SB 308 — AN ACT TO AMEND TITLE 5 OF THE DELAWARE CODE RELATING TO THE UNIFORM SPECIAL DEPOSITS ACT.

Summary

This Act adopts the Uniform Special Deposits Act (“the Act”) authored by the Uniform Law Commission. The Uniform Law Commission “provides states with non-partisan, well-conceived and well-drafted legislation that brings clarity and stability to critical areas of state statutory law.” The Act was adopted by the Uniform Law Commission in October 2023 and has been adopted in 2 states and introduced in 3 other states. The Act addresses deposits at a bank where the identity of the person entitled to payment is not determined until the occurrence of a contingency identified at the time that the deposit is created. An example of such an account is an escrow account holding funds that will be paid to one of two potential beneficiaries depending on the outcome of a contingency. Although such accounts are commonly used, the legal protections afforded them are uncertain. The fundamental purpose of the Uniform Special Deposits Act is to provide a vehicle that banks and their customers can elect to use providing greater legal certainty that the expectations of users will be respected. The Act provides a mechanism those that elect to be covered by the Act can use to avoid case law applied to special deposits that is murky and in some ways outdated in the context of modern banking. In determining whether a person is engaged in the business of banking to be considered a bank for purposes of the Act, the business of banking is intended to be construed broadly to include persons that may engage in limited functions that are part of or incidental to the business of banking, such as a trust company that engages in fiduciary and agency activities and has the power and authority to accept a special deposit. This Act takes effect on January 1, 2025.

Bill Text

• Bill Text View text Current pdf

AI-generated reading aid from the bill's amendatory text — verify against the official bill.

The bill updates the definitions and requirements within the Uniform Special Deposits Act to clarify the roles and rights of depositors and beneficiaries.

• § 5102

  "Account agreement" means an agreement that: → "Account agreement" means an agreement that:

  Redefined the term "Account agreement" in the context of the special deposits.

• § 5102

  "Bank" means a person engaged in the business of banking and includes a savings bank, savings and loan association, credit union, and trust company. Each branch or separate office of a bank is a separate bank for the purpose of this chapter. → "Bank" means a person engaged in the business of banking and includes a savings bank, savings and loan association, credit union, and trust company. Each branch or separate office of a bank is a separate bank for the purpose of this chapter.

  Clarified the definition of "Bank" in the special deposits context.

• § 5102

  "Beneficiary" means a person that: → "Beneficiary" means a person that:

  Clarified the definition of "Beneficiary" within the special deposits.

• § 5102

  "Depositor" means a person that establishes or funds a special deposit. → "Depositor" means a person that establishes or funds a special deposit.

  Updated the definition of "Depositor" to ensure clarity in the context of special deposits.

• § 5102

  "Knowledge" of a fact means: → "Knowledge" of a fact means:

  Defined the term "Knowledge" to clarify how it applies to beneficiaries and banks.

• § 5102

  "Obligated to pay a beneficiary" means a beneficiary is entitled under the account agreement to receive from the bank a payment when: → "Obligated to pay a beneficiary" means a beneficiary is entitled under the account agreement to receive from the bank a payment when:

  Clarified the conditions under which the bank is obligated to pay a beneficiary.

• § 5102

  "Permissible purpose" means a governmental, regulatory, commercial, charitable, or testamentary objective of the parties stated in an account agreement. → "Permissible purpose" means a governmental, regulatory, commercial, charitable, or testamentary objective of the parties stated in an account agreement.

  Specified what constitutes a "Permissible purpose" for special deposits.

• § 5102

  "Record" means information: → "Record" means information:

  Defined the term "Record" to include both tangible and electronic information.

• § 5102

  "Special deposit" means a deposit that satisfies § 5105 of this title. → "Special deposit" means a deposit that satisfies § 5105 of this title.

  Defined "Special deposit" to clarify its criteria.

• § 5105

  "A deposit is a special deposit if it is: → A deposit is a special deposit if it is:

  Outlined the conditions that must be met for a deposit to qualify as a special deposit.

• § 5106

  "A special deposit must serve at least 1 permissible purpose stated in the account agreement from the time the special deposit is created in the account agreement until termination of the special deposit." → A special deposit must serve at least 1 permissible purpose stated in the account agreement from the time the special deposit is created in the account agreement until termination of the special deposit.

  Stated that a special deposit must fulfill at least one permissible purpose for its duration.

• § 5107

  "Unless the account agreement provides otherwise, the bank is obligated to pay a beneficiary if there are sufficient actually and finally collected funds in the balance of the special deposit." → Unless the account agreement provides otherwise, the bank is obligated to pay a beneficiary if there are sufficient actually and finally collected funds in the balance of the special deposit.

  Outlined the bank's obligation to pay the beneficiary under certain conditions.

• § 5108

  "Neither a depositor nor a beneficiary has a property interest in a special deposit." → Neither a depositor nor a beneficiary has a property interest in a special deposit.

  Clarified that no property interest exists in the special deposit itself.

Action History

1. September 30, 2024

   Signed by Governor

2. June 27, 2024

   Passed By House. Votes: 41 YES

3. June 18, 2024

   Reported Out of Committee (Economic Development/Banking/Insurance & Commerce) in House with 8 On Its Merits

4. June 12, 2024

   Assigned to Economic Development/Banking/Insurance & Commerce Committee in House

5. June 11, 2024

   Passed By Senate. Votes: 21 YES

6. May 22, 2024

   Reported Out of Committee (Judiciary) in Senate with 6 On Its Merits

7. May 16, 2024

   Introduced and Assigned to Judiciary Committee in Senate

Sponsors

• William J. Carson · Primary
• Spiros Mantzavinos · Primary
• Kyle Evans Gay · Primary

Votes

Subjects