrow or disburse funds or
property in an escrow, an escrow agent:
(a) May disburse earnest money deposited based on an agreement
of the parties executed after the initial sales agreement; and
(b) May not impose additional requirements on the principals to
the transaction, including a requirement that the principals sign
a release of liability in favor of the escrow agent.
{ + (9) Notwithstanding any provision of this section, an
escrow agent may disburse funds, property or documents deposited
in escrow in accordance with an order of a court of competent
jurisdiction. + }
SECTION 12. { + The amendments to ORS 696.578 and 696.581 by
sections 10 and 11 of this 2009 Act apply to funds and property
received, disbursed or otherwise maintained on or after the
effective date of this 2009 Act. + }
SECTION 13. ORS 314.258, as amended by section 1, chapter 54,
Oregon Laws 2008, is amended to read:
314.258. (1) As used in this section:
(a) 'Authorized agent' means an agent who is responsible for
closing and settlement services in a conveyance.
(b) 'Closing and settlement services' means services that are
provided by:
(A) A licensed escrow agent in a real estate closing escrow as
provided in ORS 696.505 to 696.590; or
(B) An attorney for the benefit of a transferor or a transferee
in a conveyance, if, simultaneously with the conveyance, the
attorney deposits the unpaid purchase price into the attorney's
client trust account for disbursal pursuant to the written
instructions of, or the agreement between, the transferor and
transferee.
(c) 'Consideration' includes the amount of cash paid for a
conveyance and the amount of any lien, mortgage, contract,
indebtedness or other encumbrance existing against the property
conveyed to which the property remains subject or which the
purchaser agrees to pay or assume.
(d) 'Conveyance' means a transfer or a contract to transfer fee
title to any real estate located in the State of Oregon.
(e) 'Net proceeds' means the net amount to be disbursed to the
transferor, prior to reduction for withholding, as shown on the
transferor's settlement statement for the conveyance.
(f) 'Transferor' means:
(A) An individual who is not a resident of this state, as
defined in ORS 316.027, on the closing date of the conveyance; or
(B) A corporation taxed under section 11 of the Internal
Revenue Code and subchapter C, chapter 1 of the Internal Revenue
Code, that is not domiciled in this state or that is not
registered or otherwise qualified to do business in this state on
the closing date of the conveyance.
(2) An authorized agent providing closing and settlement
services in a conveyance is required to withhold from
consideration payable to a transferor an amount equal to the
least of:
(a) Four percent of the consideration for the conveyance;
(b) The net proceeds resulting from the conveyance; or
Enrolled Senate Bill 141 (SB 141-A) Page 11
(c) Eight percent of the gain includable in the transferor's
Oregon taxable income. In arriving at this amount, the authorized
agent may rely upon the transferor's written affirmation of the
amount of includable gain.
(3) An authorized agent is not required to withhold amounts
under this section if:
(a) The consideration for the conveyance does not exceed
$100,000;
(b) The conveyance is pursuant to a judicial foreclosure
proceeding, a writ of execution, a nonjudicial foreclosure of a
trust deed or a nonjudicial forfeiture of a land sale contract;
(c) The conveyance is in lieu of foreclosure of a mortgage,
trust deed or other security instrument or a land sale contract
with no additional monetary consideration;
(d) The transferor is a personal representative, executor,
conservator, bankruptcy trustee or other person acting under
judicial review;
(e) The transferor delivers to the authorized agent a written
assurance as provided in section 6045(e) of the Internal Revenue
Code that the sale or exchange qualifies for exclusion of gain
under section 121 of the Internal Revenue Code;
(f) The authorized agent obtains a written affirmation that the
transferor is unlikely to owe Oregon income tax as a result of
the conveyance;
(g) The amount that would be withheld under subsection (2) of
this section is less than $100, or less than a minimum amount
established by rule by the Department of Revenue; or
(h) The authorized agent is an attorney and a licensed escrow
agent is providing services in the conveyance.
(4)(a) Amounts withheld pursuant to this section are held in
trust for the State of Oregon and shall be paid to the department
in the time and manner prescribed by the department by rule.
(b) If an authorized agent fails to remit an amount withheld by
the agent under this section by the time remittance is required,
the department may recover from the authorized agent the amount
withheld with interest at the rate established under ORS 305.220.
(c) If an authorized agent fails to withhold when withholding
is required under this section, the department may recover a
penalty not to exceed the greater of:
(A) $500; or
(B) 10 percent of the amount required to be withheld under this
section, but not more than $2,500.
(d) The department may not proceed with collection actions
against the authorized agent if the authorized agent:
(A) Withholds the required amount in connection with a
conveyance and timely remits the funds to the department;
(B) Is not required to withhold an amount under this section;
or
(C) Demonstrates to the department that the authorized agent
obtained a written affirmation as described in this section or an
assurance as provided in section 6045(e) of the Internal Revenue
Code prior to disbursal of funds due the transferor resulting
from the conveyance.
(e) A transferor may claim the amount withheld by an authorized
agent on the transferor's personal income tax return or corporate
income tax return or excise tax return.
(f) { - Notwithstanding ORS 696.581 (2), - } An authorized
agent may withhold funds under this section without written
instructions to withhold from the transferor.
Enrolled Senate Bill 141 (SB 141-A) Page 12
(g) A written affirmation, as provided under this section,
shall be executed by the transferor or the transferor's tax
advisor under penalty of perjury and shall contain the
transferor's taxpayer identification number. The authorized agent
shall retain for six years from the date of the closing of the
conveyance any written affirmation obtained by the agent in
connection with the conveyance. The department shall prescribe by
rule the form and content of the written affirmation and
procedures for submission to the department of the information
contained in the written affirmation.
(h) It shall be a defense to any claim by the department or by
a transferor against an agent that the agent has acted in
reasonable reliance upon representations made by the transferor
or the transferor's tax advisor.
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Passed by Senate February 24, 2009
...........................................................
Secretary of Senate
...........................................................
President of Senate
Passed by House May 14, 2009
...........................................................
Speaker of House
Enrolled Senate Bill 141 (SB 141-A) Page 13
Received by Governor:
......M.,............., 2009
Approved:
......M.,............., 2009
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2009
...........................................................
Secretary of State
Enrolled Senate Bill 141 (SB 141-A) Page 14