| 1 | A bill to be entitled |
| 2 | An act relating to insurance payments from escrow |
| 3 | accounts; amending s. 501.137, F.S.; requiring an insurer |
| 4 | to reinstate, under certain circumstances, an insurance |
| 5 | policy that is cancelled due to failure of the lender to |
| 6 | pay a premium for which sufficient escrow funds are on |
| 7 | deposit; requiring that the lender reimburse the property |
| 8 | owner for any penalties or fees paid for purposes of |
| 9 | reinstating the policy; requiring a lender to pay certain |
| 10 | policy cost differentials under certain circumstances; |
| 11 | providing an effective date. |
| 12 |
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| 13 | Be It Enacted by the Legislature of the State of Florida: |
| 14 |
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| 15 | Section 1. Section 501.137, Florida Statutes, is amended |
| 16 | to read: |
| 17 | 501.137 Mortgage lenders; tax and insurance payments from |
| 18 | escrow accounts; duties.-- |
| 19 | (1) Every lender of money, whether a natural person or an |
| 20 | artificial entity, whose loans are secured by a mortgage on real |
| 21 | estate located within the state and who receives funds |
| 22 | incidental thereto or in connection therewith for the payment of |
| 23 | property taxes or hazard insurance premiums when the such funds |
| 24 | are held in escrow by or on behalf of the lender, shall promptly |
| 25 | pay the such taxes or insurance premiums when the such taxes or |
| 26 | premiums become due and adequate escrow funds are deposited, so |
| 27 | that the maximum tax discount available may be obtained with |
| 28 | regard to the taxable property and so that insurance coverage on |
| 29 | the property does not lapse. |
| 30 | (2) If an escrow account for the such taxes or insurance |
| 31 | premiums is deficient, the lender shall notify the property |
| 32 | owner within 15 days after the lender receives the notification |
| 33 | of taxes due from the county tax collector or receives the |
| 34 | notification from the insurer that a premium is due. |
| 35 | (3)(a) If the lender, as a result of neglect, fails to pay |
| 36 | any tax or insurance premium when the tax or premium is due and |
| 37 | there are sufficient escrow funds on deposit to pay the tax or |
| 38 | premium, and if the property owner suffers a loss as a result of |
| 39 | this such failure, then the lender is will be liable for the |
| 40 | such loss; except, however, that with respect to any loss that |
| 41 | which would otherwise have been insured, the extent of the such |
| 42 | liability shall not exceed the coverage limits of any insurance |
| 43 | policy that which has lapsed. |
| 44 | (b) If the premium payment is not more than 90 days |
| 45 | overdue, the insurer shall reinstate the insurance policy, |
| 46 | retroactive to the date of cancellation, and the lender shall |
| 47 | reimburse the property owner for any penalty or fees imposed by |
| 48 | the insurer and paid by the property owner for purposes of |
| 49 | reinstating the policy. |
| 50 | (c) If the premium payment is more than 90 days overdue or |
| 51 | if the insurer refuses to reinstate the insurance policy, the |
| 52 | lender shall pay the difference between the cost of the previous |
| 53 | insurance policy and a new, comparable insurance policy for a |
| 54 | period of 2 years. |
| 55 | (4) At the expiration of the annual accounting period, the |
| 56 | lender shall issue to the property owner an annual statement of |
| 57 | the escrow account. |
| 58 | Section 2. This act shall take effect July 1, 2004. |