Terms Used In Louisiana Revised Statutes 22:532

  • Affidavit: A written statement of facts confirmed by the oath of the party making it, before a notary or officer having authority to administer oaths.
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Escrow: Money given to a third party to be held for payment until certain conditions are met.
  • Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
  • Fiduciary: A trustee, executor, or administrator.
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • person: includes a body of persons, whether incorporated or not. See Louisiana Revised Statutes 1:10
  • Rescission: The cancellation of budget authority previously provided by Congress. The Impoundment Control Act of 1974 specifies that the President may propose to Congress that funds be rescinded. If both Houses have not approved a rescission proposal (by passing legislation) within 45 days of continuous session, any funds being withheld must be made available for obligation.
  • Right of rescission: Right to cancel, within three business days, a contract that uses the home of a person as collateral, except in the case of a first mortgage loan. There is no fee to the borrower, who receives a full refund of all fees paid. The right of rescission is guaranteed by the Truth in Lending Act (TILA). Source: OCC
  • Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
  • Statute: A law passed by a legislature.
  • Trust account: A general term that covers all types of accounts in a trust department, such as estates, guardianships, and agencies. Source: OCC

A.  A title insurer or a title insurance producer may operate in a fiduciary capacity as a closing, escrow, or settlement agent, provided that:

(1)  All funds deposited with the title insurer or the title insurance producer in connection with any closing, escrow agreement, or security agreement shall be deposited or submitted for collection to a qualified financial institution no later than the close of the next business day following receipt or, in the case where a borrower has a right of rescission, no later than the close of the next business day following the termination of the right of rescission, in accordance with the following requirements:

(a)  All funds collected for the business of title insurance shall be deposited and held in an escrow account as defined herein, in the name of the title insurer or title insurance producer and clearly titled as an escrow, settlement, closing, or trust account.

(b)  The funds shall be property of the person or persons entitled to them under the provisions of the escrow instructions, and shall be identified for each depositor in the manner that permits the funds to be identified on an individual basis.

(c)  The funds shall be used only in accordance with the terms of the escrow instructions.

(2)  Funds held in an escrow account shall be disbursed only pursuant to escrow instructions specifying how and to whom the funds may be disbursed.

(3)  Funds held in a security agreement for the purpose of clearing, writing over, or insuring over an exception to title shall be disbursed only pursuant to a written agreement specifying:

(a)  The necessary actions to satisfy the obligation under the arrangement.

(b)  The duties of the title insurer or the title insurance producer with respect to disbursement of the funds held, including a requirement to maintain evidence of the disposition of the title exception before any balance may be paid over to the depositor or his designee.

(4)  Funds held in connection with a real estate closing where no escrow instructions or security agreement is applicable shall be disbursed in accordance with a signed closing or disbursement statement.

B.  All disbursements shall be drawn out of an escrow account only if:

(1)  The funds directly relating to the transaction are in amounts at least equal to the disbursements;

(2)  The funds are in the possession of the title insurer or title insurance producer; and

(3)  The funds are in one or more of the following forms:

(a)  Cash.

(b)  Wire transfers unconditionally received by the title insurer or the title insurance producer or the depository of the insurer or producer.

(c)  A depository check, including a certified check, cashier’s check, or teller’s check as defined by the Expedited Funds Availability Act, 12 U.S.C. § 4001 et seq.

(d)  A personal check or other item which has been presented for payment and for which funds have been unconditionally collected by the title insurer or the title insurance producer.

(e)  Credit transfers through the Automated Clearing House which have been deemed available by the depository institution receiving the credit.  The credit shall conform to the operating rules established by the National Automated Clearing House Association.

(f)  Checks unconditionally issued by mortgage lenders which are subject to periodic audit by the Department of Housing and Urban Development or the secretary of Veterans Affairs, and which are drawn on financial institutions insured by the Federal Deposit Insurance Corporation.

(g)  A check or checks, drawn on the trust account or sales escrow account of the real estate broker licensed under La. Rev. Stat. 37:1430 et seq., in an amount up to the amount of the then current guarantee provided by the Real Estate Recovery Fund as established in La. Rev. Stat. 37:1463.

(h)  A personal or commercial check or checks in an aggregate amount not exceeding two thousand five hundred dollars per closing if the settlement agent making the deposit has reasonable and prudent grounds to believe that the deposit will be irrevocably credited to the settlement agent’s trust or escrow account.

(i)  Checks unconditionally issued by credit unions chartered by applicable state or federal statute.

(j)  Checks unconditionally issued by municipalities or political subdivisions of the state of Louisiana.

(k)  Checks drawn on the escrow accounts of title insurers or title insurance producers when the title insurance producer issuing the check shall have certified by affidavit the following:

(i)  That funds drawn at the time of the real estate closing and settlement are from an escrow account as defined by La. Rev. Stat. 22:512(6).

(ii)  That the funds disbursed are from those funds received by the title insurance producer at the time of the real estate closing and settlement and were in one of the forms enumerated in Paragraph (3) of this Subsection.

C.  Repealed by Acts 1999, No. 192, §2, eff. June 9, 1999.

D.  Nothing in this Subpart shall be deemed to prohibit the recording of documents prior to the time funds are available for disbursement with respect to a transaction, provided all parties consent to the recordation in writing.

E.  Nothing in this Section is intended to amend, alter, or supersede other provisions of this Subpart or of the laws of this state or the United States regarding the duties and obligations of an escrow agent.

Acts 1997, No. 1427, §1; Acts 1999, No. 192, §§1, 2, eff. June 9, 1999; Redesignated from La. Rev. Stat. 22:2092.11 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009; Acts 2009, No. 503, §1.

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