2006 Code of Virginia § 6.1-2.23 - Conditions for providing escrow, closing, or settlement services and for maintaining escrow account...
6.1-2.23. Conditions for providing escrow, closing, or settlement servicesand for maintaining escrow accounts.
A. All funds deposited with the settlement agent in connection with anescrow, settlement or closing shall be handled in a fiduciary capacity andsubmitted for collection to or deposited in a separate fiduciary trustaccount or accounts in a financial institution licensed to do business inthis Commonwealth no later than the close of the second business day, inaccordance with the following requirements:
1. The funds shall be the property of the person or persons entitled to themunder the provisions of the escrow, settlement, or closing agreement andshall be segregated for each depository by escrow, settlement, or closing inthe records of the settlement agent in a manner that permits the funds to beidentified on an individual basis; and
2. The funds shall be applied only in accordance with the terms of theindividual instructions or agreements under which the funds were accepted.
B. Funds held in an escrow account shall be disbursed only pursuant to awritten instruction or agreement specifying how and to whom such funds may bedisbursed. Funds payable to persons other than the settlement agent shall bedisbursed in accordance with 6.1-2.13, except:
1. Title insurance premiums payable to title insurers under 38.2-1813 or totitle insurance agents. Such title insurance premiums payable to titleinsurers and agents may be (i) held in the settlement agent's settlementescrow account, identified and itemized by file name or file number, as afile with a balance; (ii) disbursed in the form of a check drawn upon thesettlement escrow account payable to the title insurer or agent butmaintained within the settlement file of the settlement agent; or (iii)transferred within two business days into a separate title insurance premiumescrow account, which account shall be identified as such and be separatefrom the business or personal funds of the settlement agent. Thesetransferred title insurance premium funds shall be itemized and identifiedwithin the separate title insurance premium escrow account. All titleinsurance premiums payable to title insurers by title insurance agentsserving as settlement agents shall be paid in the ordinary course of businessas required by subsection A of 38.2-1813; and
2. Escrows held by the settlement agent pursuant to written instruction oragreement. A settlement statement that has been signed by the seller and thepurchaser or borrower shall be deemed sufficient to satisfy the requirementof this subsection.
C. A settlement agent may not retain any interest received on funds depositedin connection with any escrow, settlement, or closing; provided, however,that an attorney settlement agent shall maintain escrow accounts inaccordance with applicable rules of the Virginia State Bar and the SupremeCourt of Virginia.
D. Nothing in this chapter shall be deemed to prohibit the recording ofdocuments prior to the time funds are available for disbursement with respectto a transaction, provided all parties consent to such recordation.
E. All settlement statements for transactions related to real estate governedby this chapter shall be in writing and identify, by name and businessaddress, the settlement agent.
F. Nothing in this section is intended to amend, alter or supersede othersections of this chapter, or the laws of this Commonwealth or the UnitedStates, regarding the duties and obligations of the settlement agent inmaintaining escrow accounts.
(1997, c. 716; 1998, c. 69; 2001, cc. 316, 512.)
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