An escrow company shall obtain a surety bond in the minimum amount of one hundred thousand dollars ($100,000) running to the people of the state of New Mexico, which bond shall be executed and acknowledged by a corporation that is licensed by the superintendent of insurance to transact the business of fidelity and surety insurance. The bonds shall be in a form acceptable to the director and shall be filed in the director's office.
History: Laws 1983, ch. 135, § 10; 1986, ch. 21, § 1; 1987, ch. 120, § 1; 1990, ch. 47, § 1; 2015, ch. 135, § 4.
ANNOTATIONSCross references. — For official bonds of state officers and employees, see the Surety Bond Act, 10-2-13 NMSA 1978.
For the superintendent of insurance, see 8-9-9 NMSA 1978.
The 2015 amendment, effective July 1, 2015, amended the requirements for surety bonds that escrow companies are mandated to obtain; in the catchline, after the section number, deleted "cash or", after "surety bond", deleted "or employee dishonesty bond"; deleted the subsection designation for Subsection A; deleted the first sentence of former Subsection A, relating to "dishonesty bonds"; deleted "The minimum amount of the bond shall be one hundred thousand dollars ($100,000) and" from the second sentence of former Subsection A and added "An escrow company shall obtain a surety bond in the minimum amount of one hundred thousand dollars ($100,000) running to the people of the state of New Mexico, which bond"; and deleted Subsections B and C.
Temporary provisions. — Laws 2015, ch. 135, § 9 provided that an escrow company licensed pursuant to the Escrow Company Act that, prior to the effective date of Laws 2015, ch. 135, §§ 1 to 8 (July 1, 2015), was not required to file a surety or other bond with the director of the financial institutions division of the regulation and licensing department shall have until January 1, 2016 to comply with the provisions of Section 58-22-10 NMSA 1978.
The 1990 amendment, effective May 16, 1990, in Subsection B, substituted "fifty thousand dollars ($50,000)" for "twenty-five thousand dollars ($25,000)" and made a minor stylistic change in the first sentence and rewrote Subsection C which read "The provisions of Subsections A and B of this section shall apply only to a newly licensed escrow company for a period not to exceed the first three years of licensure".
Purpose is to benefit public. — The language of Section 58-22-2 NMSA 1978 leaves no room for doubt that the purchase of the fidelity bond required by this section inures to the benefit and protection of the public. Anchor Equities, Ltd. v. Pacific Coast Am., 1987-NMSC-041, 105 N.M. 751, 737 P.2d 532.
Actions against insurers. — This section, mandating that all escrow companies be "covered by an employee dishonesty bond insuring the escrow company against loss of money or negotiable securities," does not specifically allow a direct action against an insurer; nevertheless, the language of the section does not in any way negate the joinder of the insuring company as a defendant, and the policy behind the statute, i.e., protection of the public, clearly supports a direct action against an insurer by a third person placing funds in an escrow company's trust account that have allegedly been misappropriated by the owner and sole employee of the escrow company. Anchor Equities, Ltd. v. Pacific Coast Am., 1987-NMSC-041, 105 N.M. 751, 737 P.2d 532.