Escrow Security Bond
Escrow is a commonly used tool to secure enormous sums of money exchanged in real estate deals. But what would happen if the escrow agent or company absconded with the buyer's money? The buyer could lose their life savings. So, many states require an escrow security bond for escrow personnel to operate in their jurisdiction.
What is an Escrow Security Bond?
An escrow security bond is a surety bond that guarantees the lawful and ethical behavior of escrow agencies and their agents. The bond creates both a financial incentive for lawful behavior and a mechanism for injured parties to sue for damages if the law is broken.
How Does an Escrow Agency Surety Bond Work?
An escrow agency surety bond is a specific type of license bond. It works like most surety bond types in that there are three essential parties to the legal agreement:
- The Obligee is the state that requires the escrow bond.
- The Principal is the bonded escrow agency or agent that secures the bond.
- The Surety is the insurance company that underwrites the bond.
If someone has been victimized by an escrow agent's fraudulent behavior, the injured person can file a claim against the escrow bond. Then, the surety will conduct a thorough investigation of the claim. If the surety finds in favor of the person filing the claim, they will promptly pay to cover the damages up to the full value of the bond. Then, the surety seeks repayment from the principal. If they find in favor of the principal, the surety will dismiss the claim.
Who Needs an Escrow Bond?
If you wish to become an independent escrow agent or to open an escrow agency where escrow bonds are required, you must comply. Failure to do so means you cannot legally pursue your business. At this time, the following states require escrow security bonds:
- Arizona
- California
- Idaho
- Oregon
- Utah
- Washington
Check with the state board that regulates escrow in your state to learn whether you need bonding. Or contact Viking Bond Service. Our escrow bond experts will assist you.
How Much Does an Escrow Security Bond Cost?
The obligee that mandates escrow surety bonds also sets their required value. In Arizona, the bond must be for $100,000, while in Washington, you just need a $10,000 bond. The bond cost is a small percentage of the bond's value, typically between 1% and 5%. The better the principal's credit, the lower the fee. So, if you have sterling credit, a $100,000 bond could cost $1,000. If you have a rocky credit history, we will work with you to help you get bonded for the lowest possible fee.
How to Get an Escrow Security Bond?
At Viking Bond Service, we make it easy to obtain a surety bond. Simply complete our online bond application. We will run credit and get you a custom, competitive quote ASAP. We will contact you if we need further documents to approve your escrow bond.
Get Your Free Escrow Bond Quote Today
At Viking Bond Service, we are invested in your success. Contact us online, or call us at 1-888-2-SURETY (1-888-278-7389).
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