Chapter 4Revocation of License

Section § 17600

Explanation

This section explains that an escrow agent's license in California remains active until it is voluntarily surrendered, revoked, or suspended.

If a licensee wants to stop conducting business and give up their license, they must inform the commissioner in writing. They also need to return the license along with anything else that indicates they were licensed.

Additionally, the licensee has 105 days to submit a closing audit report, which must be done by an independent certified public accountant, covering specific details like bank reconciliation and lawful disbursement of funds. The commissioner must approve this audit and decide that it's in the public interest before the license surrender is officially accepted.

(a)CA Financial Code § 17600(a) An escrow agent’s license remains in effect until surrendered, revoked, or suspended.
(b)CA Financial Code § 17600(b) A licensee that ceases to engage in the business regulated by this division and desires to no longer be licensed shall notify the commissioner in writing and, at that time, tender the license and all other indicia of licensure to the commissioner. Within 105 days of the written notice to the commissioner, the licensee shall submit to the commissioner, at its own expense, a closing audit report as of the date the license is tendered to the commissioner for surrender, or for another period as the commissioner may specify, to be performed by an independent certified public accountant. The closing audit shall include, but not be limited to, information required by the commissioner, a bank reconciliation of the trust account, and a verified statement from a certified public accountant confirming lawful disbursement of funds. A license is not surrendered until the commissioner has reviewed and accepted the closing audit report, a determination has been made by the commissioner that acceptance of the surrender is in the public interest, and tender of the license is accepted in writing by the commissioner.
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(Amended by Stats. 2009, Ch. 568, Sec. 3. (SB 204) Effective January 1, 2010.)

Section § 17601

Explanation

If the state commissioner suspects that an escrow agent isn't following the rules, they can investigate that agent's business practices. This means having the right to look at any relevant business documents and places where business is conducted. The entities being examined have to let the commissioner and their team access all necessary information and locations. The escrow agent being investigated has to pay any costs related to the investigation as detailed in another section of the law.

If the commissioner has reason to believe that any escrow agent is violating the provisions of this division, the commissioner may investigate the escrow agent’s business and examine the books, accounts, records, and files used in the business of every escrow agent and of every person who acts or claims to act as principal or agent under or without the authority of this division. For the purposes of examination the commissioner and representatives of the commissioner shall have free access to the offices and places of business, books, accounts, records, papers, files, safes, and vaults of all persons examined. The cost of any investigation, inspection, and examination of a licensee under this section shall be paid to the commissioner as provided in Section 17405.1.
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(Amended by Stats. 1996, Ch. 670, Sec. 4. Effective January 1, 1997.)

Section § 17602

Explanation

This law says that if the commissioner finds out that a licensed escrow agent is breaking its own rules or any applicable laws, the commissioner can send a written order telling the agent to stop the violation. This order takes effect right away but must follow the rules in Section 17604 to become final.

If it appears to the commissioner that any licensed escrow agent is violating or has violated its articles of incorporation, or any law or rule binding upon it, the commissioner shall, by written order addressed to the agent direct the discontinuance of such violation. The order shall be effective immediately, but shall not become final except in accordance with the provisions of Section 17604.
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(Amended by Stats. 2022, Ch. 188, Sec. 10. (AB 2433) Effective January 1, 2023.)

Section § 17602.5

Explanation

This law states that if an escrow agent doesn't submit required reports on time, or doesn't include necessary information in those reports, their license could be suspended or revoked. The reports can either be mandated by law or by the commissioner, and there's a ten-day deadline unless an extension is given.

If any licensed escrow agent fails to make any reports required by law or by the commissioner within ten (10) days from the day designated for the making of the reports, or within any extension of time granted by the commissioner, or fails to include therein any matter required by law or by the commissioner, such failure shall constitute grounds for the suspension or revocation of the license held by such escrow agent.
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(Added by Stats. 1961, Ch. 475.)

Section § 17603

Explanation

This law allows the commissioner to intervene if an escrow agent is conducting business in a way that could be harmful or risky. If such behavior is detected, the commissioner can order the agent to stop these practices immediately. However, this order is temporary and must follow specific procedures before becoming permanent.

If it appears to the commissioner that any licensed escrow agent is conducting or has conducted business in an unsafe or injurious manner, the commissioner shall, by written order addressed to the agent direct the discontinuance of such unsafe or injurious practices. The order shall be effective immediately, but shall not become final except in accordance with the provisions of Section 17604.
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(Amended by Stats. 2022, Ch. 188, Sec. 11. (AB 2433) Effective January 1, 2023.)

Section § 17604

Explanation

This section outlines the process for finalizing orders against licensed escrow agents. When the commissioner intends to finalize an order, they must notify the affected agent and provide a chance for a hearing. The hearing must start within 15 business days of a request unless a later date is agreed upon. If no hearing is requested or ordered within 30 days, the order becomes final, and the agent must stop prohibited practices. Hearings follow the state's Administrative Procedure Act. If the commissioner finds unsafe conduct or rule violations, the order becomes final, and actions must cease immediately.

No order issued pursuant to Sections 17602 or 17603 may become final except after notice to any licensed escrow agent affected thereby of the intention of the commissioner to make such order final and of the reasons therefor and that upon receipt of a request the matter will be set down for hearing to commence within 15 business days after such receipt unless the licensed agent affected consents to a later date. If no hearing is requested within 30 days after the mailing of such notice and none is ordered by the commissioner, the order may become final without hearing and the licensed escrow agent shall immediately discontinue the practices named in the order. If a hearing is requested or ordered, it shall be held in accordance with the provisions of the Administrative Procedure Act, Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the commissioner shall have all of the powers granted thereunder. If upon the hearing, it appears to the commissioner that the licensed agent is conducting or has conducted business in an unsafe and injurious manner or is violating or has violated its articles of incorporation or any law of this state, or any rule binding upon it, the commissioner shall make the order of discontinuance final and the licensed escrow agent shall immediately discontinue the practices named in the order.
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(Amended by Stats. 2022, Ch. 188, Sec. 12. (AB 2433) Effective January 1, 2023.)

Section § 17605

Explanation

If an escrow agent receives a final order, they have 10 days to take legal action to stop or delay that order from being enforced. If they don't start this process in the given time or if the court doesn't stop the order within those 10 days, the escrow agent must follow the order.

The licensed escrow agent has ten (10) days after an order is made final in which to commence action to restrain enforcement of such order, and unless such action is commenced, and the enforcement of such order is enjoined within ten (10) days by the court in which the suit is brought, the licensed escrow agent shall comply with the order.
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(Amended by Stats. 1961, Ch. 475.)

Section § 17606

Explanation

If an escrow agent does not follow an order from the commissioner, the commissioner can immediately cancel their license. The escrow agent can only stop this cancellation by getting a court order.

The commissioner may immediately revoke by order the escrow agent’s license if the licensee fails to comply with any order, unless the escrow agent secures a court order restraining the enforcement of the commissioner’s revocation order.
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(Amended by Stats. 2002, Ch. 772, Sec. 12. Effective January 1, 2003.)

Section § 17606.1

Explanation

If an escrow agent's business is closed or liquidated through a court-approved process, their license is automatically revoked. However, the escrow agent can prevent this by obtaining a court order within 10 days to stop the revocation.

The license of an escrow agent shall be deemed revoked upon the completion or closure of a court approved liquidation of the business of the escrow agent, whether pursuant to Section 17635 or 17636, or otherwise, unless the escrow agent within 10 days of the court’s order approving the closing or completion of liquidation secures a court order restraining the revocation from taking effect.
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(Added by Stats. 1994, Ch. 423, Sec. 3. Effective January 1, 1995.)

Section § 17607

Explanation

This law allows the commissioner to take legal action in court if someone is suspected of breaking financial regulations. The commissioner can seek court orders to stop illegal activities or ensure rules are followed, including appointing a receiver or monitor to manage the offender's assets. These court-appointed officials can take over the responsibilities of the company's leaders, which includes filing for bankruptcy if necessary. No lawsuits can be filed against these officials or the commissioner for performing their duties under the court's approval.

Additionally, if it benefits the public, the commissioner can ask the court to provide further relief like restitution, returning gains made from illegal activities, or compensating victims for damages.

(a)CA Financial Code § 17607(a) Whenever it appears to the commissioner that any person has engaged or is about to engage in any act or practice constituting a violation of any provision of this division or any rule or order hereunder, the commissioner may in the commissioner’s discretion bring an action in the name of the people of the State of California in the superior court to enjoin the acts or practices or to enforce compliance with this law or any rule or order hereunder. Upon a proper showing a permanent or preliminary injunction, restraining order, or writ of mandate shall be granted and a receiver, monitor, conservator, or other designated fiduciary or officer of the court, which may include the commissioner, may be appointed for the defendant or the defendant’s assets, or any other ancillary relief may be granted as appropriate.
A receiver, monitor, conservator, or other designated fiduciary or officer of the court appointed by the superior court pursuant to this section may, with the approval of the court, exercise any or all of the powers of the defendant’s officers, directors, partners, trustees, or persons who exercise similar powers and perform similar duties, including the filing of a petition for bankruptcy. No action at law or in equity may be maintained by any party against the commissioner, or a receiver, monitor, conservator, or other designated fiduciary or officer of the court, by reason of their exercising these powers or performing these duties pursuant to the order of, or with the approval of, the superior court.
(b)CA Financial Code § 17607(b) If the commissioner determines it is in the public interest, the commissioner may include in any action authorized by subdivision (a) a claim for ancillary relief, including, but not limited to, a claim for restitution or disgorgement or damages on behalf of the persons injured by the act or practice constituting the subject matter of the action, and the court shall have jurisdiction to award additional relief.
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(Repealed and added by Stats. 1990, Ch. 1186, Sec. 7.)

Section § 17608

Explanation

This law allows the commissioner to suspend or revoke a person's license after giving them notice and a chance to be heard if certain issues are found. These issues include failing to keep a required bond active, breaking any rules of this division, or if there are any conditions now that would have stopped the license from being issued in the first place.

The commissioner may, after notice and a reasonable opportunity to be heard, suspend or revoke any license if he finds that:
(a)CA Financial Code § 17608(a) The licensee has failed to maintain in effect a bond required under the provisions of this division.
(b)CA Financial Code § 17608(b) The licensee has violated any provision of this division or any rule made by the commissioner under and within the authority of this division.
(c)CA Financial Code § 17608(c) Any fact or condition exists which, if it had existed at the time of the original application for such license, reasonably would have warranted the commissioner in refusing originally to issue such license.
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(Amended by Stats. 1973, Ch. 705.)

Section § 17609

Explanation

If an escrow agent's license is revoked, suspended, surrendered, or expires, it won't affect any escrow transactions that were already agreed upon legally before that happened. However, the agent cannot accept any more money or documents for those escrows once their license is revoked, surrendered, expired, or during a suspension period.

The revocation, suspension, surrender or expiration of an escrow agent’s license does not impair or affect pre-existing escrows lawfully contracted, but nothing contained in this division shall be deemed to authorize the acceptance of further funds or documents into escrow subsequent to such revocation, surrender or expiration or during any period of suspension.
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(Amended by Stats. 1955, Ch. 261.)

Section § 17609.1

Explanation

This law states that the commissioner's authority to investigate and examine remains in effect even if a license is surrendered, suspended, or revoked.

The power of investigation and examination by the commissioner is not terminated by the surrender, suspension, or revocation of any license issued by him.
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(Added by Stats. 1973, Ch. 705.)

Section § 17609.2

Explanation

This law grants the commissioner the ongoing power to act as needed for the public's well-being. The commissioner can use these powers regardless of whether a license application has been submitted, issued, surrendered, suspended, or revoked.

Whenever the commissioner deems it necessary for the general welfare of the public, the commissioner has continuous authority to exercise the powers set forth in this division whether or not an application for a license has been filed with the commissioner, any license has been issued, or if issued, has been surrendered, suspended, or revoked.
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(Amended by Stats. 2002, Ch. 772, Sec. 13. Effective January 1, 2003.)