ORS 709.220
Handling of funds awaiting investment or distribution
- security for use of funds
(1)
Funds placed or held in trust by a trust company awaiting investment or distribution shall not be held uninvested or undistributed for a longer period than is reasonable for the proper management of the account, shall be carried in a separate account and shall not be used by the trust company, bank or extranational institution in the conduct of its business or in the conduct of the business of any of its affiliates, except that such funds may be deposited in the commercial or savings or other department of the trust company, bank or extranational institution if the trust company, bank or extranational institution first obtains and sets aside in its trust department:(a)
Bonds or other securities eligible for the investment of trust funds;(b)
A surety bond;(c)
An irrevocable letter of credit issued by an insured institution, as defined in ORS 706.008 (Additional definitions for Bank Act); or(d)
A combination of the securities, letters of credit and surety bond.(2)
The surety bond shall be issued by a surety company authorized to transact business in this state and approved by the Director of the Department of Consumer and Business Services. The bond or letter of credit shall provide that the principal and surety or letter of credit issuer shall indemnify the several owners of the funds held in trust against loss due to the failure of the trust company, bank or extranational institution.(3)
Notwithstanding the provisions of ORS 708A.415 (Securing deposits by surety bond, letter of credit or insurance), the securities, the surety bond, the letter of credit or the securities, the surety bond and the letters of credit together shall be in an amount equal to the portion of the trust funds not insured by the United States Government or any agency or instrumentality of the United States.(4)
If the trust company, bank or extranational institution fails, the owners of the funds held in trust for investment or distribution have a lien on the bonds or other securities set apart, or a right of action on the surety bond and upon the letter of credit, in addition to their claim against the estate of the trust company, bank or extranational institution. [Amended by 1957 c.82 §2; 1973 c.797 §200; 1975 c.544 §29d; 1983 c.296 §5a; 1987 c.216 §5; 1991 c.331 §115; 1997 c.631 §216]
Source:
Section 709.220 — Handling of funds awaiting investment or distribution; security for use of funds, https://www.oregonlegislature.gov/bills_laws/ors/ors709.html.
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