| Most
real estate transactions in the State of California utilizes 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 place their faith in the real
estate broker or lender to recommend an escrow company. What many
consumers don't realize, however, is that they are entrusting this
escrow company to safeguard their funds being held in trust. In
addition, it is the primary responsibility of the escrow holder
to ensure that all of the necessary instructions in the real estate
agreement are executed.
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.
It is crucial, then, that the broker, lender or consumer makes a
knowledgeable and informed decision in choosing an escrow company.
Higher Standards
The stringent requirements by the Department of Corporations assure
that every licensed escrow company has met the highest standards
in the industry. 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 you peace of mind.
Call 760.568.0344
|
"Licensed"
vs. "Controlled"
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 Corporations. 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 Department of Corporations.
Better Protection
Although the majority of escrow companies are honest and above board,
the large sums of money handled by escrow companies can entice unscrupulous
individuals to abscond with the funds they are holding in trust.
And unless the escrow company is bonded, there is often no safeguard
assuring the return of the money to consumers.
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 in the amount of $5 million.
This fidelity bond guarantees that, in the event of theft of trust
accounts, the consumers' funds are protected. |
