S 234 Session 112 (1997-1998)
S 0234 General Bill, By Wilson
A BILL TO AMEND TITLE 27, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO
PROPERTY AND CONVEYANCES, BY ADDING CHAPTER 49 SO AS TO PROVIDE FOR REGULATION
AND ACCOUNTABILITY OF PERSONS OFFERING CLOSING AND SETTLEMENT SERVICES IN
CONNECTION WITH REAL PROPERTY TRANSACTIONS; TO DEFINE CERTAIN TERMS, INCLUDING
"GOOD FUNDS"; AND TO PROVIDE FOR A CIVIL REMEDY, INCLUDING ATTORNEY'S FEES TO
THE PREVAILING PARTY, FOR A VIOLATION OF THIS CHAPTER.
01/22/97 Senate Introduced and read first time SJ-8
01/22/97 Senate Referred to Committee on Judiciary SJ-8
A BILL
TO AMEND TITLE 27, CODE OF LAWS OF SOUTH
CAROLINA, 1976, RELATING TO PROPERTY AND
CONVEYANCES, BY ADDING CHAPTER 49 SO AS TO
PROVIDE FOR REGULATION AND ACCOUNTABILITY OF
PERSONS OFFERING CLOSING AND SETTLEMENT
SERVICES IN CONNECTION WITH REAL PROPERTY
TRANSACTIONS; TO DEFINE CERTAIN TERMS, INCLUDING
"GOOD FUNDS"; AND TO PROVIDE FOR A CIVIL REMEDY,
INCLUDING ATTORNEY'S FEES TO THE PREVAILING
PARTY, FOR A VIOLATION OF THIS CHAPTER.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. Title 27 of the 1976 Code is amended by adding:
"CHAPTER 49
Real Property Closing and Settlement Services
Section 27-49-10. This chapter may be cited as 'The Disbursement
of Funds as Part of Real Property Closing and Settlement Services
Act'.
Section 27-49-20. As used in this chapter:
(1) 'Closing and settlement services' means those services which
benefit the parties to the sale, transfer, conveyance, lease,
encumbrance, mortgage, or creation of a secured interest in and to
real property, and the receipt and disbursement of money in
connection with those real property transactions.
(2) 'Borrower' means the maker of the promissory note evidencing
the loan of funds to be delivered at the loan closing.
(3) 'Lender' means any person or entity making a loan secured by
a mortgage or other instrument creating a secured interest in and to
real property.
(4) 'Financial institution' means an entity that is authorized under
the laws of this State, another state, or the United States of America
to make loans and receive deposits, and that has its deposits insured
by the Federal Deposit Insurance Corporation or the National Credit
Union Share Insurance Fund.
(5) 'Loan closing' means the time agreed upon by the borrower
and lender for the execution and delivery of loan documents by the
borrower.
(6) 'Loan documents' means the note evidencing the debt due the
lender, the mortgage securing the debt due to the lender, and any
other documents required by the lender to be executed by the
borrower as part of the real property transaction.
(7) 'Funds' means the gross or net proceeds of the loan to be
distributed by or on behalf of the lender at the loan closing, or other
monies required to be delivered to the settlement agent by the parties
for the completion of settlement.
(8) 'Settlement' means the time when the settlement agent has
received the duly executed documents and funds necessary to carry
out the terms of the contract between the parties.
(9) 'Party' or 'parties' means the purchaser, seller, lender,
borrower, settlement agent, and their agents or representatives in a
real property transaction.
(10) 'Settlement agent' means the person responsible for conducting
the settlement and disbursement of the settlement proceeds and
includes any individual, professional corporation, professional
association, limited liability company, limited liability partnership,
or other entity conducting settlement and disbursement of funds.
(11) 'Disbursement of settlement proceeds' means the payment of
all proceeds of the transaction by the settlement agent to the persons
entitled to them.
(12) 'Collected funds' or 'good funds' means funds which are in the
form of cash, confirmed wire transfer, or negotiable instrument as
provided below, except that negotiable instruments for purposes of
this chapter must be signed by the drawer, be payable on demand to
order or to bearer, and contain an unconditional order to pay. The
following are collected funds or good funds:
(a) cash or confirmed wire transfers;
(b) certified checks, cashier's checks, and teller checks;
(c) checks issued by the United States of America or its agent;
(d) checks issued by this State or its agent;
(e) checks issued by the city and county governments or other
political subdivisions in this State;
(f) funds in amounts less than five hundred dollars, including
checks, traveler's checks, or money orders, but multiple items must
not be used to avoid this limitation. A settlement agent may refuse
to disburse these funds as defined in this item if his reasonable
business judgment indicates that the funds may not be collected;
(g) checks drawn on the escrow account of an attorney licensed
to practice law in this State or on the escrow account of a South
Carolina licensed real estate broker, provided the settlement agent
believes in good faith that collected funds will be in the settlement
agent's escrow account within a reasonable period, not to exceed
three business days from the date of closing;
(h) a personal or commercial check that has been deposited
sufficiently in advance into the settlement agent's escrow account to
allow Federal Reserve clearance, and for which the settlement agent
has proof that the funds are irrevocably credited to his account.
(13) 'Received and deposited' means that:
(a) good funds are in the possession of the settlement agent, or
an employee or representative of the settlement agent;
(b) a record of receipt is entered into the books of the settlement
agent; and
(c) the funds are actually delivered for deposit to the financial
institution in a timely manner, not to exceed two business days after
closing.
In the case of a wire transfer or other direct deposit, good funds are
considered to be 'received and deposited' when the financial
institution notifies the settlement agent that the funds have been
received.
Section 27-49-30. (A) Except as provided in Section
27-49-20(12)(g) a settlement agent who provides closing and
settlement services for a real property transaction shall not disburse
funds from an escrow account until good funds related to the
transaction in amounts sufficient to fund all disbursements from the
transaction have been received and deposited to the escrow account.
(B) The settlement agent shall maintain records of all receipts and
disbursements of escrow, settlement, and closing funds for six years.
(C) The exclusive civil remedy for a party injured by a violation
of this chapter is an action for actual damages plus reasonable
attorney's fees, the fees to be determined by the court in which the
action is brought if the injured party prevails. Otherwise, the
defending party must be awarded costs of the action and reasonable
attorney's fees, the fees to be determined by the court.
(D) This chapter must not be construed to repeal or modify any
provisions of law relative to the utterance or delivery of a worthless
or fraudulent check, and the provisions of this chapter are cumulative
of those provisions."
SECTION 2. This act takes effect upon approval by the Governor.
-----XX----- |