DAR File No. 40005
This rule was published in the January 15, 2016, issue (Vol. 2016, No. 2) of the Utah State Bulletin.
Requirements for Interest Bearing Accounts Used by Title Insurance Agencies for Trust Fund Deposits
Notice of Proposed Rule
DAR File No.: 40005
Filed: 12/24/2015 02:52:33 PM
Purpose of the rule or reason for the change:
The rule solely affects the title insurance industry. It has been determined that moving it to Title R592 is a more appropriate location. As such, Rule R590-212 is being repealed, and Rule R592-17 will be enacted. (DAR NOTE: The proposed new Rule R592-17 is under DAR No. 40006 in this issue, January 15, 2016, of the Bulletin.)
Summary of the rule or change:
The rule is being repealed so it can be enacted under Title R592. This rule is repealed in its entirety.
State statutory or constitutional authorization for this rule:
- Subsection 31A-23a-409(2)(b)
- Subsection 31A-2-201(1)
- Subsection 31A-2-201(3)(a)
Anticipated cost or savings to:
the state budget:
There is no anticipated cost or savings to state budget. The rule is being simultaneously enacted under Title R592 with identical language (aside from necessary changes to self-referential passages). There will be no lapse in the rules, and business will continue as usual.
There is no anticipated cost or savings to local government. The rule is being simultaneously enacted under Title R592 with identical language (aside from necessary changes to self-referential passages). There will be no lapse in the rules, and business will continue as usual.
There is no anticipated cost or savings to small businesses. The rule is being simultaneously enacted under Title R592 with identical language (aside from necessary changes to self-referential passages). There will be no lapse in the rules, and business will continue as usual.
persons other than small businesses, businesses, or local governmental entities:
There is no anticipated cost or savings to any other persons. The rule is being simultaneously enacted under Title R592 with identical language (aside from necessary changes to self-referential passages). There will be no lapse in the rules, and business will continue as usual.
Compliance costs for affected persons:
There are no compliance costs because there are no changes being implemented. The rule is being simultaneously enacted under Title R592 with identical language (aside from necessary changes to self-referential passages). There will be no lapse in the rules, and business will continue as usual.
Comments by the department head on the fiscal impact the rule may have on businesses:
The Title and Escrow Commission has approved the Department's repeal of Rule R590-212 and its simultaneous enactment as Rule R592-17. There will be no fiscal impact on businesses because there are no changes and no new requirements. The language in Rule R592-17 is identical to Rule R590-212, except where changes to self-referential passages are necessary.
Todd E. Kiser, Commissioner
The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:Insurance
Room 3110 STATE OFFICE BLDG
450 N MAIN ST
SALT LAKE CITY, UT 84114-1201
Direct questions regarding this rule to:
- Steve Gooch at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at firstname.lastname@example.org
Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:
This rule may become effective on:
Steve Gooch, Information Specialist
R590. Insurance, Administration.
R590-212. Requirements for Interest Bearing Accounts Used by
Title Insurance Agencies for Trust Fund Deposits.
This rule is promulgated pursuant to Subsections
31A-2-201(1) and 31A-2-201(3)(a) in which the commissioner is
empowered to administer and enforce this title and to make rules
to implement the provisions of this title. Authority to
promulgate rules defining the type of accounts to be used for
deposited trust funds is provided in Subsection
This rule specifies the characteristics of a depository
account that may be used by a title insurance agency to deposit
This Rule applies to all title insurers, title insurance
agencies and title insurance producers and all employees,
representatives and any other party working for or on behalf of
said entities, whether as a full time or part time employee, or
as an independent contractor.
For the purpose of this rule the commissioner adopts the
definitions as set forth in Section 31A-1-301, 31A-23a-102 and
the following: (1) "Demand deposit account" refers to a
federally insured deposit account from which withdrawals may be
made by check and the depositor or a holder of a check drawn on
the account has a legal right to immediate payment from the bank
upon presentment of the check or other withdrawal
request. (2) "Depositor" refers to a title insurance
agency that has deposited, in a qualifying trust account, funds
it holds in trust in connection with a real estate
transaction. (3) "Repurchase agreement" is an agreement in
which a bank agrees to sell to a depositor a security or other
asset at a specified price with a commitment to repurchase the
security, or other asset, at a later date for a specified
price. (4) "Sweep account" refers to a demand deposit
account subject to an agreement authorizing the bank to withdraw
from the account funds exceeding a specified amount and deposit
those funds into an interest bearing account, purchase specified
securities subject to a repurchase agreement, or purchase shares
of a mutual fund, then redeposit those funds into the demand
account, when needed, to pay checks presented for payment or
other request for withdrawal. (5) "Trust account" means an account
denominated as a trust account in which the depositor is
trustee. (6) "Money market mutual fund" means a mutual
fund that is registered and authorized under applicable federal
and state securities laws to sell its shares to the public and
managed to maintain a par value of $1 per share.
R590-212-5. Account Requirements.
(1) Authority to Retain Earnings on Funds Held in Trust.
Subsection 31A-23a-406(1) permits a title insurance agency to
retain earnings on funds held in a qualifying trust account if
authorized by the contract between the trustee and the person on
whose behalf the funds are held. (2) Responsibility for Compliance. Each depositor is
responsible for determining that the terms and conditions of an
account, in which it deposits funds held in trust, comply with
the requirements of this rule. (3) Records Required. Each title insurance agency must
retain adequate records of all deposits in a trust account,
including those utilizing a sweep feature, to establish
individual account balances for all persons whose funds are held
in trust. (4) Qualified Accounts. Funds subject to this rule must
be deposited or held in: (a) a deposit account insured by the Federal Deposit
Insurance Corporation or the National Credit Union Share
Insurance Fund or any successor federal deposit insurance;
or (b) a sweep account if it meets all of the following
qualifications: (i) funds are initially deposited into a federally
insured demand deposit account; (ii) the bank, in accordance with an agreement with the
depositor, withdraws funds exceeding a specific balance in the
account to purchase: (A) U.S. Government securities on behalf of the depositor
that are held in a segregated account in the bank subject to a
repurchase agreement with the bank. (B) shares in a money market mutual fund that only holds
obligations of the U.S. Treasury or Agencies of the U.S.
Government, and (iii) the bank is obligated and able to repurchase the
securities or sell or redeem the shares or interest at any time
at par and deposit the funds in the demand deposit account to
maintain a minimum balance and pay withdrawals. (5) Obligation of Depositor for Losses. A depositor may
only deposit funds into a sweep account if it agrees to reimburse
a trust beneficiary for any decline in value below par of the
funds deposited, regardless of the cause of the decline in
value. (6) Authorization and Disclosure Obligation. Any
depositor who uses an account described in Subsection
R590-212-5.(4)(b) must: (a) receive written authorization from those persons on
whose behalf the funds are deposited stating that the depositor
may receive all earnings which may be realized from the trust
fund deposit; and (b) provide full written disclosure to all persons on
whose behalf the funds are deposited, explaining the
characteristics of a sweep account deposit as described in U.A.C.
Subject to the provisions of the Utah Administrative
Procedures Act, violators of this rule shall be subject to
forfeitures, suspension or revocation of their insurance license
or Certificate of Authority, and any other penalties or measures
as are determined by the commissioner in accordance with
If any provision or clause of this rule or its
application to any person or situation is held invalid, such
invalidity shall not affect any other provision or application of
this rule which can be given effect without the invalid provision
or application, and to this end the provisions of this rule are
declared to be severable.
KEY: insurance, title
Date of Enactment or Last Substantive Amendment: July 12,
Notice of Continuation: November 23, 2011
Authorizing, and Implemented or Interpreted Law: 31A-2-201;
More information about a Notice of Proposed Rule is available online.
The Portable Document Format (PDF) version of the Bulletin is the official version. The PDF version of this issue is available at https://rules.utah.gov/publicat/bull-pdf/2016/b20160115.pdf. The HTML edition of the Bulletin is a convenience copy. Any discrepancy between the PDF version and HTML version is resolved in favor of the PDF version.
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For questions regarding the content or application of this rule, please contact Steve Gooch at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at email@example.com. For questions about the rulemaking process, please contact the Division of Administrative Rules.