Texas Government Code 1207.062 – Escrow Agreement
(a) An issuer may enter into an escrow or similar agreement with a person described by Section 1207.061(a) with respect to the safekeeping, investment, administration, and disposition of a deposit made under Section 1207.061.
(b) A deposit under Section 1207.061 may be invested only in:
(1) direct noncallable obligations of the United States, including obligations that are unconditionally guaranteed by the United States;
(2) noncallable obligations of an agency or instrumentality of the United States, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the governing body of the issuer adopts or approves the proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent; and
(3) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the date the governing body of the issuer adopts or approves the proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent.
Terms Used In Texas Government Code 1207.062
- Escrow: Money given to a third party to be held for payment until certain conditions are met.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: includes corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity. See Texas Government Code 311.005
- United States: includes a department, bureau, or other agency of the United States of America. See Texas Government Code 311.005
(c) A deposit under Section 1207.061 may be invested only in obligations that mature and bear interest payable at times and in amounts sufficient to provide for the scheduled payment or redemption of the obligation to be refunded. The obligations may be in book-entry form.
(d) An issuer shall enter into an agreement under Subsection (a) if an obligation to be refunded is scheduled to be paid or redeemed on a date later than the next scheduled interest payment date on the obligation.
(e) Notwithstanding Subsection (b), a deposit under an escrow agreement entered into under Subsection (a) before September 1, 1999, may not be invested in an investment described by Subsection (b)(2) or (3).