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REFERENCE TITLE: legal tender; escrow agents |
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State of Arizona Senate Fifty-first Legislature Second Regular Session 2014
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SB 1096 |
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Introduced by Senator Crandell; Representatives Barton, Borrelli, Kwasman, Livingston, Seel, Thorpe, Townsend: Senator Ward; Representatives Farnsworth E, Mitchell
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AN ACT
amending title 1, Arizona Revised Statutes, by adding chapter 7; amending sections 6‑801 and 6‑834, Arizona Revised Statutes; amending title 6, chapter 7, Arizona Revised Statutes, by adding article 5; amending title 42, chapter 5, article 1, Arizona Revised Statutes, by adding section 42‑5041; relating to legal tender.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 1, Arizona Revised Statutes, is amended by adding chapter 7, to read:
CHAPTER 7
LEGAL TENDER
ARTICLE 1. GENERAL PROVISIONS
1-701. Definitions
In the statutes and laws of this state, unless the context otherwise requires:
1. "Legal tender" means an authorized medium of exchange for the payment of debts and taxes.
2. "Specie" means coin or bullion having gold or silver content.
1-702. Legal tender recognition; use of specie
A. Legal tender in this state consists of all of the following:
1. Legal tender authorized by Congress.
2. Specie coin issued at any time by the United States government.
3. Any other specie that a court of competent jurisdiction rules by a final, unappealable order to be within the scope of state authority to make a legal tender.
B. Except as expressly provided by contract, a person may not compel any other person to tender or accept specie legal tender.
1-703. Legal tender exchanges; payment of taxes
A. Notwithstanding any other law, the exchange of one form of legal tender for another does not give rise to liability for any type of tax.
B. Legal tender is money and is not subject to taxation or regulation as property other than money.
1-704. Enforcement
The attorney general shall enforce this chapter without PREJUDICE to an individual's right of judicial action pursuant to this chapter.
Sec. 2. Section 6-801, Arizona Revised Statutes, is amended to read:
6-801. Definitions
In this chapter, unless the context otherwise requires:
1. "Account servicing" means the holding of documents or written instruments and the receipt and disbursement of payments according to the instructions of the parties to the documents or written instruments.
2. "Affiliate" means an entity that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with the entity specified.
3. "Control" means ownership or the power to vote, either directly or indirectly, more than twenty per cent of the outstanding voting shares of the controlled person.
4. "Escrow" means any transaction in which any escrow property is delivered with or without transfer of legal or equitable title, or both, and irrespective of whether a debtor‑creditor relationship is created, to a person not otherwise having any right, title or interest therein in connection with the sale, transfer, encumbrance or lease of real or personal property, to be converted, exchanged, delivered or redelivered by that person upon the contingent happening or nonhappening of a specified event or performance or nonperformance of a prescribed act, when it is then to be delivered by such person to a grantee, grantor, promisee, promisor, obligee, obligor, bailee or bailor, or any designated agent or employee of any of them. Escrow includes subdivision trusts and account servicing.
5. "Escrow agent" means any person engaged in the business of accepting escrows.
6. "Escrow business" means a commercial activity characterized by the regular and continuous carrying on of escrow transactions.
7. "Escrow property" means property, money, a written instrument or evidence of title or possession to real or personal property or any other thing of value.
8. "License" means a license issued pursuant to this chapter.
9. "Licensee" means a person licensed pursuant to this chapter.
10. "Subdivision trust" means an agreement in which title to real property or an interest therein is held for the limited purpose of holding, subdividing, developing or selling real property or an interest therein, or to facilitate any business transaction with respect thereto and under which agreement the trustee acts pursuant to direction of its beneficiaries, and without discretionary powers, with respect to the holding, subdivision, development or sale of real estate or an interest therein or the disposition of the proceeds therefrom. Subdivision trusts are, for the purpose of regulation under this chapter, escrows, except that this paragraph shall does not be construed to limit the obligation or liability of trustees of subdivision trusts under common law or otherwise.
Sec. 3. Section 6-834, Arizona Revised Statutes, is amended to read:
6-834. Deposit of monies; definition
A. Unless all of the parties to the escrow otherwise instruct the escrow agent in writing and except as provided in section 6‑847.03, the escrow agent shall deposit and maintain all monies deposited in escrow to be delivered on the close of the escrow or on any other contingency in a bank, savings bank or savings and loan association doing business in this state and the escrow agent shall keep all of the escrow monies separate, distinct and apart from monies belonging to the escrow agent. Notwithstanding the parties' instructions to the escrow agent, the escrow agent shall not deposit the escrow monies in an institution outside the United States. When deposited, the monies shall be designated as "escrow accounts" or given some other appropriate designation indicating that the monies are not the monies of the escrow agent. These monies shall be deposited immediately on receipt or as soon thereafter as is reasonably practicable.
B. A person shall not knowingly keep or cause to be kept any monies in any bank or savings and loan association under the heading of "escrow accounts" or any other name designating the monies as belonging to the clients of any escrow agent, except actual escrow monies deposited with such the escrow agent.
C. Escrow property is not subject to execution or attachment on any claim against the escrow agent.
D. Not later than three business days after receipt of any escrow monies, the escrow agent shall provide to each depositing buyer or seller, adequate notice of his right to earn interest on all deposited monies. The notice shall accurately set forth the following information with respect to this right:
1. A brief description of the depositor's right to earn interest on escrowed monies through an interest‑bearing deposit account.
2. The dollar charge that may be imposed by the escrow agent solely to set up the interest‑bearing account.
3. A good faith estimate of the amount of interest that may be earned during the life of the escrow account, or an example of a typical transaction calculated on a one thousand dollar deposit, using the prevailing savings account interest rate for a thirty day period.
4. A brief description of how the interest‑bearing account can be established, including the name, address and telephone number of the escrow agent to be contacted.
E. An escrow agent shall not receive from any depository institution any interest earned or other benefit from monies deposited with an escrow agent in connection with any escrow. Nothing in this subsection prohibits the escrow agent from receiving accounting, data processing or other services directly related to the administration of escrow accounts.
F. For the purposes of this article, "adequate notice" means a printed notice to the depositing buyer or seller that sets forth the pertinent facts clearly and conspicuously. The notice shall be printed on the escrow instructions or on an independent document and given to the depositing customer in a manner reasonably assuring the customer's receipt of the notice.
Sec. 4. Title 6, chapter 7, Arizona Revised Statutes, is amended by adding article 5, to read:
ARTICLE 5. LEGAL TENDER SERVICES
6-847. Definitions
In this article, unless the context otherwise requires:
1. "Gold cent" means specie legal tender that is one one‑HUNDREDTH of a gold dollar.
2. "Gold dollar" means specie legal tender that is one‑fiftieth of one troy ounce of fine gold in a UNITED States American eagle coin or American buffalo coin that is minted pursuant to 31 United States code sections 5112(a)(7), (a)(8), (a)(10), (a)(11), (i)(1) and (q).
3. "Legal tender class" means each of the following as a separate category of legal tender:
(a) Paper dollar and paper cent.
(b) Platinum dollar and platinum cent.
(c) Gold dollar and gold cent.
(d) Silver dollar and silver cent.
(e) Other specie legal tender in which the pro rata precious metal content is proportional to the denomination that is used in the class.
4. "Legal tender escrow agent" means an escrow agent that is licensed pursuant to this chapter that provides authorized services as prescribed in section 6‑847.01.
5. "Legal tender exchange rate" means the most recent paper dollar London fixing price for the weight of the precious metal that is contained in any legal tender class other than the paper dollar and paper cent class.
6. "Paper dollar" means a whole or fractional part of a federal reserve note that is based on the dollar denomination of the note as described in 12 United States Code section 418 or the note's electronic equivalent that is issued through the federal reserve banking system and the base metal coinage that is issued by the United States government.
7. "Platinum cent" means legal tender that is one one‑HUNDREDTH of a platinum dollar.
8. "Platinum dollar" means legal tender that is one‑fiftieth of one troy ounce of fine platinum in a coin that is minted pursuant to 31 United States code section 5112(k) and that has a nominal face value of one hundred dollars.
9. "Silver cent" means specie legal tender that is one one‑HUNDREDTH of a silver dollar.
10. "Silver dollar" means specie legal tender that is a United States American liberty coin and that has one troy ounce of fine silver content and a nominal face value of one dollar as described in 31 United States code section 5112(e).
6-847.01. Authorized services
An escrow agent who is licensed pursuant to this chapter may do any of the following:
1. Accept and hold in a fiduciary capacity legal tender deposits, including individual retirement account deposits, as provided in 26 United States Code section 408(a)(2), (m) and (n).
2. Pursuant to the escrow instructions, do either of the following:
(a) Exchange money in one legal tender class for money in another legal tender class.
(b) Pay the debts, taxes, public charges or dues of a depositor using money in a legal tender class other than that tendered into escrow by the depositor.
6-847.02. Accounting
A. A legal tender escrow agent shall:
1. Keep books and records based on a uniform system of accounting for monies in the various legal tender classes in the legal tender escrow agent's custody and control that conforms with generally accepted accounting principles and any record keeping requirements prescribed by the department.
2. With respect to each depositor, maintain separate accounts for deposits in each legal tender class.
B. Accounts with deposits that are neither gold dollar and gold cent nor silver dollar and silver cent are valued in gold dollars and gold cents or silver dollars and silver cents according to the fine precious metal content of the specie legal tender that is held in the account.
6-847.03. Vaulting and insurance
A legal tender escrow agent shall provide:
1. For the maintenance of all paper dollar and paper cent monies in federally insured deposit accounts.
2. Secure vaulting of all specie legal tender, platinum dollars and platinum cents on deposit.
3. audits of all specie legal tender, platinum dollars and platinum cents on deposit, conducted on at least a quarterly basis.
4. Insurance against damage or loss of all specie legal tender, platinum dollars and platinum cents while they are vaulted or in transit.
5. A means to verify the weight and fineness of the precious metal content of any specie legal tender or platinum dollars and platinum cents that are received outside of a documented chain of custody.
Sec. 5. Title 42, chapter 5, article 1, Arizona Revised Statutes, is amended by adding section 42-5041, to read:
42-5041. Payment in specie legal tender; definition
A. If amounts that are excluded from gross income, gross receipts or gross proceeds of sales as described in section 42‑5002, subsection A, paragraph 1 are paid to the taxpayer in specie legal tender and the department does not accept specie legal tender for the payment of taxes imposed by this chapter or chapter 6, article 3 of this title, the taxpayer shall state on the taxpayer's books and records and on an invoice, bill of sale or similar document that is provided to the purchaser all of the following:
1. The purchase price in specie legal tender and in the legal tender the taxpayer is required to use to pay the tax.
2. The amount of tax imposed by this chapter or chapter 6, article 3 of this title on the transaction with the purchaser in specie legal tender and in the legal tender the taxpayer is required to use to pay the tax.
3. The tax rate that is applicable to the transaction.
4. The date of the transaction.
B. In determining the amount of tax pursuant to subsection A of this section, the taxpayer shall use the most recent paper dollar London fixing price for the specie legal tender used by the purchaser. The department shall prescribe by rule a method for determining the amount of tax that is due if the paper dollar London fixing price is not available for a particular day.
C. For the purposes of this section, "paper dollar" has the same meaning prescribed in section 6‑847.
Sec. 6. Effective date
This act is effective from and after ninety days after the fifty-second legislature, first regular session adjourns sine die.