Escrow Company Licensing
Most real estate transactions in the State of California utilize the services of an escrow company. Ironically , escrow remains one of the least understood elements of the real estate process.
Because of this, buyers and sellers often utilize real estate broker or lender to recommend an escrow company. What many consumers don't realize, however, is that it is the primary responsibility of the escrow holder to ensure that all of the necessary instructions, pertaining to escrow, in the real estate agreement are complied with.
The responsibility to protect the consumers interests should not be taken lightly. The escrow holder must remain impartial during the escrow period to ensure fair representation of all parties.
Licensed vs. Controlled ( Granite Escrow & Settlement Services is Licensed)
All escrow companies in California can be classified into two basic categories: Licensed or Controlled. "Licensed" escrow companies are independent businesses licensed by the California Department of Business Oversight. This license regulates the procedures and practices of the companies and subjects them to stringent requirements designed to protect consumers.
"Controlled" escrow companies are non-licensed businesses that can be owned by a variety of entities, including real estate brokers, mortgage brokers, banks, savings and loans, and title insurance companies. Such companies fall under the jurisdiction of a variety of supervising agencies, with regulations and requirements that vary widely. One fact remains constant, however. None of the agencies have regulations as strict as those imposed on the escrow companies licensed by the California Department of Business Oversight.
Licensed escrow companies are consumers best bet for safeguarding their funds. All licensed escrow companies are required to be members of the Escrow Agents' Fidelity Corporation, which provides fidelity coverage for member trust accounts. This fidelity bond guarantees that, in the event of theft of trust accounts, the consumers' funds are protected.
The stringent requirements by the California Department of Business Oversight assure that every licensed escrow company has met the highest standards of the industry. Consumer protection regulations unique to licensed escrow companies include:
A certification program for all escrow officers in the company's employ, including fingerprinting and background checks by the Department of Justice.
A requirement that an escrow officer with at least five years of escrow experience be on site;
Financial stability requirement, including a minimum of two audits a year;
Prohibiting employment of convicted felons or anyone who has been disbarred from the escrow industry;
Membership with the Escrow Agents' Fidelity Corporation which provides a $ 5 million fidelity bond.
The bottom line is that a licensed escrow company is the best possible neutral third party to complete your real estate transaction. Whether searching for an escrow holder yourself or looking to recommend one to a client, a licensed escrow company gives peace of mind.