Louisiana Escrow Agent (Bond for Deed): A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a Louisiana Escrow Agent (Bond for Deed).
At a Glance:
- Lowest Cost: $100 per year or $10 a month
- Bond Amount: Determined on a case-by-case basis (more on this later)
- Who Needs It: All escrow agents that handle bond for deed transactions within Louisiana
- Purpose: To protect the public from financial harm if the escrow agent commits fraud or engages in unfair business practices
- Who Regulates Escrow Agents in Louisiana: The Louisiana Office of Financial Institutions
Background
Louisiana Revised Statutes 903, Section A requires all escrow agents that handle bond for deed transactions in the state to obtain a license from the Office of Financial Institutions. The Louisiana Legislature enacted the licensing requirement to ensure that escrow agents do not engage in unethical business practices. To provide financial security for the enforcement of the licensing law, escrow agents must purchase and maintain a surety bond to be eligible for licensure.
What Is the Purpose of the Louisiana Escrow Agent (Bond for Deed)?
Louisiana requires all escrow agents that handle bond for deed transactions to purchase a surety bond as part of the application process to obtain a license. The bond ensures that restitution is available to any damaged party should the escrow agent fail to abide by the regulations outlined in the Louisiana Revised Statutes Title 9, Chapter 2, Part 1. Specifically, the bond protects claimants if the escrow agent 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 a Louisiana Escrow Agent (Bond for Deed)?
BondExchange makes obtaining a Louisiana Escrow Agent (Bond for Deed) easy. Simply log in to your account and use our keyword search to find the “bond for deed” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (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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How Is the Bond Amount Determined?
According to the Louisiana Office of Financial Institutions, the Escrow Agent (Bond for Deed) limit is based on the annual business activity of the preceding calendar year. For first-time licensees, the surety bond is required to have a $10,000 minimum amount.
Is a Credit Check Required for the Louisiana Escrow Agent (Bond for Deed)?
Surety companies will run a credit check on the escrow agent to determine eligibility and pricing for the Escrow Agent (Bond for Deed). Escrow agents with excellent credit and work experience can expect to receive the best rates. Escrow agents with poor credit may be declined by some surety companies or have to 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 Louisiana Escrow Agent (Bond for Deed) Cost?
The Escrow Agent (Bond for Deed) can cost between 0.5% to 5% of the bond amount per year. Monthly subscription options are also available. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below briefly references the approximate bond cost on the $10,000 requirement.
$10,000 Louisiana Escrow Agent (Bond for Deed) Cost
| Credit Score* | Bond Cost (1 Year) | Bond Cost (1 month) |
|---|---|---|
| 649 – 720+ | $100 | $10 |
| 629 – 648 | $150 | $15 |
| 600 – 628 | $250 | $25 |
| 580 – 599 | $350 | $35 |
| 550 – 579 | $400 | $40 |
| 525 – 549 | $500 | $50 |
| 500 – 525 | $600 | $60 |
*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 Louisiana Define “Escrow Agent”?
To paraphrase Louisiana Revised Statute 901, an escrow agent is a business that is a designated third party to a bond for deed transaction. For example, the escrow agent distributes payments made between two parties in accordance with a written bond for deed escrow agent agreement.
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 Become Licensed in Louisiana?
Escrow agents in Louisiana must navigate several steps to obtain a license. Below are the general guidelines, but applicants should refer to the Louisiana Office of Financial Institutions Bond for Deed webpage for details on the process.
License Period – The escrow agent (bond for deed) license is effective for one year and must be renewed annually with the Louisiana Office of Financial Institutions on or before March 15th.
Step 1 – Purchase a Surety Bond
All escrow agents that handle bond for deed transactions within Louisiana must purchase and maintain a surety bond.
Step 2 – Fulfill Net Worth Requirements
Each applicant shall have a $25,000 net worth.
Step 3 – Satisfy the Following Requirements
To apply for a license, applicants must complete the requirements listed below:
- Complete the Escrow Agent (Bond for Deed) License Application
- Include a $150 application fee with the application
- Provide evidence of escrow deposit accounts
- Two original fingerprint cards (a $39.25 background processing fee is needed)
- Attach a list of additional locations where the applicant intends to operate as a bond for deed escrow agent. Include complete physical/municipal address, phone number, and name of manager
How Do Escrow Agents in Louisiana Renew Their Licenses?
Escrow agents must annually renew their license with the Louisiana Office of Financial Institutions on or before March 15th. A nonrefundable license renewal fee of $100 is required. If the renewal application and fee are mailed after the due date but on or before April 15th, an additional late penalty equal to 50 percent of the renewal fee shall be paid as a prerequisite for the renewal of an existing license. Failure to mail an application for renewal with its accompanying fee on or before April 15th shall result in the expiration of the existing license.
What Are the Insurance Requirements for Escrow Agents in Louisiana?
Louisiana 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 surety bond.
How Do Louisiana Escrow Agents File Their Bonds?
Escrow agents should submit their completed bond forms, including the power of attorney when submitting their license applications to the Louisiana Office of Financial Institutions (see the mailing address listed below).
Office of Financial Institutions
8660 United Plaza Boulevard, 2nd Floor
Baton Rouge, LA 70809
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
- Date the bond is signed
What Can Louisiana Escrow Agents Do to Avoid a Claim Against Their Surety Bond?
To avoid claims against their bonds, escrow agents in Louisiana must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:
- Negligence
- Misrepresentation
- Fraud
What Other Insurance Products Can Agents Offer Escrow Agents in Louisiana?
Most reputable escrow agents will purchase business liability insurance. Bonds are our only business at BondExchange, so we do not issue any other types of 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 Escrow Agent Customers in Louisiana?
Louisiana 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.