GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION LAW 2021-93
SENATE BILL 198
AN ACT to provide that a settlement agent may disburse settlement proceeds in reliance on a check drawn on the account of or issued by a licensed mortgage lender, to make amendments relating to the north Carolina commercial receivership act, and to make technical changes to various laws regulating financial practices, as recommended by the general statutes commission.
The General Assembly of North Carolina enacts:
PART I. GOOD FUNDS SETTLEMENT ACT AMENDMENTS
SECTION 1. G.S. 45A‑4 reads as rewritten:
"§ 45A‑4. Duty of settlement agent.
(a) The settlement agent
shall cause recordation of the deed, if any, the deed of trust or mortgage, or
other loan documents required to be recorded at settlement. The settlement
agent shall not disburse any of the closing funds prior to verification that
the closing funds used to fund disbursement are deposited in the settlement
agent's trust or escrow account in one or more forms prescribed by this
Chapter. A settlement agent may disburse funds from the settlement agent's
trust or escrow account (to either the applicable register of deeds or directly
to a private company authorized to electronically record documents with the
office of the register of deeds) as necessary to record any deeds, deeds of
trust, and any other documents required to be filed in connection with the
closing, including excise tax (revenue stamps) and recording fees, but the
may shall not disburse any other funds from its
trust or escrow account until the deeds, deeds of trust, and other required
loan documents have been recorded in the office of the register of deeds.
Unless otherwise provided in this Chapter, a settlement agent shall not cause a
disbursement of settlement proceeds unless those settlement proceeds are
collected funds. Notwithstanding that a deposit made by a settlement agent to
its trust or escrow account does not constitute collected funds, the settlement
agent may cause a disbursement of settlement proceeds from its trust or escrow
account in reliance on that deposit if the deposit is in one or more of the
(1) A certified
(2) A check issued by the
State, the United States, a political subdivision of the State, or an agency or
instrumentality of the United States, including an agricultural credit
(3) A cashier's check,
teller's check, or official bank check drawn on or issued by a financial
institution insured by the Federal Deposit Insurance Corporation or a
comparable agency of the federal or state
(4) A check drawn on the
trust account of an attorney licensed to practice in
the State of North Carolina;Carolina.
(5) A check or checks drawn
on the trust or escrow account of a real estate broker licensed under Chapter
93A of the General
(6) A personal or commercial
check or checks in an aggregate amount not exceeding five thousand dollars
($5,000) per closing if the settlement agent making the deposit has reasonable
and prudent grounds to believe that the deposit will be irrevocably credited to
the settlement agent's trust or escrow
(7) A check drawn on the
account of or issued by a mortgage
banker lender licensed under
Article 19A 19B of Chapter 53 of the General Statutes that has
posted with the Commissioner of Banks a surety bond in the amount of at least
three hundred thousand dollars ($300,000). The surety bond shall be in a form
satisfactory to the Commissioner and shall run to the State for the benefit of
any settlement agent with a claim against the licensee for a dishonored check.Statutes.
(b) If the settlement agent
receives information from the lender as provided in G.S. 45A‑5(b) or
otherwise has actual knowledge that a mortgage broker or other person acted as
a mortgage broker in the origination of the loan, the settlement agent shall
place an entry on page 1 of the deed of trust showing the name of the mortgage
broker or other person
who that acted as a mortgage broker in the
origination of the loan. Information pertaining to the identity of the mortgage
broker or other person who that acted as a mortgage broker in the
origination of the loan shall not be considered is not confidential
information. The terms term "mortgage broker" and
"act as a mortgage broker" shall have has the same meaning
as provided in G.S. 53‑243.01.G.S. 53‑244.030."
PART II. AMENDMENTS RELATING TO NC COMMERCIAL RECEIVERSHIP ACT
SECTION 2. G.S. 1‑502 reads as rewritten:
"§ 1‑502. In what cases appointed.
A receiver may be appointed in any of the following cases:
(4) In cases provided in G.S. 1‑507.1 and
in similar cases, regarding property within this State of foreign corporations.
The provisions of Part 2 of
Article 38 of Chapter 1 of the General Statutes apply to the appointment of a
receiver of a corporation under this section."
SECTION 3. G.S. 1‑507.20 reads as rewritten:
"§ 1‑507.20. Short title; definitions.
(a) Short Title. This Article may be cited as the North Carolina Commercial Receivership Act.
(b) Definitions. The
following definitions apply throughout this
Article unless the context
(5) Court. The superior or
district court in which the receivership is pending, except that in the case of
a receiver appointed to partition real property pursuant to
G.S. 46A‑28, the term shall mean the clerk of superior
court that has jurisdiction over the receiver and the receivership.
(16) Insider. As to any person, includes the following:
d. An affiliate, or insider
of an affiliate, as if
such the affiliate were the person.
(24) Property. All of the
debtor's right, title, and interest, both legal and equitable, in real and
personal property, regardless of the manner by which any of
the same were or
are it was or is acquired. The term includes any proceeds, products,
offspring, rents, or profits of or from the property. The term does not include
(i) any power that the debtor may exercise solely for the benefit of another
person, (ii) a power of withdrawal exercisable by the debtor over property of a
trust for which the debtor is not the settlor, to the extent that the power is
not subject to the claims of the debtor's creditors pursuant to G.S. 36C‑5‑505(b),
or (iii) if the debtor is an individual, any real property owned jointly by the
debtor and the debtor's spouse that is held by them as a tenancy by the
entireties, unless the debtor's spouse is also a debtor in the receivership and
there is a joint debt owed to one or more creditors.
(27) Receivership property.
In the case of a general receivership, all or substantially all of the
nonexempt property of the debtor, or in the case of a limited receivership, the
property of the debtor identified in the order appointing the receiver, or in any
subsequent order, and, in each case, except for the debtor's property that is
wholly exempt from the enforcement of claims of creditors pursuant to
applicable law, including without limitation, pursuant to G.S. 1‑362,
1C‑1601(a), 1C‑1602, 25C‑4, 30‑15, 30‑17, 131E‑91(d)(5),
Notwithstanding the foregoing, receivership Receivership
property in a general receivership of an individual business debtor
shall debtor, however, does not include (i) the principal residence
of the individual business debtor if the value of the principal residence is
less than the combined amount of all liens and all rights of redemption and
allowed claims of exemption in the principal residence and (ii) any consumer
good if the value of such the consumer good is less than the
combined amount of all liens and all rights of redemption and allowed claims of
exemption in such the consumer good.
SECTION 4. G.S. 1‑507.24 reads as rewritten:
"§ 1‑507.24. Appointment of receivers; receivership not a trust.
(a) Action in Which
Receivers Appointed. A receiver may be appointed under this Article by the
filing of a civil action by a creditor or other party in interest in which the
sole relief requested is the appointment of a receiver or is combined with, or
is ancillary to, a civil action that seeks a money judgment or other relief, or
in the case of a limited receivership, is part of a power of sale or judicial
foreclosure proceeding. However, in the case of an individual business debtor,
a creditor to whom only consumer debt is owing
may shall not file
a civil action or motion to appoint a receiver for the individual business
debtor. If the debtor files the complaint commencing a civil action in which
the sole relief requested is the appointment of a receiver, then no summons
under Rule 4 of the North Carolina Civil Rules of Procedure shall be necessary
and the title of the action required by Rule 10 of the North Carolina Civil
Rules of Procedure shall be:
"In re: ___________ [name of debtor]".
The filing of a civil action under this subsection by a creditor or other party in interest in which the sole relief requested is the appointment of a receiver does not waive or limit any rights or remedies the creditor or other party in interest has against the debtor or the debtor's property.
(b) Appointment by Judge. Either a judge of the Superior Court Division or the District Court Division may appoint a receiver for a debtor that is an individual business debtor. Only a judge of the Superior Court Division may appoint a receiver for an entity. Once a receiver is appointed, the following provisions apply:
(1) If a receiver is
appointed for an individual business debtor or if a limited receiver is
appointed for an entity, the clerk shall provide a copy of the order appointing
the receiver to the senior resident superior court judge or the
district court judge for the court in which the receivership is
pending. If the receivership is pending in the Superior Court Division, the
senior resident superior court judge for the court in which the receivership is
pending shall designate either one of the resident judges for the court in
which the receivership is pending, or one of the nonresident judges of the
Superior Court Division then assigned to the district in which the receivership
is pending, to be the presiding judge over the receiver and the receivership.
The presiding judge shall retain jurisdiction and supervision of the receiver
and the receivership until the receivership is terminated and the receiver discharged
pursuant to G.S. 1‑507.37, or until the senior resident superior
court judge enters an order transferring jurisdiction and supervision of the
receiver to another superior court judge. The judge of the Superior Court
Division so designated shall retain jurisdiction and supervision
notwithstanding the judge's rotation out of the district. If the receivership
is pending in the District Court Division, the chief district court judge for
the court in which the receivership is pending shall designate one of the
judges of the District Court Division to retain jurisdiction and supervision of
the receiver and the receivership until the receivership is terminated and the
receiver is discharged pursuant to G.S. 1‑507.37, or until the chief
district court judge enters an order transferring jurisdiction and supervision
of the receiver to another district court judge.
shall does not
apply to the appointment of a receiver in a pending action to partition real
property pursuant to G.S. 46A‑28.
(e) Receiver for Entities and Individual Business Debtors. In addition to those situations specifically provided for by law, a limited or general receiver may be appointed when an entity or an individual business debtor meets any of the following criteria:
(8) The person is the subject
of an action to dissolve
such the person.
(k) Bad Faith Filing. If
the court denies a motion to appoint a receiver for an individual business
debtor other than on consent of the party or parties seeking the appointment of
the receiver and the debtor, and if the debtor does not waive the right to
judgment under this subsection, the court may grant judgment against the party
or parties seeking the appointment of the receiver for any damages proximately
such the filing, including costs and reasonable
attorneys' fees, and punitive damages, if the court determines, after notice
and hearing, that the motion was filed in bad faith."
SECTION 5. G.S. 1‑507.30 reads as rewritten:
"§ 1‑507.30. Duties of debtor.
(a) Duties. In addition to
those duties conferred by statute or order of the court, the debtor
have has the following duties:
(1) To assist and cooperate
fully with the receiver in the administration of the receivership and the
receivership property and the discharge of the receiver's
and to comply with all rules and orders of the court.
(2) To deliver to the
receiver, immediately upon the receiver's
and demand, all of the receivership property in the debtor's possession,
custody, or control, including all books and records, electronic data,
passwords, access codes, statements of accounts, deeds, titles or other
evidence of ownership, financial statements, financial and lien information,
bank account statements, and all other papers and documents related to the
(3) To supply to the receiver information as requested relating to the administration of the receivership and the receivership property, including information necessary to complete any reports or other documents that the receiver may be required to file.
(4) To remain responsible for the filing of all tax returns, including those returns applicable to periods which include those in which the receivership is in effect, except as otherwise ordered by the court.
(b) Debtor Not Individual. If the debtor is not an individual, this section applies to each officer, director, manager, member, partner, trustee, or other person exercising or having the power to exercise control over the affairs of the debtor immediately before the appointment of the receiver.
(c) Enforcement. If a
person knowingly fails to perform a duty imposed by this section, the court may
(i) compel the person to comply with that duty, (ii) award the receiver actual
damages caused by the person's
failure, failure and reasonable
attorneys' fees and costs, and (iii) sanction the person for civil
SECTION 6. G.S. 1‑507.40 reads as rewritten:
"§ 1‑507.40. Turnover of receivership property.
(a) Demand by Receiver. Except as expressly provided in this section, and unless otherwise ordered by the court, upon demand by a receiver: (i) subject to subsection (b) of this section, any person shall turn over to the receiver any receivership property that is within the possession, custody, or control of that person and (ii) any person that owes a debt that is receivership property and is matured or payable on demand or on order shall pay the debt to or on the order of the receiver, except to the extent that the debt is subject to setoff or recoupment.
(c) Turnover Motion by
Receiver. A receiver may seek to compel turnover of receivership property
subdivision clause (i) of subsection (a) of this
section by motion in the receivership. If there exists a bona fide dispute with
respect to the existence or nature of the receiver's or the debtor's interest
in the receivership property, turnover shall be sought by means of an action
under G.S. 1‑507.38. Unless a bona fide dispute exists about a
receiver's right to possession, custody, or control of receivership property,
the court may sanction as civil contempt a person's failure to turn over the
property when required by this section.
(d) Payment Only to Receiver.
A person that has notice of the appointment of a receiver and owes a debt
that is receivership property
may shall not satisfy the debt by
payment to the debtor."
SECTION 7. G.S. 1‑507.42 reads as rewritten:
"§ 1‑507.42. Stays.
(f) Inapplicability of Stay. The entry of an order appointing a receiver does not operate as a stay of any of the following:
(9) Any other exception as
provided in United States Code, Title 11,
§ 326(b), § 362(b), as
to the automatic stay in federal bankruptcy cases in effect from time to time.
(h) Enforcement. If a
person knowingly violates a stay under this section, the court may award actual
damages caused by the violation, reasonable attorneys' fees, and
and may sanction the violation as civil contempt."
SECTION 8. G.S. 46A‑28 reads as rewritten:
"§ 46A‑28. Court's authority to make orders before final determination of proceeding; notice and hearing.
(a) Before final determination of a proceeding to partition real property, on application of any of the parties, the court may make any orders that it finds to be in the best interest of the parties, including, but not limited to, orders relating to possession, payment of secured debt or other liens on the property, occupancy and payment of rents, the appointment of a receiver pursuant to G.S. 1‑502(6) or a limited receiver for the real property pursuant to Article 38A of Chapter 1 of the General Statutes, and access to the property for the purpose of inspecting, surveying, appraising, or selling the property.
SECTION 9. G.S. 53C‑9‑401 reads as rewritten:
Statute Article relating
to receivers applicable to insolvent banks. The provisions of G.S. 1‑507.1
through 1‑507.11, Article 38A of
Chapter 1 of the General Statutes, relating
to receivers, when not inconsistent with the provisions of this Article, shall
apply applies to the liquidation of banks under this Article."
PART III. TECHNICAL CHANGES TO VARIOUS LAWS REGULATING FINANCIAL PRACTICES
SECTION 10. G.S. 53‑249 reads as rewritten:
"§ 53‑249. Filing and posting of loan fees; disclosures.
(a) Filing of Fee
Schedule. On or before January 2 of each year, each registrant
shall file with the Commissioner a schedule of the refund anticipation loan
fees for refund anticipation loans to be facilitated by the registrant during
the succeeding year. Immediately upon learning of any change in the refund
anticipation loan fee for that year, the registrant shall file an amendment
with the Commissioner setting out the change. Filing is effective upon receipt
by the Commissioner.
(b) Notice of Unconscionable
Fee. Fee. If the Commissioner finds that a refund anticipation
loan fee filed pursuant to subsection (a) of this section is
unconscionable, he the Commissioner shall notify the registrant
that (i) in his opinion the fee is unconscionable and (ii) the
consequences of charging a refund anticipation loan fee in an amount that the
Commissioner has notified the registrant is unconscionable include liability to
the debtor for three times the amount of that fee and possible revocation of
registration as a facilitator after notice and a hearing.
(c) Posting of Fee
Schedule. Every registrant shall prominently display at each
office where the registrant is facilitating refund anticipation loans a
schedule showing the current refund anticipation loan fees for refund anticipation
loans facilitated at the office and the current electronic filing fees for the
electronic filing of the taxpayer's tax return. Every registrant shall also
prominently display on each fee schedule a statement to the effect that the
taxpayer may have the tax return filed electronically without also obtaining a
refund anticipation loan. No registrant may facilitate a refund anticipation
loan unless (i) the schedule required by this subsection is displayed and (ii)
the refund anticipation loan fee actually charged is the same as the fee
displayed on the schedule and the fee filed with the Commissioner pursuant to
subsection (a).(a) of this section.
At the time a debtor applies for a refund anticipation loan, the registrant
shall disclose to the debtor on a form separate from the application:
fee for the loan.refund
anticipation loan fee.
SECTION 11. G.S. 53‑258 reads as rewritten:
"§ 53‑258. Authority and procedures governing reverse mortgage loans.
(a) Except as provided in
subsection (b1) of this section, no person, firm, or corporation shall engage
in the business of making reverse mortgage loans without first being approved
as an authorized reverse mortgage lender by the Commissioner. Mortgage lenders
licensed under Article
19A 19B of this Chapter must also be
authorized under this Article before making reverse mortgage loans.
(b1) Each of the following lenders shall be considered authorized to engage in the business of making reverse mortgage loans without being required to apply pursuant to subsection (b) of this section and may represent to the public that it is so authorized:
(1) The North Carolina Housing Finance Agency.
(2) A bank, savings institution, or credit union formed under the laws of this or any other state or of the United States.
(3) A wholly owned subsidiary of an entity described in subdivision (2) of this subsection.
Each lender listed in this
subsection may, upon written request to the
Commissioner of Banks, Commissioner,
obtain written confirmation of its authority to engage in the business of
making reverse mortgage loans. In the case of lenders listed in subdivisions
(2) and (3) of this subsection, the request shall be accompanied by the fee set
forth in subsection (d) of this section.
SECTION 12. G.S. 53‑277 reads as rewritten:
"§ 53‑277. Exemptions.
(a) This Article
not apply to:to any of the following:
(1) A bank, savings
institution, credit union, or farm credit system organized under the laws of
the United States or any
(2) Any person or entity
principally engaged in the bona fide retail sale of goods or
services, who services
that, either as an incident to or independently of a retail sale or service
and not holding itself out to be a check‑cashing service, from time to
time cashes checks, drafts, or money orders for a fee or other consideration,
where not more than two dollars ($2.00) is charged for the service.consideration
and charges no more than two dollars ($2.00) for the service.
(b) A person licensed under
16A 16B of this Chapter (Money Transmitters Act) is
exempt from G.S. 53‑276, 53‑278, 53‑279, and 53‑284,
but is deemed a licensee for purposes of the remaining provisions of this
Article. This exemption does not apply to an authorized agent delegate
of a person licensed under Article 16A 16B of this
SECTION 13. G.S. 53‑366 reads as rewritten:
"§ 53‑366. Applicability of other laws to authorized trust institutions; status of State trust company.
(a) Except as otherwise
provided in this Article, the following provisions of this Chapter and Chapter
53C of the General Statutes
shall apply to authorized trust institutions:
(7) Article 8 of Chapter 53C
of the General Statutes, except where it clearly appears from the context that
a particular provision is not applicable to trust business or trust marketing,
and except that the provisions of this Article
shall apply in lieu of:of
the following provisions:
a. G.S. 53C‑8‑2.
b. G.S. 53C‑8‑3.
c. G.S. 53C‑8‑17.
(b) Rules adopted by the
Commissioner to implement those provisions of this Chapter made applicable to
authorized trust institutions by subsection (a) of this section also
to authorized trust institutions unless the rules are inconsistent with this
Article or it clearly appears from the context that a particular provision is
inapplicable to trust business or trust marketing.
(c) Activities of authorized
trust institutions for clients shall not be considered
the sale or issuance
of checks money transmission under Article 16 16B of
Chapter 53 of the General Statutes.
(d) Until the Commissioner
has issued new rules governing State trust companies, State trust companies
be are governed by rules issued by the Commissioner for banks acting
in a fiduciary capacity, except to the extent the rules are inconsistent with
this Article or it clearly appears from the context that a particular provision
is inapplicable to the business of a State trust company.
(e) Notwithstanding any
other provision of this Chapter, a State trust
company:company is deemed
to be all of the following:
(1) Repealed by Session Laws 2012‑56, s. 31, effective October 1, 2012.
Is a A "bank"
for purposes of laws made applicable to authorized trust institutions in this
section and for purposes of G.S. 53‑277.
Is a A trust
company organized and doing business under the laws of the State of North
Carolina, a substantial part of the business of which is exercising fiduciary
powers similar to those permitted national banks under authority of the
Comptroller of the Currency, and which is subject by law to supervision
and examination by the Commissioner as a banking institution; andCommissioner.
Is a A financial
institution similar to a bank.
(f) In the case of a State
trust company controlled by a company that has declared itself to be a
"financial holding company" under
12 U.S.C. § 1843(l)(1)(C)(i), 12
U.S.C. § 1843(l)(1)(D)(i), deposits held for an account shall be are
deemed to be "trust funds" within the meaning of 12 U.S.C.
§ 1813(p) unless all fiduciary duties with respect to the account are
explicitly disclaimed. This subsection does not prescribe the nature or extend
the scope of any fiduciary duties; the nature and extent of any fiduciary
duties with respect to deposits held for accounts shall be are as
provided by the instruments and laws applicable to those accounts.
(g) Subject to any
limitations contained in this Article, an authorized trust institution is a
company", company," a "corporate trustee",
trustee," a "corporate fiduciary", fiduciary,"
and a "corporation acting in a fiduciary capacity", capacity,"
as such these and similar terms are used in the General
Statutes, except where it clearly appears from the context in which those terms
are used that a different meaning is intended."
SECTION 14. G.S. 66‑106 reads as rewritten:
"§ 66‑106. Definitions.
(a) For purposes of this
Article, the following definitions apply: (1) A "loan broker" is any person, firm,
or corporation who, in return for any consideration from any person, promises
to (i) procure for such person, or assist such person in procuring, a loan from
any third party; or (ii) consider whether or not it will make a loan to such
person. (2)(1) A
"loan" is an Loan. An agreement to advance money or
property in return for the promise to make payments therefor, whether such the
agreement is styled as a loan, credit card, line of credit, a lease lease,
(2) Loan broker. Any person, firm, or corporation that, in return for any consideration from any person, promises to do any of the following:
a. Procure for the person, or assist the person in procuring, a loan from any third party.
b. Consider whether or not it will make a loan to the person. This sub‑subdivision does not apply to a lender whose loans or advances to any person in North Carolina aggregate more than one million dollars ($1,000,000) in the preceding calendar year.
Except for mortgage
loans as defined in G.S. 53‑243.01, this This Article shall
does not apply to any of the following:
(1) A party approved as a mortgagee by the
Secretary of Housing and Urban Development, the Federal Housing Administration,
the Veterans Administration, a National Mortgage
or any federal agency; nor to any agency.
(2) A party currently designated and compensated
by a North Carolina licensed insurance company as its agent to service loans it
makes in this
State; nor to any State.
(3) An insurance company registered with and
licensed by the North Carolina Insurance
Commissioner; nor, with Commissioner.
(4) With respect to a residential
loans, to any loan, a residential mortgage banker
lender or mortgage broker licensed pursuant to Article 19A 19B
of Chapter 53 of the General Statutes or exempt from licensure pursuant to G.S.
53‑243.01(12) and G.S. 53‑243.02; nor to any G.S. 53‑244.040(d).
(5) An attorney‑at‑law, public
accountant, or dealer registered under the North Carolina Securities Act,
acting in the professional capacity for which
such the attorney‑at‑law,
public accountant, or dealer is registered or licensed under the laws of the
State of North Carolina. Provided further that subdivision (1)(ii) above
shall not apply to any lender whose loans or advances to any person, firm or
corporation in North Carolina aggregate more than one million dollars
($1,000,000) in the preceding calendar year."
PART IV. EFFECTIVE DATE
SECTION 15. This act is effective when it becomes law.
In the General Assembly read three times and ratified this the 15th day of July, 2021.
s/ Carl Ford
Presiding Officer of the Senate
s/ Tim Moore
Speaker of the House of Representatives
s/ Roy Cooper
Approved 3:03 p.m. this 22nd day of July, 2021