STAND. COM. REP. NO. 975

 

Honolulu, Hawaii

                  

 

RE:    S.B. No. 1398

       S.D. 1

 

 

 

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

 

Madam:

 

     Your Committee on Judiciary and Labor, to which was referred S.B. No. 1398 entitled:

 

"A BILL FOR AN ACT RELATING TO ESCROW DEPOSITORIES,"

 

begs leave to report as follows:

 

     The purpose of this measure is to update and amend chapter 449, Hawaii Revised Statutes, governing escrow depositories.

 

     Your Committee received testimony in support of this measure from the Department of Commerce and Consumer Affairs.  Hawaii Escrow & Title, Inc., Integrity Escrow & Title, and Security Title Corporation opposed this measure.  The Escrow Association of Hawaii and Guardian Escrow Services, Inc. offered comments. Title Guaranty Escrow Services provided comments and proposed an alternate draft.

 

     Your Committee was informed that the Escrow Association of Hawaii and the Commissioner of Financial Institutions have been working together to develop comprehensive revisions to the Escrow Depository statute, and that further revisions may be proposed as this measure proceeds through the legislative process.  Based on testimony presented, your Committee finds it prudent to increase the minimum net capital requirement for an escrow depository, set at $50,000 in 1973, in light of the value of current real estate escrow transactions in Hawaii.  An increase to $500,000, however, would disproportionately burden smaller escrow companies.  Moreover, it appears that an increase in errors and omissions insurance could enhance consumer protection.

 

Accordingly, your Committee has amended this measure by:

 

(1)  Increasing the $50,000 tangible net worth or bond requirement in section 449-5.5, Hawaii Revised Statutes, to $100,000, instead of $500,000;

 

(2)  Amending section 449-12, Hawaii Revised Statutes, by increasing the $100,000 errors and omissions insurance requirement to $750,000; and

 

(3)  Changing the effective date to July 1, 2059, to encourage further discussion.   

 

     As affirmed by the record of votes of the members of your Committee on Judiciary and Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1398, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 1398, S.D. 1.

 

Respectfully submitted on behalf of the members of the Committee on Judiciary and Labor,

 

 

 

____________________________

CLAYTON HEE, Chair