Most real estate transactions in the State of California utilize the services of an escrow company and yet escrow remains one of the least understood elements of the real estate process. Because of this, buyers and sellers alike often consult their real estate broker or lender to recommend an escrow company. What you may not realize is that you 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. This responsibility 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.
If you are deciding on an escrow company to trust, then this is a good place to start. The first thing to understand is that there are two options for you to choose from; Independent and Controlled escrow companies.
INDEPENDENT ESCROW COMPANY
An independent escrow agent must join the EAFC (Escrow Agents’ Fidelity Corporation). Membership is a requirement if the agent is involved in escrows specified under Section 17312 (C) of the Financial Code. The membership protects members against any fraudulent loss or embezzlement against an escrow agent or employee of an agent. Any person or company with a history of misconduct or criminal record is denied membership to the EAFC.
An independent agent is must also have someone onsite during business hours with at least five years of qualified escrow experience. Background checks, fingerprinting and a required audit are other requirements. With more guidelines to abide by, means these independent escrow companies will offer quality escrow service to any principal, broker or person.
CONTROLLED ESCROW COMPANY
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.
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.
WHY CHOOSE CITRUS HERITAGE ESCROW
The choice between using an independent and controlled escrow company is yours to make. Most companies in the escrow business are honest and loyal. But, any time handling large sums of money you want it in trusted hands.
Independent companies have the covering and protection needed, not just for themselves but the buyer as well. Using a controlled escrow company does not guarantee reliable protection. So, choose wisely.
When choosing an escrow company there can be many important factors to evaluate. Fees, location, staff and even recommendations from friends and colleagues are all things to consider. With Citrus Heritage Escrow by your side, you can rest assured that when you receive your settlement check, you’ve gained the maximum benefit from your home sale or purchase.
Call us today with any questions or concerns. Our professional Escrow Agents will help you through this exciting yet confusing process. (951) 335-7200