6-814. Procedure for licensing; surety bond

A. Every escrow agent before engaging in the escrow business shall file with the superintendent an application for a license, in writing, verified by oath and in the form prescribed by the superintendent. It shall state the location of the principal office and all branch offices in this state, the name or style of doing business, the names and residence and business addresses of all persons holding an interest in the business as principals, partners, officers, trustees and directors, specifying as to each his capacity and title, the general plan and character of operation and the length of time they have been engaged in the escrow business.

B. The superintendent may require additional information he considers necessary in connection with any application for a license under this article.

C. At the time of filing an application for a license and at all times while holding the license, the applicant shall deposit and maintain with the superintendent a corporate surety bond in the amount of one hundred thousand dollars payable to any person injured by the failure of the licensee to comply with the requirements of this chapter or for the wrongful act, default, fraud or misrepresentation of the licensee or his employees and to this state for the benefit of the person injured and executed by a surety company qualified to do business in this state.

D. Notwithstanding section 35-155, in lieu of the total corporate surety bond required by this section, an applicant or licensee may deposit with the superintendent a deposit in the form of cash or alternatives to cash in the amount of one hundred thousand dollars. The superintendent may accept as an alternative to cash any of the following:

1. Certificates of deposit or investment certificates which are payable or assigned to the state treasurer, issued by banks doing business in this state and fully insured by the federal deposit insurance corporation or any successor institution.

2. Certificates of deposit, investment certificates or share accounts which are payable or assigned to the state treasurer, issued by a savings and loan association doing business in this state and fully insured by the federal deposit insurance corporation or any successor institution.

3. Certificates of deposit, investment certificates or share accounts which are payable or assigned to the state treasurer, issued by a credit union doing business in this state and fully insured by the national credit union administration or any successor institution.

E. The superintendent shall deposit the cash or alternatives to cash received under this section with the state treasurer. The state treasurer shall hold the cash or alternatives to cash in the name of this state to guarantee the faithful performance of all legal obligations of the person required to post the bond. The person is entitled to receive any accrued interest earned from the alternatives to cash. The state treasurer may impose a fee to reimburse the state treasurer for administrative expenses. The fee shall not exceed ten dollars for each cash or alternatives to cash deposit and shall be paid by the licensee. The state treasurer may prescribe rules relating to the terms and conditions of each type of security provided by this section.

F. A deposit of cash or an assignment of an alternative to cash shall contain an affirmative statement by the assignor that the monies assigned are not derived from any escrow deposit. In addition to such other terms and conditions as the superintendent prescribes by rule, the principal amount of the deposit shall be released only on written authorization of the superintendent or on the order of a court of competent jurisdiction, but in any event the principal amount of the deposit shall not be released before the expiration of three years from the date of substitution of a bond for a cash alternative, the surrender of the license pursuant to section 6-838 or the revocation or expiration of the license, whichever occurs first.

G. No suit may be commenced on a bond or cash or alternative to cash after the expiration of three years following the act or acts on which the suit is based, except that time for purposes of claims for fraud shall be measured as provided in section 12-543, paragraph 3. If an injured person commences an action for a judgement to collect from the bond or cash alternative deposited in lieu of a bond, the injured person shall notify the superintendent of the action in writing at the time of commencement of the action and shall provide copies of all documents relating to the action to the superintendent upon request.

H. The superintendent shall examine the application for a license and if he is satisfied that the applicant should not be refused a license under section 6-817, he shall issue the license.