An Act To Supervise and Regulate Escrow Agents in Order To Protect Consumers
Maine Legislature, Session 124, LD 0165
Committee Amendment CA_A_H40 (House)

COMMITTEE AMENDMENT "It" to H.P. 144, L.D. 165, Bill, "An Act To 
Supervise and Regulate Escrow Agents in Order To Protect Consumers" 
Amend the bill by striking out the title and substituting the following: 
'An Act To Supervise and Regulate Real Estate Settlement Agents and Exchange 
Facilitators in Order To Protect Consumers' 
Amend the bill by striking out everything after the enacting clause and before the 
summary and inserting the following: 
'Sec. 1. 10 MRS A c. 212-C is enacted to read: 
CHAPTER 212-C 
REGULATION OF EXCHANGE FACILITATORS 
§1395. Definitions 
As used in this chapter, unless the context otherwise indicates, the following terms 
have the following meanings. 
1. Administrator. "Administrator" means the Superintendent of Consumer Credit 
Protection within the Department of Professional and Financial Regulation. 
2. Affiliated. "Affiliated" means a person, directly or indirectly through one or more 
intennediaries, who controls, is controlled by or is under common control of, another 
person. 
3. Client. "Client" means the taxpayer with whom the exchange facilitator enters 
into an agreement described in subsection 4, paragraph A. 
4. Exchange facilitator. "Exchange facilitator" means a person that does any of the 
following: 
A. 
Facilitates, for a fee, an exchange of like-kind property by entering into an 
agreement with a taxpayer by which the exchange facilitator acquires from the 
Page I - 124LR0405(02)-1 
COMMITTEE AMENDMENT 
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COMMIITEE AMENDMENT" A" to H.P. 144, L.D. 165 
taxpayer the contractual rights to sell the taxpayer's relinquished property located in 
this State and transfers a replacement property to the taxpayer as a. qualified 
, intermediary as that term is defined under United States Treasury Regulation Section 
1.1 031(k)-l (g)( 4) or enters into an agreement with the taxpayer to take title to a 
property in this State as an exchange accommodation titleholder as that term is 
defined in United States Intemal Revenue ServIce Revenue Procedure 2000-37 or 
enters into an agreement with a taxpayer to act as a qualified trustee or qualified 
escrow holder as those terms are defined under United States Treasury Regulation 
Section 1.103](k)-l(g)(3), except as provided in section 1396; 
B. Maintains an office in this State for the purpose of soliciting business as an 
exchange facilitator; or 
C. Purports to be an exchange facilitator by advertising any of the services listed in 
paragraph A or soliciting clients in printed publications, direct mail, television or 
radio advertisements, telephone calls, facsimile transmissions or other electronic 
communications directed to the general public in this State for purposes of providing 
any of those services. 
5. Fee. "Fee" means compensation of any nature, direct or indirect, monetary or in-
kind, that is received by a person or related person as defined in the United States Intemal 
Revenue Code, Section 267(b) or 707(b) for any services relating to or incidental to the 
exchange of like-kind property. 
6. Financial institution. "Financial institution" means a bank, credit union, savings 
and loan association, savings bank or trust company or other similar depository or 
nondepository financial institution including an institution whose accounts are insured by 
the full faith and credit of the United States, the Federal Deposit Insurance Corporation, 
the National Credit Union Share Insurance Fund or other similar or successor programs 
as well as an affiliate or subsidiary of such institution. 
7. Person. "Person" means an individual, corporation, partnership, limited liability 
company, joint venture, association, joint stock company, trust or any other form of legal 
entity, including agents and employees of a person. 
8. 
Prudent investor standard. "Prudent investor standard" means the prudent 
investor standard referenced in Title 18-B, Part 1, section 90 1, subsection I. 
§1396. License; requirements 
1. License. A person may not directly or indirectly engage in or carry on, or purport 
to engage in or carry on, the business of, or act in the capacity of, an exchange facilitator 
in this State without first obtaining a license from the administrator in accordance with 
this chapter. 
2. Issuance of license. An application for a license as an exchange facilitator must 
be in writing and filed with the administrator in the manner and form prescribed by the 
administrator. The administrator shall set an application fee for a primary office not to 
exceed $350 and for any branch offices not to exceed $200. All funds received by the 
administrator under this chapter are appropriated for the use of the administrator. 
3. Renewal. On or before April 30th of each year, an exchange facilitator licensed 
under this chapter shall pay an annual license renewal fee of$150 and shall file with the 
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COMMITTEE AMENDMENT "A " 
to H.P. 144, L.D. 165 
administrator a renewal form containing such information as the administrator may 
require. 
4. Place of business; name. An exchange facilitator licensed under this chapter 
shall maintain a home office as its principal location for the transaction of exchange 
facilitator business. The administrator may issue additional branch licenses to the same 
exchange facilitator licensee upon compliance with all the provisions of this chapter 
governing the issuance of a single exchange facilitator license. An exchange facilitator 
may not engage in the exchange facilitator business at any place of business for which it 
does not hold a license or engage in business under any other name than that on the 
license. 
5. Exemptions. The following persons described in this subsection are exempt from 
the requirements of this chapter: 
A. A taxpayer or a disqualified person, as that term is defined under United States 
Treasury 
Regulation 
Section 
1.1 031(k)-l (k), 
seeking 
to 
qual ify 
for 
the 
nonrecognition provisions of Section 1031 of the United States Internal Revenue 
Code of 1986, as amended; 
B. A financial institution; 
C. A title insurance company underwritten title company or escrow company that is 
acting solely as a qualified escrow holder or qualified trustee, as those terms are 
defined under United States Treasury Regulation Section 1.1031(k)-I(g)(3), and that 
is not facilitating exchanges; 
D. A person that advertises for and teaches seminars or classes or otherwise makes a 
presentation to attorneys, accountants, real estate professionals, tax professionals or 
other professionals, when the primary purpose is to teach the professionals about tax-
deferred exchanges or to train them to act as exchange facilitators; 
E. A qualified intermediary, as that term is defined under United States Treasury 
Regulation Section 1.1 031(k)-l(g)( 4), who holds exchange funds from the disposition 
of relinquished property located outside this State; 
F. An entity in which an exchange accommodation titleholder has a 100% interest 
and that is used by the exchange accommodation titleholder as defined in United 
States Internal Revenue Service Revenue Procedure 2003-37 to take title to property 
in this State; 
G. A person licensed to practice law in this State while engaged in the performance 
of the person's professional duties, except an attorney or law firm actively engaging 
in a separate business as an exchange facilitator; 
H. 
A real estate company, broker or salesperson licensed by and subject to the 
jurisdiction of this State while performing acts in the course of or incidental to sales 
or purchases of real or personal property handled or negotiated by the real estate 
company, broker or salesperson; 
I. A receiver, trustee in bankruptcy, executor, administrator, guardian or other person 
acting under the supervision or order of a court of this State or of a federal court; 
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COMMITTEE AMENDMENT" A " 
to H.P. 144, L.D. 165 
1. A person licensed in this State as a certified public accountant while engaged in 
the performance of the person's professional duties who is not actively engaged in a 
separate business as an exchange facilitator; 
K. A regulated lender subject to the licensing requirements of Title 9-A to the extent 
the lender is not engaged in a separate business as an exchange facilitator; 
L. Any federal or state agency and its political subdivisions; and 
M. A loan broker subject to the licensing requirements of Title 9-A, Article 10 to the 
extent the loan broker is not engaged in a separate business as an exchange facilitator. 
§1397. Financial responsibility and insurance coverage requirements 
1. Financial responsibility. An exchange facilitator shall at all times comply with 
one or more of the following: 
A. Maintain a fidelity bond or bonds in an amount not less than $250,000, executed 
by an insurer authorized to do business in this State; 
B. 
Deposit an amount of cash or securities or irrevocable letters of credit in an 
amount not less than $250,000 in an interest-bearing deposit account or a money 
market account with a financial institution. Interest on that amount must accrue to the 
exchange facilitator; or 
C. Deposit all exchange funds in a qualified escrow account or qualified trust, as 
those terms are defined under' United States Treasury Regulation Section 
1.1 031(k)-l(g)(3), with a financial institution and provide that any withdrawals from 
that escrow account or trust require that person's and the client's written 
authorization. 
An exchange facilitator may maintain a bond or bonds or deposit an amount of cash or 
securities or irrevocable letters of credit in excess of the minimum required amounts. If 
an exchange facilitator is listed as a named insured on one or more fidelity bonds totaling 
at least $250,000, the requirements of this subsection are deemed satisfied. 
2. Insurance or alternative coverage. An exchange facilitator shall at all times 
comply with either of the following: 
A. Maintain an errors and omissions insurance policy in an amount not less than 
$100,000, executed by an insurer authorized to do business in this State; or 
B. Deposit an amount of cash, securities or irrevocable letters of credit in an amount 
not less than $100,000 in an interest-bearing deposit account or a money market 
account with a financial institution. 
Interest on that amount must accrue to the 
exchange facilitator. 
An exchange facilitator may maintain insurance or deposit an amount of cash or 
securities or irrevocable letters of credit in excess of the minimum required amounts. If 
an exchange facilitator is listed as a named insured on an errors and omissions policy of 
at least $100,000, the requirements of this section are deemed satisfied. 
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COMMITTEE AMENDMENT "A" to H.P. 144, L.D. 165 
§1398. Duties of exchange facilitators; prohibited activities 
1. Duty to client. An exchange facilitator shall act as a custodian for all exchange 
funds, including, but not limited to, money, property, other consideration or instruments 
received by the person from, or on behalf of, a client, except funds received as the 
person's compensation. An exchange facilitator shall invest those exchange funds in 
investments that meet a prudent investor standard and that satisfy the investment goals of 
liquidity and preservation of principal. For purposes of this subsection, a prudent investor 
standard is violated if any of the following occurs: 
A. Exchange funds are knowingly commingled by the exchange facilitator with the 
operating accounts of the exchange facilitator; 
B. Exchange funds are loaned or otherwise transferred to any person or entity, other 
than a financial institution, that is affiliated with or related to the exchange facilitator. 
This paragraph does not apply to the transfer offunds from an exchange facilitator to 
an exchange accommodation titleholder as defined in United States Internal Revenue 
Service Revenue Procedure 2003-37 in accordance with an exchange contract; or 
C. Exchange funds are invested in a manner that does not provide sufficient liquidity 
to meet the exchange facilitator's contractual obligations to its clients and does not 
preserve the principal ofthe exchange funds. 
Exchange funds are not subject to execution or attachment on any claim against the 
exchange facilitator. An exchange facilitator may not knowingly keep, or cause to be 
kept, any money in any bank, credit union, or other financial institution under a name 
designating the money as belonging to the client of any exchange facilitator, unless that 
money belongs to that client and was actually entrusted to the exchange facilitator by that 
client. 
2. Notice of change in control. An exchange facilitator shall notify all existing 
exchange clients whose relinquished property is located in this State, or whose 
replacement property held under a qualified exchange accommodation agreement is 
located in this State, of any change in control of the exchange facilitator. The notice must 
be provided within 10 business days of the effective date of the change in control by hand 
delivery, facsimile transmission, e-mail, overnight mail or first-class mail, and must be 
posted on the exchange facilitator's publicly accessible website for at least 90 days 
following the change in control. The notice must include the name, address and other 
contact information of the transferees. For purposes of this subsection, "change in 
control" means any transfer of more than 50% of the assets or ownership interests, 
directly or indirectly, of the exchange facilitator. 
3. Prohibitions. A person engaged in business as an exchange facilitator may not do 
any of the following: 
A. 
Make any material misrepresentations concerning any like-kind exchange 
transaction that are intended to mislead; 
B. 
Pursue a continued or flagrant course of misrepresentation, or make false 
statements through advertising or otherwise; 
. 
C. Fail, within a reasonable time, to account for any money or property belonging to 
others that may be in the possession of, or under control of, the person; 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT I~ "to H.P .. 144, L.D. 165 
D. Engage in any conduct constituting fraudulent or dishonest dealings; 
E. 
Commit any crime involving fraud, misrepresentation, deceit, embezzlement, 
misappropriation of funds, robbery or theft; or 
F. Materially fail to fulfill its contractual duties to a client to deliver property or 
funds to the client, unless that fail ure is due to circumstances beyond the control of 
the person engaging in business as an exchange facilitator. 
§1399. Civil liability 
1. Claim on bonds, deposits or letters of credit. The administrator may file a 
claim on behalf of any client or clients on the bonds, deposits or letters of credit described 
in section 1397, subsection I to recover the damages as a result of financial loss or 
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damages by reason of the failure of an exchange facilitator to comply with this chapter. 
2. 
Civil action. 
A person may bring a civil action in a court of competent 
jurisdiction against an exchange facilitator for any violation of this chapter. 
§1400. Powers and duties of the administrator 
1. Rules. In addition to any other powers and duties of the administrator authorized 
by law, the administrator may adopt rules as necessary to carry out the purposes of this 
chapter. Rules adopted pursuant to this subsection are routine technical rules as defined 
in Title 5, chapter 375, subchapter 2-A. 
2. Examinations and investigations. The administrator may examine or investigate 
the books, records and accounts of each exchange facilitator, within or without the State, 
at intervals the administrator considers necessary. The administrator may assess the 
exchange facilitator for the actual costs of the examination pursuant to Title 9-A, Article 
6. 
3. Enforcement. The administrator may undertake any action authorized pursuant to 
Title 9-A, Article 6 to ensure compliance with this chapter. 
Sec. 2. 10 MRSA c. 212-D is enacted to read: 
CHAPTER 212-D 
REGULATION OF RESIDENTIAL REAL ESTATE SETTLEMENT AGENCIES 
§1400-A. Definitions 
As used in this chapter, unless the context otherwise indicates, the following terms 
have the following meanings. 
1. Administrator. "Administrator" means the Superintendent of Consumer Credit 
Protection within the Department of Professional and Financial Regulation. 
2. Financial institution. "Financial institution" means a bank, credit union, savings 
and loan association, savings bank, trust company or other similar depository or 
nondepository financial institution, including an institution whose accounts are insured by 
the full faith and credit of the United States, the Federal Deposit Insurance Corporation, 
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COMMITTEE AMENDMENT"~ "to H.P. 144, L.D. 165 
the National Credit Union Share Insurance Fund or other similar or successor programs 
as well as an affiliate or subsidiary of such financial institution. 
3. 
Settlement agency. 
"Settlement agency" means the person responsible for 
conducting the settlement or disbursement of settlement proceeds in a residential real 
estate transaction effecting the sale, transfer, encumbrance or lease to another person of 
real or personal property located in this State. "Settlement agency" includes an individual, 
corporation, limited liability company, partnership or other entity conducting the 
settlement and disbursement of settlement proceeds. 
4. Settlement agent. "Settlement agent" means a person engaged in the business of 
settlements on behalf of a settlement agency. 
5. Settlement. "Settlement" means the receipt of loan funds, loan documents or other 
documents or funds to carry out the contractual terms of a residential real estate 
transaction. 
§1400-B. Registration; requirements 
1. 
Registration. A person may not directly or indirectly engage in or carry on, or 
purport to engage in or carryon, the business of, or act in the capacity of, a settlement 
agency in this State without first registering with the administrator in accordance with 
this chapter. The registration must be in a manner and form prescribed by the 
administrator. The administrator shall set a registration fee for a primary office or a 
branch office not to exceed $25. All funds received by the administrator under this 
chapter are appropriated for the use of the administrator. 
2. Exemptions. This chapter does not apply to: 
A. A person licensed to practice law in this State while engaged in the performance 
of the person's professional duties, except an attorney or law firm actively engaging 
in a separate business as a settlement agency; 
B. Individual settlement agents, working on behalf of a settlement agency registered 
or exempt under this section; 
C. 
A real estate company, broker or salesperson licensed by and subject to the 
jurisdiction of this State while performing acts in the course of or incidental to sales 
or purchases of real or personal property handled or negotiated by the real estate 
company, broker or salesperson; 
D. 
A receiver, trustee in bankruptcy, executor, administrator, guardian or other 
person acting under the supervision or order of a court of this State or of a federal 
court; 
E. A person licensed in this State as a certified public accountant while engaged in 
the performance of the person's professional duties who is not actively engaged in a 
separate business as a settlement agency; 
F. A financial institution; 
G. A regulated lender subject to the licensing requirements of Title 9-A to the extent 
the lender is not engaged in a separate business as a settlement agency; 
H. Any federal or state agency and its political subdivisions; and 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT" A " 
to H.P. 144, L.D. 165 
I. A loan broker subject to the requirements of Title 9-A, Article 10 to the extent the 
loan broker is not engaged in a separate business as a settlement agency. 
3. Renewal. On or before April 30th of each year, a settlement agency registered 
under this chapter shall pay an annual renewal fee of $25 and shall file with the 
administrator a renewal form containing such information as the administrator may 
require. 
4. Place of business; name. A settlement agency registered under this chapter shall 
maintain a home office as its principal location for the transaction of settlement business. 
The administrator may issue additional branch registrations to the same settlement agency 
upon compliance with all the provisions of this chapter governing the issuance of a single 
settlement agency registration. 
For purposes of this subsection, the conducting of a 
settlement by mail or at a remote location for the convenience of the parties by a 
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settlement agent based out of the settlement agency's registered principal office or 
registered branch office is not considered the transaction of settlement business at a place 
of business other than the registered location of the settlement agency. 
5. Examinations and investigations. Upon any complaint alleging a violation of 
law, including the Funded Settlement Act, the federal Real Estate Settlement Procedures 
Act of 1974, 12 United States Code, Section 2601 et seq. or the Maine Consumer Credit 
Code, the administrator may examine or investigate the books, records and accounts of a 
settlement agency. 
6. Enforcement. The administrator may undertake any action authorized pursuant to 
Title 9-A, Article 6 to ensure compliance with this chapter. Nothing in this subsection 
may be construed to affect the ability of a settlement company to assert the attorney-client 
privilege. With respect to a settlement company that is owned or operated by an attorney 
licensed in this State, the administrator shall notify the Board of Overseers of the Bar of 
any enforcement action taken by the administrator pursuant to this chapter. 
Sec. 3. Appropriations and allocations. The following appropriations and 
allocations are made. 
PROFESSIONAL AND FINANCIAL REGULATION, DEPARTMENT OF 
Administrative Services - Professional and Financial Regulation 0094 
Initiative: Allocates funds for the one-time costs of establishing new license and 
registration categories in the agency's licensing system. 
OTHER SPECIAL REVENUE FUNDS 
All Other 
OTHER SPECIAL REVENUE FUNDS TOTAL 
Bureau of Consumer Credit Protection 0091 
2009-10 
$5,000 
$5,000 
2010-11 
$0 
$0 
Initiative: Allocates funds for the ongoing costs of regulating exchange facilitators and 
residential real estate settlement agencies. 
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OTHER SPECIAL REVENUE FUNDS 
All Other 
OTHER SPECIAL REVENUE FUNDS TOTAL 
PROFESSIONAL AND FINANCIAL 
REGULATION, DEPARTMENT OF 
DEPARTMENT TOTALS 
OTHER SPECIAL REVENUE FUNDS 
DEPARTMENT TOTAL-ALL FUNDS 
SUMMARY 
2009-10 
$1,525 
$1,525 
2009-10 
$6,525 
$6,525 
2010-11 
$6,100 
$6,100 
2010-11 
$6,100 
$6,100 
This amendment replaces the bill. 
In section I, the amendment regulates those 
entities that operate as exchange facilitators, requiring those entities to be licensed by the 
DepaJiment of Professional and Financial Regulation, Bureau of Consumer Credit 
Protection and to demonstrate financial responsibility by obtaining fidelity bonds or 
surety bonds and insurance. In section 2, the amendment requires residential mortgage 
settlement agencies to register with the Bureau of Consumer Credit Protection. The 
amendment gives the Superintendent of Consumer Credit Protection authority to examine 
a settlement agency and investigate complaints alleging a violation of existing laws, such 
as the federal Real Estate Settlement Procedures Act of 1974, the Funded Settlement Act 
and the Maine Consumer Credit Code, for the protection of consumers. 
The amendment also adds an appropriations and allocations section. 
FISCAL NOTE REQUIRED 
(See attached) 
COMMITTEE AMENDMENT 
Approved: 03/20109 frac:.. 
LD 165 
LR 405(02) 
An Act To Supervise and Regulate Escrow Agents in Order To Protect Consumers 
Fiscal Note for Bill as Amended by Committee Amendment "Pr' 
Committee: Insurance and Financial Services 
Appropriations/Allocations 
Other Special Revenue Funds 
Revenue 
Other Special Revenue Funds 
Correctional and Judicial Impact Statements 
Increases the number of civil violations 
Fiscal Note Required: Yes 
Fiscal Note 
2009-10 
$6,525 
$7,375 
2010-11 
$6,100 
$6,375 
Projections 
2011-12 
$6,100 
$6,375 
The collection of additional fines may also increase General Fund revenue by minor amounts. 
Fiscal Detail and Notes 
Projections 
2012-13 
$6,100 
$6,375 
Provides an Other Special Revenue Furyds allocation of $ 1 ,525 in 2009-10 and $6, I 00 in 2010-lIto the Bureau of 
Consumer Credit Protection in the Department of Professional and Financial Regulation for the ongoing costs of 
regulating exchange facilitators and residential real estate settlement agencies. Also provides an allocation of$5,000 
in 2009-1 0 to the Office of Administrative Services in the Department of Professional and Financial Regulation for the 
one-time costs of establishing new license and registration categories in the agency's licensing system. Also assumes 
increased Other Special Revenue Funds revenue collections of$7,375 in 2009-10 and $6,375 in 2010-11 from new 
licensing and registration fees. 
LR0405(02) - Fiscal Note - Page 1 of I 
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