Arizona Escrow Agent Bond: A Comprehensive Guide
This guide provides information for insurance agents to help customers obtain an Arizona Escrow Agent bond.
At a Glance:
- Lowest Cost: $750 per year or $75 per month
- Bond Amount: $100,000
- Who Needs It: All escrow agents operating in Arizona
- Purpose: To ensure the public will receive compensation for financial harm if the escrow agent violates licensing laws
- Who Regulates Escrow Agents in Arizona: The Arizona Department of Insurance and Financial Institutions
Background
Arizona Revised Statute 6-814 requires all escrow agents operating within the state to obtain a license from the Department of Insurance and Financial Institutions. The Arizona legislature enacted the licensing requirement to ensure escrow agents do not engage in unethical business practices. To provide financial security for enforcing licensing laws, escrow agents must purchase and maintain a $100,000 surety bond to be eligible for licensure.
What Is the Purpose of the Arizona Escrow Agent Bond?
Arizona requires escrow agents to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that restitution is available to any damaged party should the escrow agent fail to abide by the regulations outlined in Arizona Revised Statute 6-814. Specifically, the bond protects claimants if the escrow agent acts negligently, commits fraud, or engages in unfair business practices. In short, the bond is a type of insurance that protects the public if the escrow agent violates the terms of their license.
How Can an Insurance Agent Obtain an Arizona Escrow Agent Surety Bond?
BondExchange makes obtaining an Arizona Escrow Agent bond easy. Simply log in to your account and use our keyword search to find the “escrow agent” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone at (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
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Is a Credit Check Required for the Arizona Escrow Agent Bond?
Surety companies will run a credit check on the escrow business to determine eligibility and pricing for the Arizona Escrow Agent bond. Escrow agents with excellent credit and work experience can expect to receive the best rates. While escrow agents with poor credit may be declined by some surety companies, or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the applicant’s credit.
How Much Does the Arizona Escrow Agent Bond Cost?
The Arizona Escrow Agent bond can cost between $750 to $7,000 per year or $75 to $700 per month. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on the $100,000 bond requirement.
$100,000 Escrow Agent Bond Cost
| Credit Score* | Bond Cost (1 Year) | Bond Cost (1 month) |
|---|---|---|
| 720+ | $750 | $75 |
| 625 – 719 | $1,000 | $100 |
| 600 – 624 | $2,500 | $250 |
| 575 – 599 | $3,000 | $300 |
| 550 – 574 | $5,000 | $500 |
| 500 – 549 | $7,000 | $700 |
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
How Does Arizona Define “Escrow Agent”?
Arizona Revised Statute 6-801 defines an escrow agent as “any person engaged in the business of accepting escrows.” Escrow agents act as neutral third parties to the sale or transfer of real or personal property. For example, an escrow agent may hold onto the title of a home until the real estate transaction has successfully gone through. Once approved, the escrow agent may transfer the title over to the new owners.
Exemptions to this definition include:
- Licensed attorneys conducting regular business
- Persons acting under a court order
- Trustees of deeds of trust performing their duties
- Licensed real estate brokers collecting rents for others
- Licensed collection agencies acting within the scope of their authority
- Licensed mortgage brokers, bankers, and loan originators
- Licensed premium finance companies
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How Do Escrow Agents Apply for a License in Arizona?
Escrow agents in Arizona must navigate several steps to obtain a license. Below are the general guidelines, but applicants should refer to the Department of Insurance and Financial Institution’s Escrow Agents webpage for specific details on the process.
License Period – The Arizona Escrow Agent License expires on September 30th of each year and must be renewed before the expiration date.
Step 1 – Purchase a Surety Bond
Escrow agents operating within the State of Arizona must purchase and maintain a $100,000 surety bond.
Step 2 – Complete the Application
Applications for an escrow agent license must be completed through the Arizona Professional Licensure Portal. The following forms are required as part of the application process:
-
- Copy of signed and sealed Escrow Agent bond
- Unaudited financial statement (include a balance sheet, as well as a profit and loss statement)
- Biographical Statement
- Escrow Rate Filing Form
For additional details, check out the DFI Application Requirements page. All persons owning at least 20% of the business, as well as any key individuals and active managers, must undergo a background check.
Escrow agents must apply for a separate business license for each branch location.
Step 3 – Pay Fees
Applicants for an Arizona escrow agent license must pay the following fees when submitting their license application:
-
- New Application – $1,000.00 + License Fee (based upon submission date):
| Month the License Is Issued | Licensing Fee |
|---|---|
| Jan, Feb, Mar | $750 |
| Apr, May, June | $500 |
| July, Aug, Sep | $1,250* |
| Oct, Nov, Dec | $1,000 |
- Branch Office Application – $500.00 + License Fee (based upon submission date):
| Month the License Is Issued | Licensing Fee |
|---|---|
| Jan, Feb, Mar | $187.50 |
| Apr, May, June | $125 |
| July, Aug, Sep | $312.50* |
| Oct, Nov, Dec | $250 |
*Fee includes the following year’s renewal fee.
How Do Arizona Escrow Agents Renew Their License?
An escrow agent can renew their license online through the licensure portal. Arizona escrow agent licenses expire on September 30th of each year. License renewals are due between August 1st and September 30th. Licenses renewed from October 1st to the 31st are subject to an additional penalty fee of $25 a day.
What Are the Insurance Requirements for Escrow Agents in Arizona?
Arizona does not require escrow agents to purchase any form of liability insurance as a prerequisite to obtaining a license. Escrow agents must purchase and maintain a $100,000 surety bond.
How Do Arizona Escrow Agents File Their Bonds?
Escrow agents should submit their completed bond forms, including the power of attorney, electronically when submitting their license applications to the Arizona Department of Insurance and Financial Institutions. The surety bond requires signatures from the surety company, as well as the escrow agent. The surety company should include the following information on the bond form:
- The legal name of the individual buying the bond
- Surety company’s name
- License type (escrow agent)
- Date the bond is signed
It is important to note that if the Department grants the applicant an escrow agent license, a copy of the bond form must then be uploaded to the NMLS.
What Can Arizona Escrow Agents Do to Avoid a Claim Against Their Surety Bond?
The easiest way to avoid a claim as an escrow agent is to comply with all applicable license regulations. Common violations that can cause an official bond claim are listed below:
- Negligence
- Default
- Misrepresentation
- Fraud
For example, failure to maintain accurate/current accounting and finance records of all business transactions is subject to a negligence violation. If the violation remains unresolved by the licensee, a bond claim may be filed.
What Other Insurance Products Can Agents Offer Escrow Agents in Arizona?
Arizona does not require escrow agents to obtain any form of liability insurance. However, most reputable businesses will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for Arizona Escrow Agent Customers?
Arizona conveniently provides a public database to search for active escrow agents in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.