Use of Checks in Escrow Transaction

RICHARD H. BRYAN Governor LARRY D. STRUVE Director STATE OF NEVADA DAVID A. GATES Commissioner of Insurance [LOGO] # DEPARTMENT OF COMMERCE INSURANCE DIVISION 201 South Fall Street Carson City, Nevada 89710 (702) 885-4270 BULLETIN NO. 88-002 July 27, 1988 # USE OF CHECKS IN ESCROW TRANSACTION In Bulletin 86-007, the Division explained its posture with regard the execution of escrow instructions based upon the receipt of a "draft." In summary, the position is that execution before the draft is honored by the originating bank may be a violation of the escrow instructions and, therefore, Title 57 of NRS. Since that time questions have arisen concerning "checks" and the responsibilities of a title agent or escrow officer in the event of a check being returned because the account upon which the check was drawn had insufficient funds to honor the check. Any licensee conducting escrow activity may execute escrow instructions upon receipt of a check, prior to its being honored, if: 1. The escrow instructions specifically address the issue of execution upon receipt of a financial instrument rather than upon its being honored. 2. The title agent maintains sufficient corporate or partnership funds to honor the check, and does so. These funds may not, in any circumstances, come from "escrow", "collection or other fiduciary accounts maintained by the title agent. 3. The title agent maintains a separate financial record of all transactions of this type. These (O)-3459 Bulletin No. 88-002 Page two records must be maintained in such detail as to allow the Division to determine the origin of the funds, whether the check was ultimately honored and any outstanding amounts. DAVID A. GATES DAVID A. GATES Commissioner of Insurance DAG:sr TO Whom it May Concern FROM Shirley A. Rains Secretary to the Commissioner SUBJECT Bulletin No. 88-002 # Memo DATE 10/17/88 The enclosed Bulletin is a corrected copy. Please discard Bulletin No. 87-002 (Use of Checks in Escrow Transaction), and replace with the attached. Be careful not to discard Bulletin No. 87-002 (Reserves for Non-Profit Medical Service Corporations). 0-499