Senate committee unanimously backs Uniform Special Deposits Act to clarify escrow-like accounts

The Senate Industry and Business Committee unanimously recommended Senate Bill 2123, the Uniform Special Deposits Act, which would clarify the legal status of deposits that bank customers and financial institutions establish for a specific conditional purpose.

Representative Lawrence Clameen, chairman of the North Dakota Commission on Uniform State Laws, told the committee special deposits function “in the nature of a protected escrow account” and are used when a beneficiary’s entitlement depends on a future contingency such as the closing of a real-estate sale or the conclusion of a lease.

The bill defines when an account is a “special deposit,” requires that designation in the account agreement, and limits protections to deposits that serve a permissible purpose (such as governmental, regulatory, commercial, charitable or testamentary objectives). The act is opt-in: banks or credit unions must offer the special-deposit product and customers must agree to the account terms.

Supporters and testimony

Rick Kleberg of the North Dakota Bankers Association said…