Surety Bond Encyclopedia

Escrow Agent ($100,000) Bond - Statewide in Arizona

Brief Summary

Arizona sets one figure for every licensed escrow agent: a $100,000 corporate surety bond, with no tiers. Posting the bond instead of $100,000 in cash or certificates of deposit keeps that money in the business, and a cash deposit is held by the state treasurer for at least three years after a bond replaces it or the license ends.

Under A.R.S. § 6-814(C), every Arizona escrow agent must deposit and maintain a $100,000 corporate surety bond with the deputy director of the Financial Institutions Division of the Department of Insurance and Financial Institutions, from the day it files its license application for as long as it holds the license. The bond is payable to anyone injured by the licensee's failure to comply with the escrow law or by the wrongful act, default, fraud or misrepresentation of the licensee or its employees.

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How to Apply for a Escrow Agent ($100,000) Bond:

Prepare the license application, verified by oath, listing the principal office and every Arizona branch office.
List the names and residence and business addresses of all principals, partners, officers, trustees and directors.
Pay the $1,000 application fee plus $500 for each branch office application.
Obtain the $100,000 corporate surety bond and file it with the application.
Answer any additional information requests from the deputy director.
Renew by December 31 each year with the $1,000 renewal fee plus $250 per branch office.

Detailed Information About the Arizona Escrow Agent ($100,000) Bond:

One amount, no tiers

A.R.S. § 6-814(C) requires a corporate surety bond of $100,000 when an escrow agent files its license application and at all times while it holds the license. The bond is payable to any person injured by the licensee's failure to comply with the escrow chapter, or by the wrongful act, default, fraud or misrepresentation of the licensee or its employees, and to the State of Arizona for the benefit of the injured person. It must be executed by a surety company qualified to do business in Arizona.

Who needs a license, and who does not

A.R.S. § 6-813 bars anyone from acting as an escrow agent without a license unless exempt under § 6-811. The exemptions include a lawyer licensed in Arizona who is not actively engaged in conducting an escrow business, trustees under deeds of trust acting as trustees, acts done under a court order, and real estate brokers holding rents or earnest money who account for it within a reasonable time. Banks, credit unions, savings banks, trust companies and savings and loan associations are outside the licensing article, but § 6-811(B) says that does not allow an affiliate of one of those institutions to run an escrow business without its own license. A bank affiliate handling escrows needs the license and the bond.

Cash instead of a bond

Section 6-814(D) allows a $100,000 deposit of cash or approved alternatives in place of the bond. The alternatives are certificates of deposit, investment certificates or share accounts assigned to the state treasurer from federally insured banks, savings and loan associations or credit unions doing business in Arizona. The money cannot come from any escrow deposit, and the principal is not released until at least three years after a bond is substituted, the license is surrendered, or the license is revoked or expires, whichever happens first.

Claims

A suit on the bond must be brought within three years after the act it is based on, with fraud claims timed under A.R.S. § 12-543. A claimant who sues must notify the deputy director in writing when the action begins.

Fees and renewal

A.R.S. § 6-126 sets a $1,000 application fee, $500 for each branch office application, and an annual renewal fee of $1,000 plus $250 for each branch office. Under § 6-815 the renewal is due by December 31. Each day late adds $25, the license is suspended if the renewal is not received by December 31, and it expires if the renewal and fee are not in by January 31.

Eligibility and Requirements for a Arizona Escrow Agent ($100,000) Bond:

Corporate surety bond of exactly $100,000.
Surety company qualified to do business in Arizona.
Bond payable to injured persons and to the State of Arizona for their benefit.
Bond kept in force for as long as the license is held.
A foreign corporation needs a valid grant of authority to do business in Arizona before transacting escrow business, under A.R.S. § 6-812.

Arizona Escrow Agent ($100,000) Bond FAQs:

Does the bond go up with more branches or more volume?

Section 6-814(C) sets one figure, $100,000, and does not scale it. Branches add a $500 application fee each and $250 apiece to the annual renewal fee under § 6-126.

We are an affiliate of an Arizona bank. Are we exempt?

No. A.R.S. § 6-811(B) exempts banks, credit unions, savings banks, trust companies and savings and loan associations themselves, but says plainly that the exemption does not let an affiliate engage in the escrow business unless it is licensed.

Can we post cash instead of a bond?

Yes. Section 6-814(D) accepts $100,000 in cash or approved certificates of deposit, investment certificates or share accounts assigned to the state treasurer. The funds cannot come from escrow deposits, and they stay on deposit for at least three years after the bond is substituted or the license ends.

How long does an injured party have to sue on the bond?

Three years after the act the suit is based on. Fraud claims are measured under A.R.S. § 12-543. The claimant must notify the deputy director in writing when the suit is filed.

What happens if we miss the December 31 renewal?

A $25 fee accrues for each day late, and the license is suspended until renewed. If the renewal application and fee are not received by January 31, the license expires and a new original license is required.