2005 California Financial Code Sections 17400-17424 CHAPTER 3. ESCROW REGULATIONS

17400.  The commissioner may from time to time make, amend, and
rescind the rules, forms, and orders that are necessary to carry out
the provisions of this division, and define any terms, whether or not
used in this division, insofar as the definitions are not
inconsistent with the provisions of this division.  For the purpose
of rules and forms, the commissioner may, among other things,
classify persons and matters within the commissioner's jurisdiction
and may prescribe different requirements for different classes.  The
commissioner may, in the commissioner's discretion, waive any
requirement of any rule or form in situations where in his or her
opinion the requirement is not necessary in the public interest or
for the protection of the public.
17402.  No person subject to this division or any officer thereof
shall advertise in any manner or publish any statement of its
capital, other than amounts fully paid in and accumulated surplus.
17403.  (a) No person subject to this division shall issue,
circulate, or publish any advertisement by any means of
communication, or make use of or circulate any letterheads,
billheads, blank notes, blank receipts, blank escrow instructions,
certificates, circulars, or any written, printed, partially written
or printed paper containing any fictitious or corporate name or other
words indicating that the person is in the escrow business, unless
the person is a licensed escrow agent.
   (b) If, in the opinion of the commissioner, any person has
violated this section, the commissioner may order that person to
desist and refrain from that violation.  If, within 30 days after the
order is served, a request for hearing is filed in writing and the
hearing is not held within 60 days thereafter, the order is
rescinded.
17403.1.  No person subject to this division shall describe as an
escrow, whether orally, in writing, or electronically, any
transaction that is not defined as such in Section 17003.
17403.2.  (a) No person subject to this division shall solicit or
accept an escrow instruction or amended or supplemental escrow
instruction containing any blank to be filled in after signing or
initialing of the escrow instruction or amended or supplemental
escrow instruction, nor permit any person to make any addition to,
deletion from, or alteration of an escrow instruction or amended or
supplemental escrow instruction, unless the addition, deletion or
alteration is signed or initialed by all persons who had signed or
initialed the escrow instruction or amended or supplemental escrow
instruction prior to the addition, deletion or alteration.
   (b) In addition to subdivision (a), no Internet escrow agent
subject to this division shall solicit or accept electronically over
the Internet an escrow instruction or amended or supplemental escrow
instruction containing any blank to be filled in after executing that
escrow instruction or amended or supplemental escrow instruction,
nor permit any person to electronically, over the Internet, make any
addition to, deletion from, or alteration of an escrow instruction or
amended or supplemental escrow instruction, unless that addition,
deletion or alteration is executed by all persons who had executed
the escrow instruction or amended or supplemental escrow instruction
prior to the addition, deletion, or alteration.
17403.3.  (a) At the time of execution a copy of each escrow
instruction or amended or supplemental escrow instruction shall be
delivered to all persons executing the same.
   (b) Internet escrow agents shall deliver electronically over the
Internet a copy of each executed escrow instruction or amended or
supplemental escrow instruction to all persons executing the same.
In the event a person is not able to electronically receive the
instructions, the Internet escrow agent shall mail a true and correct
copy of the instructions to the person within 24 hours of execution.
17403.4.  All written escrow instructions and all escrow
instructions transmitted electronically over the Internet executed by
a buyer or seller, whether prepared by a person subject to this
division or by a person exempt from this division under Section
17006, shall contain a statement in not less than 10-point type which
shall include the license name and the name of the department
issuing the license or authority under which the person is operating.
  This section shall not apply to supplemental escrow instructions or
modifications to escrow instructions.
   This section shall become operative on July 1, 1993.
17403.5.  (a) All records required by this chapter may be retained
by an Internet escrow agent and provided to the commissioner in
electronic format.
   (b) All transfers by an Internet escrow agent between trust
accounts and interest-bearing accounts, and between escrow accounts,
may be made electronically.
   (c) A statement of account may be delivered by an Internet escrow
agent to a customer by electronic mail or via the Internet, unless
otherwise requested by the customer.
17404.  Every person subject to this division shall keep and use in
its business, books, accounts, and records which will properly enable
the commissioner to determine whether the escrow functions performed
by such person comply with the provisions of this division and with
all rules made by the commissioner under this division.
17405.  (a) The business, accounts and records of every person
performing as an escrow agent, whether required to be licensed under
this division or not, are subject to inspection and examination by
the commissioner at any time without prior notice.  The provisions of
this section shall not apply to persons specified in Section 17006.
   (b) Any person subject to this division shall, upon request,
exhibit and allow inspection and copying of any books and records by
the commissioner or his or her authorized representative.
   (c) (1) The commissioner shall conduct an examination of each
licensed escrow agent as described in subdivision (a) as often as the
commissioner deems necessary and appropriate, but not less than once
every 48 months.
   (2) The examination shall be conducted for the 12-month period
immediately preceding the date that the examination is commenced
unless the commissioner finds, based on information uncovered in the
examination or in the most recent independent audit report, that the
examination should be extended beyond the 12-month period.
   (3) In determining how often an examination shall be conducted,
the commissioner may consider each licensed escrow agent's compliance
with the requirements set forth in this division and other factors
the commissioner may by rule or order designate.
   (4) This subdivision shall apply only to examinations commenced
after the effective date established by the rule or order of the
commissioner for the factors described in paragraph (3).
   (d) Notwithstanding subdivision (c), the commissioner may conduct
an indoctrination or preliminary examination, or both, under this
section of any new licensee within one year of the issuance of the
license under this division, and an examination described in
subdivision (a) within two years of the issuance of the license under
this division.
17405.1.  The cost of every inspection and examination of a licensee
or other person subject to this division shall be paid to the
commissioner by the licensee or person examined, and the commissioner
may maintain an action for the recovery of these costs in any court
of competent jurisdiction.  In determining the cost of an inspection
or examination, the commissioner may use the estimated average hourly
cost for all persons performing inspections or examinations of
licensees or other persons subject to this division for the fiscal
year.
   For the purposes of this section only, no person other than a
licensee shall be deemed to be a person subject to this division
unless and until the person is determined to be a person subject to
this division by an administrative hearing  in accordance with
Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of
Title 2 of the Government Code or by a judicial hearing in any court
of competent jurisdiction.
17406.  (a) Each licensee shall submit to the commissioner, at such
licensee's own expense, an audit report containing audited financial
statements covering the calendar year or, if such licensee has an
established fiscal year, then for such fiscal year, within 105 days
after the close of each such calendar or fiscal year.  At such time,
each licensee shall also file such additional relevant information as
the commissioner may require.
   (b) Within 30 days after receipt of a request from the
commissioner, a licensee or other person subject to this division
shall submit to the commissioner, at such person's own expense, an
audit report containing audited financial statements covering the 12
calendar months next preceding the month of receipt of the request,
or such other period as the commissioner may require.  Unless the
public interest shall otherwise require, the commissioner shall
exempt a licensee from the provisions of subdivision (a) hereof in
whole or in part if such licensee has complied with a request
pursuant to this subdivision as of a date within the calendar or
fiscal year for which such exemption is granted.
   (c) A licensee whose license has been surrendered or revoked shall
submit to the commissioner, at its own expense, on or before 105
days after the effective date of such surrender or revocation, a
closing audit report as of such effective date, or for such other
period as the commissioner may specify.  Such report shall include
the information specified by the commissioner.  A licensee who has
complied with this subdivision is exempted from subdivision (a) of
this section.
   (d) The reports and financial statements referred to in
subdivisions (a), (b), and (c) of this section shall include at least
a balance sheet and a statement of income for the year ended on the
balance sheet date together with such other relevant information as
the commissioner may require, and shall be prepared in accordance
with generally accepted accounting principles, and shall be
accompanied by a report, certificate, or opinion of, an independent
certified public accountant or independent public accountant.  The
audits shall be conducted in accordance with generally accepted
auditing standards and the rules of the commissioner.
   (e) A licensee shall make other special reports to the
commissioner as the commissioner may from time to time require.
   (f) For good cause and upon written request, the commissioner may
extend the time for compliance with subdivisions (a) and (b) of this
section.
   (g) A licensee shall, when requested by the commissioner, submit
its unaudited financial statements, prepared in accordance with
generally accepted accounting principles and consisting of at least a
balance sheet and statement of income and expense as of the date and
for the period specified by the commissioner.  The commissioner may
require the submission of such reports on a monthly or other periodic
basis.
   (h) If the report, certificate, or opinion of the independent
accountant referred to in subdivision (d) hereof is in any way
qualified, the commissioner may require the licensee to take such
action as he deems appropriate to permit an independent accountant to
remove such qualifications from the report, certificate or opinion.
   (i) The commissioner may reject any financial statement, report,
certificate or opinion by notifying the licensee or other person
required to make such filing of its rejection and the cause thereof.
Within 30 days after the receipt of such notice, the licensee or
other person shall correct such deficiency and the failure so to do
shall be deemed a violation of this division.  The commissioner shall
retain a copy of all filings so rejected.
   (j) The commissioner may make rules specifying the form and
content of the reports and financial statements referred to in this
section, and may require that such reports and financial statements
be verified by the licensee in such manner as he may prescribe.
   (k) Upon completion of the reports and financial statements
referred to in subdivisions (a), (b), and (c), the independent
accountant shall submit to the commissioner complete copies of the
reports and financial statements at the same time that copies of the
reports and financial statements are submitted to the licensee.
17406.1.  (a) Whenever the reports and financial statements required
pursuant to subdivision (a), (b), or (c) of Section 17406 are to be
reported upon or certified by an accountant other than the accountant
reporting upon or certifying the licensee's most recent reports or
financial statements, the licensee shall furnish the commissioner
with a written notice stating whether there was any disagreement with
the former accountant on any matter in connection with the
preparation of the most recent reports or financial statements
reported upon or certified by that former accountant.  If there was
any disagreement, the licensee's written notice shall describe the
reasons for the disagreement.  The written notice shall be signed by
the chief executive officer of the licensee.  The licensee shall also
request, in writing, that the former accountant furnish the licensee
with a letter addressed to the commissioner stating whether the
former accountant agrees with the statements contained in the
licensee's written notice.  If the former accountant disagrees with
any of the licensee's statements, the former accountant's letter
shall explain the reasons for disagreeing with the licensee's
statements.  The written notice of the licensee, along with the
former accountant's letter shall be filed with the commissioner no
later than 30 days from the date of engagement of the new accountant.
   (b) The written notice of the licensee required by subdivision (a)
shall be considered a notice for purposes of Section 17702.
17408.  (a) If any person subject to this division fails to make any
report required by law or by the commissioner, the commissioner may
immediately cause the books, records, papers, and affairs of said
person to be thoroughly examined.
   (b) The commissioner may impose, by order, a penalty on any person
who fails, within the time specified in any written demand of the
commissioner, (1) to make and file with the commissioner any report
required by law or requested by the commissioner, or (2) to furnish
any material information required by the commissioner to be included
in the report. The amount of the penalty may not exceed one hundred
dollars ($100) for each day for the first five days the report or
information is overdue, and thereafter may not exceed five hundred
dollars ($500) for each day the report or information is overdue.
   (c) If, after an order has been made under subdivision (b), a
request for hearing is filed in writing within 30 days of the date of
service of the order by the person to whom the order was directed, a
hearing shall be held in accordance with the Administrative
Procedure Act, Chapter 5 (commencing with Section 11500) of Part 1 of
Division 3 of Title 2 of the Government Code, and the commissioner
shall have all the powers granted under that chapter.
   (d) If the person fails to file a written request for a hearing
within 30 days of the date of service of the order, the order
imposing the penalty shall be deemed a final order of the
commissioner, and the penalty shall be paid within five business
days.
   (e) If a hearing is requested, the penalty shall be paid within
five business days after the effective date of any decision in the
case ordering payment to be made.
17409.  (a) All moneys deposited in escrow to be delivered upon the
close of the escrow or upon any other contingency, shall be deposited
and maintained in a noninterest-bearing demand or checking account
in a bank, a state or federal savings bank, or a state or federal
savings association  or in a noninterest-bearing account subject to
immediate withdrawal in an industrial loan company insured by the
Federal Deposit Insurance Corporation and approved to receive those
moneys by the commissioner.  Thereafter, these moneys may be
deposited in an interest-bearing account in a bank, a state or
federal savings bank, a state or federal savings association, an
industrial loan company approved to receive those moneys by the
commissioner, or a state or federal credit union, if the depositor is
qualified for membership under the bylaws of that credit union, and
the moneys are maintained separate, distinct, and apart from funds
belonging to the escrow agent.  Those funds, when deposited, are to
be designated as "trust funds," "escrow accounts," or under some
other appropriate name indicating that the funds are not the funds of
the escrow agent.
   Upon request of the commissioner, a licensee shall furnish to the
commissioner an authorization for examination of financial records of
any trust funds or escrow accounts, maintained in a financial
institution, in accordance with the procedures set forth in Section
7473 of the Government Code.
   (b) A licensee engaged in the business of receiving escrows for
deposit or delivery of the types specified in subdivision (c) of
Section 17312 and of the types not specified therein shall maintain
separate escrow trust accounts, for both types of escrow business in
the same manner as provided in subdivision (a) of this section and
Sections 17409.1, 17410, 17411, and 17411.1.
17409.1.  (a) Each person subject to this chapter shall maintain
separate escrow trust accounts for each licensed location.  Transfers
between accounts are prohibited except by the actual writing of a
check from one escrow to the other, and by depositing the check for
the account of, and the writing of a receipt for the escrow to which
the funds are being transferred.  Each transfer shall be properly
supported and documented in escrow files by inclusion of escrow
instructions executed by the principals authorizing the transfer.
   (b) With regard to Internet escrow companies, transfers to trust
accounts by commercial banks and from operating accounts to cover
losses may be made through wire transfer.  Receipts for all these
transactions may be maintained in electronic form.
17410.  (a) Escrow or trust funds are not subject to enforcement of
a money judgment arising out of any claim against the licensee or
person acting as escrow agent, and in no instance shall such escrow
or trust funds be considered or treated as an asset of the licensee
or person performing the functions of an escrow  agent.
   (b) Interest paid or payable on funds deposited in escrow by a
licensee are not subject to enforcement of a money judgment arising
out of any claim against the licensee or person acting as escrow
agent.
17411.  No person shall knowingly keep or cause to be kept any funds
or money in any bank or state or federal savings and loan
association under the heading of "trust funds" or "escrow accounts"
or any other name designating such funds or money as belonging to the
clients of any escrow agency, except actual escrow or trust funds
deposited with such agency.
17411.1.  "Trust funds" or "escrow accounts" as used in Sections
17409, 17410, and 17411 shall include all funds required to be held
by an escrow agent pursuant to a federal or state law, or requirement
of a governmental agency.
17414.  (a) It is a violation for any person subject to this
division or any director, stockholder, trustee, officer, agent, or
employee of any such person to do any of the following:
   (1) Knowingly or recklessly disburse or cause the disbursal of
escrow funds otherwise than in accordance with escrow instructions,
or knowingly or recklessly to direct, participate in, or aid or abet
in a material way, any activity which constitutes theft or fraud in
connection with any escrow transaction.
   (2) Knowingly or recklessly make or cause to be made any
misstatement or omission to state a material fact, orally or in
writing, in escrow books, accounts, files, reports, exhibits,
statements, or any other document pertaining to an escrow or escrow
affairs.
   (b) Any director, officer, stockholder, trustee, employee, or
agent of an escrow agent, who abstracts or willfully misappropriates
money, funds, trust obligations or property deposited with an escrow
agent, is guilty of a felony.  Upon conviction, of an offense under
this section or similar offenses specified in Chapter 4 (commencing
with Section 470), Chapter 5 (commencing with Section 484), or
Chapter 6 (commencing with Section 503) of Title 13 of Part 1 of the
Penal Code, the court shall, in addition to any other punishment
imposed, order the person to make full restitution, first to the
escrow agent and then to Fidelity Corporation, to the extent it has
indemnified the escrow agent.  Nothing in this section shall be
deemed or construed to repeal, amend, or impair any existing
provision of law prescribing a punishment for such an offense.
   (c) Any person subject to this division who knows of a person's
involvement in an abstraction or misappropriation of money, funds,
trust obligations, or property deposited with a licensed escrow agent
shall immediately report the abstraction or misappropriation in
writing to the commissioner and to Fidelity Corporation.  No person
shall be civilly liable for reporting as required under this
subdivision, unless the information provided in the report is false
and the person providing false information does so with knowledge and
malice.  The reports filed under this section, including the
identity of the person making the filing, shall remain confidential
pursuant to state law.
17414.1.  (a) Any person who has been convicted of or pleaded nolo
contendere to any crime specified in subdivision (b) within the past
10 years, or has been held liable in any civil action by final
judgment or any administrative judgment by any public agency within
the past seven years, of any of the provisions specified in
subdivision (b), shall not serve in any capacity as an officer,
director, stockholder, trustee, agent, or employee of an escrow
agent, or in any position involving any duties with an escrow agent,
in this state.  This subdivision shall not apply to any person whose
office, employment, ownership interest, or other participation in the
business of a licensed escrow agent commenced prior to January 1,
1992.
   (b) Subdivision (a) applies to criminal convictions of, pleas of
nolo contendere to, or civil or administrative judgments entered for
offenses including the following:
   (1) Offenses specified in Chapter 18 (commencing with Section
3350) of Division 1.
   (2) Offenses specified in Article 4 (commencing with Section 5300)
of Chapter 1 of Division 2.
   (3) Offenses specified in Article 8 (commencing with Section
14750) of Chapter 4 of Division 5.
   (4) Offenses specified in Chapter 3 (commencing with Section
17400), and Chapter 7 (commencing with Section 17700) of Division 6.
   (5) Offenses specified in Chapter 6 (commencing with Section
18435) of Division 7.
   (6) Offenses specified in provisions of the laws of the United
States added or amended by the federal Financial Institutions Reform,
Recovery and Enforcement Act of 1989 (Public Law 101-73).
   (7) Offenses involving robbery, burglary, theft, embezzlement,
fraud, fraudulent conversion or misappropriation of property,
forgery, bookmaking, receiving stolen property, counterfeiting,
controlled substances, extortion, checks, credit cards, or computer
violations specified in Section 502 of the Penal Code.
   For the purpose of this section, but not Section 17423, an offense
does not include a conviction for which the person has obtained a
certificate of rehabilitation from a court of competent jurisdiction
under Section 1203.4 or 4852.13 of the Penal Code or a similar
certificate of rehabilitation obtained in a foreign jurisdiction.
   (c) On and after January 1, 1992, any person who seeks employment
by, or an ownership interest in, or other participation in the
business of a licensed escrow agent shall, as a condition to
obtaining that employment, interest, or participation, authorize
Fidelity Corporation and the commissioner, or both, to have access to
that person's state summary criminal history information, as defined
in Section 11105 of the Penal Code, for purposes of determining
whether the person has a prior conviction of, or pleaded nolo
contendere to, a criminal offense specified in subdivision (b).
   (d) On or before the 10th day of employment, each escrow agent
shall obtain and forward to the commissioner the fingerprints of
persons seeking employment by an escrow agent.  The fingerprints
shall be submitted by certified mail, return receipt requested, on
the form established by the Department of Justice for requesting
state summary criminal history information.  Persons who have
previously submitted fingerprints to the commissioner may so notify
the commissioner and need not submit additional fingerprints unless
requested to do so by the commissioner.  The commissioner shall
provide written notice to both the escrow agent and to the person if
any of the information received pursuant to this division shows that
the person's employment would be in violation of Section 17414.1, and
the escrow agent shall deny the person the employment.  No person
whose employment is in violation of subdivision (a) shall have access
to trust funds or sign checks or otherwise perform any activities
related to the processing of escrow transactions after the licensed
escrow agent has been notified by the commissioner that the person's
employment is in violation of subdivision (a).
   (e) Any state summary criminal history information obtained
pursuant to this section shall be kept confidential and no recipient
shall disclose the contents other than for the purpose of determining
eligibility for employment by, or acquisition of an ownership
interest in, or other participation in the business of a licensed
escrow agent.
   (f) The authority granted by this section to the commissioner or
to Fidelity Corporation shall be in addition to any other authority
granted by law to obtain information about any person who is subject
to this division.  Nothing in this section shall be construed to
limit any authority of the commissioner or Fidelity Corporation
otherwise provided by law.
   (g) Any person who knowingly violates subdivision (a) or (d),
including, but not limited to, any escrow agent who permits
employment by, or an ownership interest in, or other participation in
the business of an escrow agent in violation of subdivision (a) or
(d) shall, upon conviction, be subject to punishment as set forth in
Section 17700.  Any person who knows of a violation of subdivision
(a) or (d) shall immediately report the violation in writing to the
commissioner.  No person shall be civilly liable for reporting as
required under this subdivision, unless the information provided in
the report is false and the person providing false information does
so with knowledge and malice.  The reports filed under this section,
including the identity of the person making the filing, shall remain
confidential pursuant to state law.
   (h) Nothing in this section shall be construed to permit the
reinstatement of any person barred by the commissioner pursuant to
Section 17423 nor to prohibit the commissioner from bringing any
action pursuant to Section 17423.
   (i) If any provision of this section or the application thereof to
any person or circumstances is held invalid, that invalidity shall
not affect other provisions or applications of this section which can
be given effect without the invalid provision or application, and to
this end the provisions of this section are severable.
17414.2.  (a) In response to any written request by an escrow agent
or by Fidelity Corporation, any bank, savings association, credit
union, any other financial institution, or any other exempt person
specified in Section 17006, an escrow agent or Fidelity Corporation
may provide a written employment reference that advises of the person'
s involvement in a crime or act specified in Section 17414 or
subdivision (b) of Section 17414.1, or any theft, embezzlement,
misappropriation, or other defalcation which has been reported to
federal authorities pursuant to federal banking guidelines, or that
has been reported to the commissioner or Fidelity Corporation,
pursuant to this division.  In order for the immunity provided in
subdivision (b) to apply, a copy of the written employment reference
shall be sent concurrently by the Fidelity Corporation, person,
entity, escrow agent, bank, savings association, credit union, any
other financial institution, or exempt person specified in Section
17006 providing the reference, to the last known address of the
person concerning whom the reference is provided.
   (b) No licensed escrow agent, bank, savings association, credit
union, any other financial institution, exempt person specified in
Section 17006, or Fidelity Corporation shall be civilly liable for
providing an employment reference as specified in subdivision (a),
unless the information provided is false and the licensed escrow
agent, bank, savings association, credit union, any other financial
institution, or exempt person specified in Section 17006, or Fidelity
Corporation providing false information does so with knowledge and
malice.
17415.  (a) If the commissioner, as a result of any examination or
from any report made to him or her, shall find that any person
subject to this division is in an insolvent condition, is conducting
escrow business in such an unsafe or injurious manner as to render
further operations hazardous to the public or to customers, has
failed to comply with the provisions of Section 17212.1 or 17414.1,
has permitted its tangible net worth to be lower than the minimum
required by law, has failed to maintain its liquid assets in excess
of current liabilities as set forth in Section 17210, or has failed
to comply with the bonding requirements of Chapter 2 (commencing with
Section 17200) of this division, the commissioner may, by an order
addressed to and served by registered or certified mail or by
personal service on such person and on any other person having in his
or her possession or control any escrowed funds, trust funds or
other property deposited in escrow with said person, direct
discontinuance of the disbursement of trust funds by the parties or
any of them, the receipt of trust funds, the delivery or recording of
documents received in escrow, or other business operations.  No
person having in his or her possession any of these funds or
documents shall be liable for failure to comply with the order unless
he or she has received written notice of the order.  Subject to
subdivision (b), the order shall remain in effect until set aside by
the commissioner in whole or in part, the person has been adjudged
bankrupt, or pursuant to Chapter 6 (commencing with Section 17621) of
this division the commissioner has assumed possession of the escrow
agent.
   (b) Within 15 days from the date of an order pursuant to
subdivision (a), the person may request a hearing under the
Administrative Procedure Act, Chapter 5 (commencing with Section
11500) of Division 3 of Title 2 of the Government Code.  Upon receipt
of a request, the matter shall be set for hearing to commence within
30 days after such receipt unless the person subject to this
division consents to a later date.  If no hearing is requested within
15 days after the mailing or service of such notice and none is
ordered by the commissioner, the failure to request a hearing shall
constitute a waiver of the right to a hearing.  Neither the request
for a hearing nor the hearing itself shall stay the order issued by
the commissioner under subdivision (a).
17416.  Whenever in the opinion of the commissioner any person,
except as named in Section 17006, is engaged, either actually or
through subterfuge, in the business of receiving escrows for deposit
or delivery as defined in this division, without a license from the
commissioner the commissioner may order that person to desist and to
refrain from engaging in that business.  If, within 30 days after
such an order is served, a request for a hearing is filed in writing
and the hearing is not held within 60 days thereafter, the order is
rescinded.
17419.  On and after January 1, 1992, any person seeking employment
with an escrow agent shall complete an employment application on or
before the first day of employment which includes, at least, the
following information. A copy of the employment application shall be
forwarded to the commissioner on or before the first day of the
applicant's employment. Persons required to file a statement of
identity and questionnaire pursuant to subdivision (f) of Section
17209 or Section 17212.1 are not required to file the employment
application set forth in this section. Each person completing the
employment application shall be given the notice required by the
Information Practices Act (Section 1798.17 of the Civil Code), copies
of which may be obtained from the commissioner. Nothing in this
section shall limit an escrow agent from requesting additional
information from an applicant.
                STATEMENT OF IDENTITY
             AND EMPLOYMENT APPLICATION
Name of Escrow Company: __________________________
Escrow Agent License Number: _____________________
1. Exact Full
Name:
__________________________________________________
  (Please Print or Type)  First Name  Middle Name
                      Last Name
         (Do not use initials or nicknames)
   Title of position to be filled in connection
with the
preparation of this employment
application.
__________________________________________________
  2. Employment for the last 10 years:
+----------+----------+---------------+--------------+
|   From   |    To    | Employer Name |  Occupation  |
|          |          |  and Address  |  and Duties  |
+----------+----------+---------------+--------------+
|          |  Present |               |              |
+----------+----------+---------------+--------------+
|          |          |               |              |
+----------+----------+---------------+--------------+
|          |          |               |              |
+----------+----------+---------------+--------------+
|          |          |               |              |
+----------+----------+---------------+--------------+
|          |          |               |              |
+----------+----------+---------------+--------------+
|          |          |               |              |
+----------+----------+---------------+--------------+
|          |          |               |              |
+----------+----------+---------------+--------------+
|          |          |               |              |
+----------+----------+---------------+--------------+
|          |          |               |              |
+----------+----------+---------------+--------------+
  NOTE: Attach separate schedule if space is not
adequate.
  3. Residence addresses for the last 10 years:
+--------+---------+----------+-------------+----------+
|  From  |    To   |  Street  |     City    |   State  |
+--------+---------+----------+-------------+----------+
|        | Present |          |             |          |
+--------+---------+----------+-------------+----------+
|        |         |          |             |          |
+--------+---------+----------+-------------+----------+
|        |         |          |             |          |
+--------+---------+----------+-------------+----------+
  NOTE: Attach separate schedule if space is not
adequate.
  4. Have you ever been named in any order,
judgment
    or decree of any court or any governmental
    agency or administrator, temporarily or
    permanently restraining or enjoining you from
    engaging in or continuing any conduct,
    practice or employment
                        ( )  Yes          ( )  No
If the answer is "Yes",
please
complete the following:
Date of Suit: ___________________________________
Location of Court (City, County, State): ________
Nature of Suit: _________________________________
  Note: Attach a certified copy of any order,
judgment, or decree.
  5. Have you ever been refused a license to
engage in
    any business in this state or any other state,
    or has any such license ever been suspended or
    revoked
                      ( )  Yes            ( )  No
If the answer is "Yes,"
please
complete the following:
State: _______________ Title of State Department:
_________________________________________________
Nature of License and Number:
_________________________________________________
Note: Attach a certified copy of any order,
judgment, or decree.
  6. Have you ever been convicted of or pleaded
nolo
    contendere to a crime other than minor traffic
    citations that do not constitute a misdemeanor
    or felony offense
    NOTE: "Convicted" includes a verdict of
    guilty by judge or jury, a plea of guilty or
    of nolo contendere or a forfeiture of bail.
    All convictions must be disclosed even if the
    plea or verdict was thereafter set aside and
    the charges against you dismissed or expunged
    or if you have been pardoned. Convictions
    occurring while you were a minor must be
    disclosed unless the record of conviction has
    been sealed under Section 1203.45 of the
    California Penal Code or Section 781 of the
    California Welfare and Institutions Code.
                             ( )   Yes     ( )  No
If the answer is "Yes"
please
complete the following:
Date of Case: ____________________________________
Location of Court (City, County, State): _________
Nature of Case: __________________________________
Note: Attach a certified copy of any order,
judgment, or decree.
  7. Have you ever been a defendant in a civil
court
    action other than divorce, condemnation or
    personal injury
                             ( )   Yes     ( )  No
   If the answer is "Yes" please
complete the following:
Date of Suit: ____________________________________
Location of Court (City, County, State): _________
Nature of Suit: __________________________________
Note: Attach a certified copy of any order,
judgment, or decree.
  8. Have you ever changed your name or ever been
    known by any name other than that herein
    listed
    (Including a woman's maiden name)
                                ( )  Yes    ( )  No
   If so, explain. Change in name through marriage
or court order should   also be listed.
   EXACT DATE OF EACH NAME CHANGE MUST BE
LISTED.
___________________________________________________
___________________________________________________
  9. Have you ever done business under a fictitious
firm
     name either as an individual or in the
     partnership or corporate form
                               ( )  Yes     ( )  No
   If the answer is "Yes" set forth particulars:
   _________________________________________________
   _________________________________________________
  10. Have you ever been a subject of a bankruptcy
or a
     petition in bankruptcy
                               ( )  Yes     ( )  No
   If the answer is "Yes" give date, title of
case, location of bankruptcy   filing:
__________________________________________________
__________________________________________________
__________________________________________________
  11. Have you ever been refused a bond, or have you
     ever had a bond revoked or canceled
                                ( ) Yes      ( ) No
   If the answer is "Yes" give details:
   _________________________________________________
   _________________________________________________
  12.In what capacity will you be employed _________
    (e.g., Clerk, Escrow Officer,
Receptionist, etc.)
  13. Do you expect to be a party to, or broker or
     salesman in connection with escrows conducted
     by the escrow company which is employing you
                               ( ) Yes       ( ) No
   If the answer is "Yes" please
explain:
   _________________________________________________
   _________________________________________________
   _________________________________________________
NOTE: Attach separate schedule if space is not
adequate.
                    VERIFICATION
I, the undersigned, state that I am the person
named in the foregoing Statement of Identity and
Employment Application; that I have read and
signed said Statement of Identity and Employment
Application and know the contents thereof,
including all exhibits attached thereto, and
that the statements made therein, including any
exhibits attached thereto, are true.
Any person who provides false information is
guilty of a felony and shall, upon conviction,
be fined not more than ten thousand dollars
($10,000) or imprisoned in the state prison for
one year or more or in a county jail for not
more than one year, or be punished by both such
fine and imprisonment. Any person who knows or
should have known of a violation of this section
shall immediately report the violation in
writing to the       commissioner.
                         I certify/declare under
                         penalty of perjury under
                         the laws of the State of
                         California that the
                         foregoing is true and
                         correct.
                         Executed at _____________
                                     (City)
                         _________________________
                             (County)   (State)
                         this ___ day of  , 20 __.
                         _________________________
                          (Signature of Declarant)
17420.  Except for the normal compensation of his own employees, it
shall be a violation of this division for any person subject to this
division to pay over to any other person any commission, fee, or
other consideration as compensation for referring, soliciting,
handling, or servicing escrow customers or accounts.
   It shall also be a violation for any person to enter into any
arrangement, either of his own making or of a subsidiary nature, or
through any other person having a dual capacity, or through any
person having a direct or indirect interest in the escrow, or other
device permitting any fee, commission, or compensation which is
contingent upon the performance of any act, condition, or instruction
set forth in an escrow to be drawn or paid, either in whole or in
part, or in kind or its equivalent, prior to the actual closing and
completion of the escrow.
17421.  Notwithstanding the provisions of Section 17420, a
disbursal, other than for a fee, commission or compensation may be
advanced or paid out prior to the close of an escrow if the written
instructions of all parties to the transaction so provide.
17422.  A joint control agent, unless acting pursuant to written
instructions of his principals, shall not disburse funds for the
payment of the cost of labor, materials, services, permits, fees, or
other items of expense incurred in the construction of improvements
upon real property until such time as he determines that the person
furnishing such labor, materials, services, permits, fees, or other
items has substantially complied with the specifications contained in
the control agreement.
17423.  (a) The commissioner may, after appropriate notice and
opportunity for hearing, by order, censure or suspend for a period
not exceeding 12 months, or bar from any position of employment,
management, or control any escrow agent, or any other person, if the
commissioner finds either of the following:
   (1) That the censure, suspension, or bar is in the public interest
and that the person has committed or caused a violation of this
division or rule or order of the commissioner, which violation was
either known or should have been known by the person committing or
causing it or has caused material damage to the escrow agent or to
the public.
   (2) That the person has been convicted of or pleaded nolo
contendere to any crime, or has been held liable in any civil action
by final judgment, or any administrative judgment by any public
agency, if that crime or civil or administrative judgment involved
any offense specified in subdivision (b) of Section 17414.1, or any
other offense reasonably related to the qualifications, functions, or
duties of a person engaged in the business in accordance with the
provisions of this division.
   (b) Within 15 days from the date of a notice of intention to issue
an order pursuant to subdivision (a), the person may request a
hearing under the Administrative Procedure Act (Chapter 5 (commencing
with Section 11500) of Division 3 of Title 2 of the Government
Code).  Upon receipt of a request, the matter shall be set for
hearing to commence within 30 days after such receipt unless the
person subject to this division consents to a later date.  If no
hearing is requested within 15 days after the mailing or service of
such notice and none is ordered by the commissioner, the failure to
request a hearing shall constitute a waiver of the right to a
hearing.
   (c) Upon receipt of a notice of intention to issue an order
pursuant to this section, the person who is the subject of the
proposed order is immediately prohibited from engaging in any escrow
processing activities, including disbursing any trust funds in the
escrow agent's possession, custody or control, and the financial
institution holding trust funds shall be so notified by service of
the notice, accusation and other administrative pleadings.  The
prohibition against disbursement of trust funds may be set aside, in
whole or in part, by the commissioner for good cause.
   (d) Fidelity Corporation shall disclose to all licensees the
identity of persons who have been censured, suspended, or barred from
any position of employment, management, or control.
   (e) Persons suspended or barred under this section are prohibited
from participating in any business activity of a licensed escrow
agent and from engaging in any business activity on the premises
where a licensed escrow agent is conducting escrow business.  This
subdivision shall not be construed to prohibit suspended or barred
persons from having their personal escrow transactions processed by a
licensed escrow agent.
   (f) This section shall apply to any violation, conviction, plea,
or judgment occurring at any time prior to and after the enactment of
this section.
   (g) The provisions of Section 17414.1 exempting convictions for
which a person has obtained a certificate of rehabilitation from the
prohibition against serving as an officer, director, stockholder,
trustee, agent, or employee of an escrow agent, or in any position
involving any duties with an escrow agent, shall not apply to permit
the reinstatement of any person barred by the commissioner pursuant
to this section, nor to prohibit the commissioner from bringing any
action pursuant to this section.
   (h) If any provision of this section or the application thereof to
any person or circumstances is held invalid, that invalidity shall
not affect other provisions or applications of this section which can
be given effect without the invalid provision or application, and to
this end the provisions of this section are severable.
17423.1.  (a) (1) Whenever the commissioner takes any enforcement or
disciplinary action pursuant to Section 17423, upon the action
becoming final the commissioner shall notify the Real Estate
Commissioner and the Insurance Commissioner of the action or actions
taken.  The purpose of this notification is to alert the departments
that enforcement or disciplinary action has been taken, if the person
seeks or obtains employment with entities regulated by the
departments.
   (2) The commissioner shall provide the Real Estate Commissioner
and the Insurance Commissioner, in addition to the notification of
the action taken, with a copy of the written accusation, statement of
issues, or order issued or filed in the matter and, at the request
of the Real Estate Commissioner or Insurance Commissioner, with any
underlying factual material relevant to the enforcement or
disciplinary action.  Any confidential information provided by the
commissioner to the Insurance Commissioner or the Real Estate
Commissioner shall not be made public pursuant to this section.
Notwithstanding any other provision of law, the disclosure of any
underlying factual material to the Insurance Commissioner or the Real
Estate Commissioner shall not operate as a waiver of confidentiality
or any privilege that the commissioner may assert.
   (b) The commissioner shall establish and maintain, on the Web site
maintained by the Department of Corporations, a separate and readily
identifiable database of all persons who have been subject to any
enforcement or disciplinary action that triggers the notification
requirements of this section.  The database shall also contain a
direct link to the databases, described in Section 10176.1 of the
Business and Professions Code and Section 12414.31 of the Insurance
Code and required to be maintained on the Web sites of the Department
of Real Estate and the Department of Insurance, respectively, of
persons who have been subject to enforcement or disciplinary action
for malfeasance or misconduct related to the escrow industry by the
Insurance Commissioner and the Real Estate Commissioner.
   (c) There shall be no liability on the part of, and no cause of
action of any nature shall arise against, the State of California,
the Department of Corporations, the Commissioner of Corporations, any
other state agency, or any officer, agent, employee, consultant, or
contractor of the state, for the release of any false or unauthorized
information pursuant to this section, unless the release of that
information was done with knowledge and malice, or for the failure to
release any information pursuant to this section.
17424.  (a) For any licensee, a disciplinary action taken by the
State of California, another state, an agency of the federal
government, or another country for an action substantially related to
the activity regulated under this division may be grounds for
disciplinary action by the commissioner.  A certified copy of the
record of the disciplinary action taken against the licensee by the
State of California, other state, agency of the federal government,
or other country shall be conclusive evidence of the events related
therein.
   (b) Nothing in this section shall preclude the commissioner from
applying a specific statutory provision in this division providing
for discipline against a licensee as a result of disciplinary action
taken against a licensee by the State of California, another state,
an agency of the federal government, or another country.