3 Colo. Code Regs. § 702-8-1-4-5

Current through Register Vol. 47, No. 24, December 25, 2024

Section 3 CCR 702-8-1-4-5 - Rules Regarding Fiduciary Duties

A. All title entities, their authorized agents, and affiliates in possession of funds received and belonging to others shall maintain the funds in a fiduciary capacity in a separate fiduciary fund account or accounts supported by books and records sufficient to identify such funds. Any such fiduciary fund account shall be identified as "fiduciary fund account", "trust account" or "escrow account", or identified similarly.

B. Funds that must be maintained as fiduciary funds include, but are not limited to, underwriter portions of title insurance premiums, earnest money deposits, loan proceeds, seller proceeds, homeowner association dues, and any other funds received as part of a title entity conducting closing and settlement services.

C. All fiduciary funds shall be maintained in an account separate from other monies and assets of the title entity. Commingling of other monies and assets of the title entity with fiduciary funds is prohibited. Notwithstanding the foregoing, nothing herein shall prohibit the advancement of funds authorized pursuant to § 38-35-125(2), C.R.S.

D. All fiduciary funds shall be deposited within three business days of receipt with a state or federal bank, or a savings and loan association whose depositors are insured by an instrumentality of the United States Government, unless otherwise directed in writing by all necessary parties to the transaction.

E. Except as otherwise consented to in writing by the parties to a transaction establishing the need for fiduciary funds, a title entity or its authorized agent shall not use such fiduciary funds for any purpose other than the purpose or purposes set forth in the written agreement for which the fiduciary funds were deposited with the title entity.

F. Unless otherwise consented to in writing by all necessary parties, fiduciary funds, other than earnest money, held by a title entity shall either be disbursed for the purpose that the funds were collected or returned to the party that deposited the funds with the title entity within 120 days of the closing of the transaction.

G. Unless prior written authorization has been received by all necessary parties, fiduciary funds shall not be deposited by a title entity into a treasury management account or any other type of investment account.

H. Fiduciary funds may only be deposited into a sweep account by a title entity if the funds are segregated and held in a fiduciary capacity in the account the funds are swept into.

I. A title entity shall not earn interest on fiduciary funds unless disclosure is made to any parties to a transaction, for who said funds are being held, that interest is or has been earned. Said disclosure must offer the opportunity to receive payment of any interest earned on such funds beyond any administrative fees as may be on file with the Division. Said disclosure must be clear and conspicuous, and may be made at any time up to and including closing.

J. Until a title entity receives written instructions pertaining to the holding of fiduciary funds, in a form agreeable to the title entity, it shall comply with the following:

1. The title entity shall deposit funds into an escrow, trust, or other fiduciary account and hold them in a fiduciary capacity.

2. The title entity shall use any funds designated as "earnest money" for the consummation of the transaction as evidenced by the contract to buy and sell real estate applicable to said transaction. Except, if the transaction does not close, the title entity shall:

a. Release the earnest money funds as directed by written instructions signed by both the buyer and seller; or

b. If acceptable written instructions are not received, uncontested funds shall be held by the title entity for 120 days from the scheduled date of closing, after which the title entity shall return said funds to the depositing party.

3. Nothing herein shall be read as relieving the responsibilities, if any, of any title entity in complying with the Colorado unclaimed property act, § 38-13-101, et seq., C.R.S.

4. Every title insurance agent or title insurance agency shall reconcile all fiduciary accounts, or similarly identified accounts, at least every forty-five (45) days.

K. In the event of any controversy regarding the funds held by the title entity (not withstanding any termination of the contract), the title entity shall not be required to take any action unless and until such controversy is resolved. At its option and discretion, the title entity may:

1. Await any proceeding; or

2. Deliver written notice to the buyer and seller that unless the title entity receives a copy of a summons and complaint or claim (between buyer and seller), containing the case number of the lawsuit or lawsuits, within 120 days of the title entity's written notice delivered to the parties, title entity shall return the funds to the depositing party.

3 CCR 702-8-1-4-5

38 CR 17, September 10, 2015, effective 10/1/2015

39 CR 14, July 25, 2016, effective 8/15/2016

40 CR 03, February 10, 2017, effective 3/15/2017

41 CR 12, June 25, 2018, effective 7/15/2018

42 CR 14, July 25, 2019, effective 8/15/2019

43 CR 14, July 25, 2020, effective 8/15/2020

45 CR 16, August 25, 2022, effective 9/14/2022