Current Status Bill Number:234 Type of Legislation:General Bill GB Introducing Body:Senate Introduced Date:19970122 Primary Sponsor:Wilson All Sponsors:Wilson Drafted Document Number:dka\3994mm.97 Residing Body:Senate Current Committee:Judiciary Committee 11 SJ Subject:Disbursement of Funds as Part of Real Property Closing and Settlement Services Act
Body Date Action Description Com Leg Involved
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Senate 19970122 Introduced, read first time, 11 SJ
referred to Committee
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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:
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.