Michigan Laws 328.224 – Liability for principal and income; investment of funds; changing escrow agent or depository
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(1) Payments of principal and income by a depository or an escrow agent made in good faith pursuant to the terms of this act shall relieve that depository or escrow agent of any further liability for that principal and income.
(2) An escrow agent shall invest funds held or managed under this act only as expressly authorized by this act and shall not invest funds by purchasing life insurance or annuities the proceeds of which are not payable in full until the happening of some event including, but not limited to, death of the contract beneficiary.
Terms Used In Michigan Laws 328.224
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Contract: A legal written agreement that becomes binding when signed.
- Contract buyer: means an individual, including a contract beneficiary, who purchases merchandise or funeral or cemetery services pursuant to a prepaid contract. See Michigan Laws 328.213
- Depository: means a state or nationally chartered bank or state or federally chartered savings and loan association, savings bank, or credit union whose deposits are insured by an agency of the United States government under the laws of this state or the United States. See Michigan Laws 328.214
- Escrow: Money given to a third party to be held for payment until certain conditions are met.
- Escrow agent: means a person who holds, invests, and disburses principal and income from the funds received under a prepaid contract. See Michigan Laws 328.214
- Funds: means all money or other consideration actually received from a contract buyer by a contract seller or provider or an assignee from the contract buyer in connection with any aspect of the sale of a prepaid contract, including finance charges, but does not include late payment penalties, payments required to be made to a governmental agency at the time the contract is entered into, or a commission authorized by section 12(1). See Michigan Laws 328.214
- Income: means the money earned by the investment of the principal, including, but not limited to, interest, dividends, and gains or losses on the sale of, deposit of, or exchange of, property using invested principal amounts. See Michigan Laws 328.214
- Principal: means the money or other consideration actually deposited in the escrow or trust accounts required by this act. See Michigan Laws 328.215
- Provider: means any person who furnishes or agrees to furnish merchandise or funeral or cemetery services pursuant to a prepaid contract, whether or not that person is the contract seller. See Michigan Laws 328.215
(3) A provider or an escrow agent may, without approval of any other party, change the depository of any escrow account, with or without cause, at any time. A contract buyer shall be notified if the escrow agent or depository is changed.