SENATE BILL 259
54th legislature - STATE OF NEW MEXICO - second session, 2020
Cliff R. Pirtle
RELATING TO FINANCIAL INSTITUTIONS; ELIMINATING REQUIREMENTS FOR SURETY BONDS FOR ESCROW COMPANIES; IMPOSING REQUIREMENTS FOR FIDELITY BONDS FOR ESCROW COMPANIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 58-22-10 NMSA 1978 (being Laws 1983, Chapter 135, Section 10, as amended) is amended to read:
"58-22-10. [SURETY] FIDELITY BOND REQUIRED.--
A. An escrow company shall obtain a [surety] fidelity bond in the minimum amount of [one hundred thousand dollars ($100,000) running to the people of the state of New Mexico] one million dollars ($1,000,000), which bond shall be executed and acknowledged by a corporation that is licensed by the superintendent of insurance to transact the business of fidelity [and surety] insurance. [The bonds shall be in a form acceptable to the director and shall be filed in the director's office.]
B. The fidelity bond required by this section shall be for the benefit of:
(1) any person damaged by an act or acts of the escrow company or its directors, officers or employees as a result of a violation of the provisions of, or any rule promulgated pursuant to, the Escrow Company Act, the Criminal Code or other acts made criminal offenses pursuant to state law;
(2) any person damaged by the negligence, fraud or embezzlement of the escrow company or its directors, officers or employees; or
(3) any person damaged by any other breach of fiduciary duty by the escrow company or its directors, officers or employees.
C. Every fidelity bond shall be in a form acceptable to the director and shall be filed in the director's office.
D. Every fidelity bond filed with the director by an escrow company pursuant to Subsection A of this section shall contain a provision prohibiting the bond company from canceling the fidelity bond for failure to pay the premium unless the bond company files a written notice with the director at least ten days before canceling the fidelity bond. Every fidelity bond filed with the director by an escrow company pursuant to Subsection A of this section shall contain a provision prohibiting the bond company from canceling the fidelity bond for any other reason unless the bond company files a written notice with the director at least thirty days before canceling the fidelity bond.
E. The director shall revoke the certificate of an escrow company that fails to maintain a bond as required by this section.
F. Upon investigation or examination of an applicant for licensure as an escrow company or of a licensed escrow company, the director may determine the necessity for an applicant or licensee to acquire and maintain suitable additional insurance in an amount as required by the director, to protect the escrow company, or the clients of the escrow company, against burglary, robbery, forgery, theft, fraud, embezzlement or other similar insurable losses to which the escrow company or its clients may be exposed.
G. The director may revoke the license of an escrow company that fails to obtain insurance as required by Subsection F of this section within a reasonable period of time, not to exceed ninety days from the date the director provides notice to the applicant or licensee of the imposition of the additional insurance requirement, or that fails to maintain insurance as required by Subsection F of this section."
SECTION 2. EFFECTIVE DATE.--The effective date of the provisions of this act is January 1, 2021.
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