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B 26-0032

Uniform Special Deposits Act of 2025

26th Council Period (2025-2026) Introduced by Phil Mendelson

The act creates a uniform, opt-in framework clarifying banks' duties and beneficiaries for special deposits, reducing uncertainty and limiting creditor access.

Law L26-0084, Effective from Feb 03, 2026 Published in DC Register Vol 73 and Page 002674
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Bill Summary · B 26-0032

Summary — B26-0032: Uniform Special Deposits Act of 2025

Status: Enacted (Signed by Mayor Nov 24, 2025; Returned from Mayor Nov 25, 2025; Act No. A26-0201)
Introduced: Jan 7, 2025 (Chairman Phil Mendelson)
Committee: Business & Economic Development; public hearing Mar 20, 2025; committee mark-up Oct 15, 2025; final Council readings Oct–Nov 2025

Purpose and intent

The Uniform Special Deposits Act creates a clear, uniform statutory framework for “special deposits” — bank deposits made for a defined purpose where the ultimate payee (beneficiary) is determined only after a contingency occurs. The law aims to reduce legal uncertainty that has limited the use of these deposits by defining their essential elements, clarifying banks’ duties and liability, and addressing how creditor claims, setoff/recoupment, and bankruptcy interact with special deposits. The Act is modeled on the Uniform Law Commission drafting and is an “opt‑in” statute: parties must elect to have a deposit governed by the Act.

Key provisions and rules

  • Definitions and scope (new Chapter 29A, Title 28, D.C. Code): establishes terms such as “special deposit,” “account agreement,” “beneficiary,” “contingency,” “creditor process,” and “knowledge.”
  • Opt‑in requirement: an account agreement must be in a record and expressly state the parties’ intent to create a special deposit governed by the Act.
  • Requirements for a special deposit (§ 28‑2954): (text in the Act) sets the substantive criteria a deposit must satisfy to qualify — e.g., written account agreement, stated permissible purpose, contingency language (beneficiary may be identified immediately or determined on termination).
  • Bank obligations to pay beneficiaries (§ 28‑2956): a bank becomes “obligated to pay” when the contingency has occurred and the bank has knowledge of that occurrence.
  • Property interests (§ 28‑2957): the Act provides that neither the depositor nor the beneficiary has a traditional property interest in the special deposit (so rights are governed by the Act and account agreement).
  • Creditor process and bankruptcy (§ 28‑2958 and related sections): clarifies when creditor remedies (attachment, garnishment, levies, liens, injunctions) may be enforceable against a bank holding a special deposit and clarifies treatment in insolvency/bankruptcy contexts.
  • Recoupment / setoff (§ 28‑2960): clarifies the lawfulness and limits of a bank’s right to assert setoff or recoup unrelated bank claims against a special deposit.
  • Term and default term (§ 28‑2962 / Engrossed summary): establishes a default 5‑year term for special deposits unless the parties agree otherwise.
  • Variation by agreement (§ 28‑2953): certain enumerated provisions of the chapter are non‑waivable; other provisions may be varied by agreement between parties.
  • Uniformity and transitional provisions (§ 28‑2964–2965): directs courts to construe the Act to promote uniformity among adopting jurisdictions and provides rules for applying the Act to existing and future special deposits.

Who is affected

  • Banks and their branches/office units (each branch is treated as a separate bank for chapter purposes)
  • Depositors who fund special deposits (consumers, businesses, landlords/tenants, litigants, market participants)
  • Potential beneficiaries (identified now or determinable later)
  • Creditors, trustees in bankruptcy, and courts resolving disputes over access to funds The Act is designed to benefit both commercial counterparties and consumer users by reducing legal risk and increasing predictability for escrow, security deposits, litigation deposits, and market‑infrastructure uses.

Procedural / timeline notes

  • Introduced Jan 7, 2025; referred to committee Jan 21, 2025.
  • Public hearing held Mar 20, 2025; committee reported favorably Oct 15, 2025.
  • First readings Oct 21, 2025; final readings Nov 4, 2025.
  • Transmitted to Mayor Nov 17, 2025; signed Nov 24, 2025; returned as Enrolled Act A26‑0201 Nov 25, 2025.
  • The Act applies prospectively and includes transitional rules addressing existing deposits.

Likely impact

The Act reduces transactional and litigation uncertainty surrounding special deposits, encouraging their use for escrow/security/market infrastructure purposes while setting statutory limits on creditor access and bank setoff. It provides clearer duties for banks and predictable remedies for beneficiaries and claimants, and aligns District law with the Uniform Law Commission’s model to promote interstate uniformity.

Compiled from official sources — confirm details with the bill’s official record.

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