Introduction
In several states around the US, escrow companies and agents are required to obtain bonds. It is a common certification essential for experts working in escrow. This licensing bond must be provided in the format and quantity specified by the appropriate state agencies. What is the bonding’s objective? You can be subject to a lawsuit against your bond if you violate the law and commit illegal acts, such as concealing escrow documents or not releasing all funds. This safeguard enables individuals who have been compromised to request compensation for the losses they have incurred. Your escrow service bond functions similarly to a three-party contract. Your escrow agency business must get a bond as the owner. The obligee is the state agency that mandates bonding. The bond is given to you by the surety firm.
How much does it cost?
Only a minor portion of the bond price that you must post to comply with your state’s licensing requirements must be covered by you. This is the bond premium, which is determined by your and your company’s financial situation. For example, when applying for an Escrow Agent Bond, the surety must evaluate and determine the price of your bond based on several variables. An important factor in that procedure is your credit rating. Your company’s economy, resources, finances, and even business knowledge are other crucial factors. You’ll probably pay less for bonding if your application seems more consistent. The usual prices for individuals with good financial health range from 1% to 5%. Many variables can cause bond prices to change as time passes.
States that need an escrow agency bond
- Washington
As part of their licensing procedure, escrow agents in the state of Washington must deposit a $10,000 surety deposit.
- Arizona
Escrow agents in Arizona are required to furnish the Arizona Department of Banking and Finance with a bond of $100,000. The prescribed bond form must be used.
- Oregon
In Oregon, escrow agents are required to provide the state Real Estate Agency with a $50,000 bond.
- California
In California, escrow licensees are required to deposit a surety bond. Presenting it to the Department of Business Supervision is mandatory.
- Idaho
Before operating in the territory, escrow agents must submit a $20,000 surety bond to the Idaho Department of Revenue.
What happens if the credit score is low?
Even if you are having financial challenges, you can still get an escrow agency bond. To give applications with bad credit ratings, tax rights, declaring bankruptcy, and civil judgments an insurance choice, the majority of surety bond companies operate their Bad Credit Surety Bonds service. As there is more risk at play, bad credit bonding rates are greater. Premiums should range from 5% to 10%. However, most businesses make sure you spend the lowest price, so forget about your expenses. To choose the best bonding solution for your circumstances, most companies collaborate with a large number of A-rated, T-listed assurance providers.