Utah Escrow Agency Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a Utah Escrow Agency bond.
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 agencies operating in the State of Utah
- Purpose: To protect the public from financial harm if the escrow agency commits fraud or engages in unfair business practices
- Who Regulates Escrow Agencies in Utah: The Utah Department of Financial Institutions
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 Utah Escrow Agency Bond?
Utah Code 7-22-103 requires all escrow agencies operating in the state to obtain a license from the Department of Financial Institutions. The Utah State Legislature enacted the licensing requirement to ensure that escrow agencies do not engage in unethical business practices. To provide financial security for the enforcement of the licensing law, escrow agencies must purchase and maintain a surety bond to be eligible for licensure.
How Can an Insurance Agent Obtain a Utah Escrow Agency Bond?
BondExchange makes obtaining a Utah Escrow Agency bond easy. Simply log in to your account and use our keyword search to find the “escrow agency” 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.
Not an agent? Then let us pair you with one!
Click the above image to find a BX Agent near you
How Is the Bond Amount Determined?
According to Utah Code 7-22-105, the Escrow Agency bond limit is based on the monthly average escrow liability of the licensee. For bond limit calculation details, see below.
- A monthly average of up to $10,000 requires a $10,000 surety bond
- A monthly average of $10,001 to 20,000 requires a $20,000 surety bond
- A monthly average of $20,001 to 30,000 requires a $30,000 surety bond
- A monthly average of $30,001 to 40,000 requires a $40,000 surety bond
- A monthly average of more than $40,000 requires a $50,000 surety bond
Is a Credit Check Required for the Utah Escrow Agency Bond?
Surety companies will run a credit check on the applicant to determine eligibility and pricing for the Utah Escrow Agency bond. Escrow agencies with excellent credit and work experience can expect to receive the best rates. Escrow agencies 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 Utah Escrow Agency Bond Cost?
The Utah Escrow Agency bond 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 Utah Escrow Agency Bond 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 Utah Define “Escrow Agency”?
To paraphrase Utah Code 7-22-101, an escrow agency is a business entity that holds property in a trust for a third party until certain conditions have been met. For example, when an individual is purchasing a house, an escrow agency will hold onto the title to the property and the initial down payment until both the buyer and seller meet all of their contractual obligations.
Exemptions to these definitions include:
- Banks, trust companies, building/loan or savings/loan associations, credit unions, or insurance companies
- Licensed attorneys performing their regular duties
- Licensed abstractors performing title searches for the issuance of a title insurance policy
- Licensed real estate brokers
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 Agency Become Licensed in Utah?
Escrow agencies in Utah must navigate several steps to obtain a license. Below are the general guidelines, but applicants should refer to the NMLS State Licensing Requirements webpage for further details on the process.
License Period – Utah escrow agencies must renew their license with the Department of Financial Institutions on or before December 31st of each year.
Step 1 – Purchase a Surety Bond
All escrow agencies in Utah must purchase and maintain a surety bond for licensure purposes.
Step 2 – Complete License Application
Applications for an escrow agency license must be completed and submitted online through the NMLS website. A new application checklist can be found here (this includes financial statements, bank account details, other trade names, employee information, etc.). A license application of $100 is also required.
How Do Escrow Agencies in Utah Renew Their Licenses?
Utah escrow agencies must renew their license with the Department of Financial Institutions on or before December 31st of each year, as well as pay a $100 renewal fee.
What Are the Insurance Requirements for Escrow Agencies in Utah?
Utah does not require escrow agencies to purchase any form of liability insurance as a prerequisite to obtaining a license. However, escrow agencies must purchase and maintain a surety bond.
How Do Utah Escrow Agencies File Their Bonds?
Escrow agencies in Utah should submit their completed bond forms, including the power of attorney, electronically when submitting their license applications to the NMLS. The surety bond requires signatures from the surety company and the escrow agency. The surety company should include the following information on the bond form:
- Legal name and address of the individual buying the bond
- Surety company’s name
- Date the bond is signed
What Can Utah Escrow Agencies Do to Avoid a Claim Against Their Surety Bond?
The easiest way to avoid a claim as an escrow agency is to comply with all applicable license regulations. Common actions that can cause an official bond claim are listed below:
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 Agencies in Utah?
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 Agency Customers in Utah?
Utah conveniently provides a public database to search for active escrow agencies 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.