California Escrow License Surety Bond

To become an escrow agent in California, you must obtain a special bond called the California Escrow License Surety Bond. This bond is required by the California Department of Business Oversight, Division of Corporations and helps protect individuals who entrust escrow agents with their money or property.

What is Escrow?

In California, “escrow” refers to a process where a neutral third party safely holds valuable items—such as money or property documents—while a sale, transfer, lease, or similar deal is being completed. In many cases, an Escrow Agent Bond is required to ensure the escrow agent handles these responsibilities ethically and in compliance with state regulations. The third party keeps these items until certain conditions are met. Once everything is completed, the third party gives the items to the correct person involved in the deal.

Escrow agents manage this process and are required to be licensed—even if they operate online. These laws exist to protect individuals who use escrow services, which is why escrow companies must follow strict regulations.

What Are the Requirements to Get a License?

To become a licensed escrow agent in California, you must meet the following requirements:

1. Join the Escrow Agents’ Fidelity Corporation (EAFC): Membership in this organisation helps protect consumers and ensures compliance with industry standards.
2. File a Fidelity Bond (if applicable): If you handle transactions not covered under Section 17312, you must file a separate fidelity bond.
3. Meet Financial Requirements: Submit audited financial statements that show:
   • Tangible assets of more than $50,000
   • Liquid assets (cash or easily accessible funds) of at least $25,000
4. Undergo Background Checks: All owners, directors, shareholders, and officers must pass a complete background check.
5. Appoint a Qualified Manager: The manager must have a minimum of five years’ experience in escrow services, be present at the licensed office during business hours, and sign an affidavit confirming they understand and follow California’s escrow laws and regulations.
6. Pay the Required Fees:
   • $625 for the first office location
   • $425 for each additional office
   • $100 investigation fee for every office location
7. Obtain a California Escrow License Surety Bond: You must purchase a bond with a minimum value of $25,000, issued by a company legally authorised to do business in California. With good credit, some providers may offer this bond for less than 1% of its total value.

How Much Should the Bond Be?

The required bond amount depends on how much money the escrow agent handles (called “trust liability”). The base amount is $25,000, but it can go up to $35,000 or $50,000, depending on average trust liabilities. For each additional licensed location, the bond amount must increase by $5,000.

Want More Information?

To learn more about licensing and escrow laws, visit the Department of Business Oversight’s official website. They provide all the necessary forms, instructions, and legal details.

This bond is a key step in ensuring escrow agents in California act responsibly and protect the interests of their clients.