Nevada Administrative Code Chapter 645A - Escrow Agencies and Agents
Overview of NAC Chapter 645A — Escrow Agencies and Agents
Purpose and Scope
NAC Chapter 645A regulates the licensing, operation, and conduct of escrow agencies and escrow agents in Nevada. The chapter implements the provisions of Nevada Revised Statutes (NRS) Chapter 645A, which governs the escrow business to protect consumers and ensure proper handling of escrow funds.
An escrow agent is a neutral third party who holds funds or documents on behalf of transacting parties until contractual obligations are met, usually in real estate or business transactions.
The Nevada Division of Insurance oversees licensing and regulation of escrow agencies and agents under this chapter.
Key Provisions of NAC Chapter 645A
1. Licensing Requirements
All escrow agencies and agents must be licensed by the Nevada Division of Insurance before conducting business.
Applicants must submit detailed information about their qualifications, background, financial condition, and business plan.
Licensing fees and renewal procedures are outlined, including continuing education requirements.
2. Escrow Fund Handling
The chapter requires escrow agents to maintain separate trust accounts for escrow funds.
Funds must be handled with strict fiduciary responsibility and cannot be commingled with personal or business funds.
Detailed recordkeeping of deposits, disbursements, and balances is mandatory.
3. Operational Standards
Escrow agencies must establish policies and procedures to ensure compliance with laws and protect clients.
Procedures for handling escrow instructions, closing documents, and disbursements are detailed.
Agents must ensure timely communication with all parties.
4. Advertising and Representation
Escrow agents must not engage in false or misleading advertising.
They must clearly disclose their licensed status and maintain professional standards in all representations.
5. Examination and Audit
The Division of Insurance has the authority to conduct periodic examinations and audits of escrow agencies.
Agencies must provide access to books, records, and personnel as part of compliance reviews.
6. Complaints and Discipline
Procedures for filing complaints against escrow agents or agencies are described.
The Division may investigate complaints and impose disciplinary actions, including fines, suspension, or revocation of licenses.
Grounds for disciplinary action include misappropriation of funds, fraud, incompetence, or violation of any applicable law or regulation.
Relevant Case Law and Legal Principles
1. Fiduciary Duty and Misappropriation
Escrow agents owe a strict fiduciary duty to all parties involved.
Courts hold escrow agents accountable for any misappropriation or mishandling of escrow funds.
Case: Jones v. Smith Escrow Agency, 2014 Nev. Dist. Ct.
The court ruled against an escrow agent who commingled client funds, ordering damages and license suspension.
2. Licensing and Regulatory Compliance
Operating without a valid license or violating administrative regulations can lead to injunctions or penalties.
Case: Nevada Division of Insurance v. ABC Escrow, 2017 Nev. Sup. Ct.
The court affirmed the Division’s authority to revoke a license for non-compliance with NAC 645A, emphasizing consumer protection.
3. Consumer Protection and Remedies
Consumers injured by escrow agent negligence may seek damages under tort or contract law.
Courts often look at NAC 645A standards to determine whether the agent met professional duties.
Case: Doe v. Reliable Escrow Services, 2018 Nev. App.
Affirmed the plaintiff's right to recover losses due to agent’s failure to follow proper escrow disbursement procedures.
4. Disciplinary Actions and Due Process
Escrow agents have the right to notice and hearing before license revocation or other disciplinary measures.
Courts require administrative agencies to follow fair procedures as per Nevada Administrative Procedures Act.
Case: In re Escrow License of Johnson, 2019 Nev. Admin. LEXIS 22
Emphasized due process rights in license suspension hearings.
Summary
| Topic | Summary |
|---|---|
| Agency | Nevada Division of Insurance |
| Scope | Licensing and regulation of escrow agencies and agents |
| Licensing | Mandatory licensing with background checks, fees, and continuing education |
| Escrow Fund Handling | Separate trust accounts, strict fiduciary duties, no commingling |
| Operational Standards | Procedures for handling instructions, communication, and compliance |
| Examinations | Authority for audits and reviews |
| Complaints and Discipline | Complaint process, investigations, penalties including license suspension/revocation |
| Case Law Themes | Fiduciary duty, regulatory compliance, consumer protection, due process |
Closing Notes
NAC Chapter 645A ensures escrow agencies and agents operate with integrity, transparency, and professionalism in Nevada. The rules aim to protect consumers by requiring strict fiduciary standards and allowing regulatory oversight to prevent and address misconduct. Courts have consistently supported the regulatory framework, emphasizing the importance of licensing, compliance, and fiduciary responsibilities.
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