Escrow Agent (For Fidelity Bond Deductible) Bond - Statewide in California

Brief Summary

If your escrow company's fidelity bond carries a deductible, DFPI requires that gap to be covered by a surety bond as well. This bond, filed on form DFPI-EL 303A, is written for exactly the deductible amount, so get the deductible figure from your fidelity carrier first and the surety bond is sized to match it.

Under 10 CCR 1723(c), a California escrow agent whose required fidelity bond has a deductible must deposit with the Commissioner of Financial Protection and Innovation a surety bond in the amount of that deductible. There is no fixed dollar figure. The bond equals the deductible and, according to DFPI, must always be maintained at that amount. It is filed on form DFPI-EL 303A and pays the Commissioner for trust losses the fidelity bond does not cover because of its deductible.

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How to Apply for a Escrow Agent (For Fidelity Bond Deductible) Bond:

• Get the exact deductible on your Section 1723 fidelity bond from the fidelity carrier.
• Set the surety bond penal sum equal to that deductible.
• Complete form DFPI-EL 303A with the escrow agent's legal name as principal.
• Have the surety execute the form through its attorney in fact.
• File the bond with the DFPI Commissioner along with the fidelity bond.
• Change the surety bond amount whenever the fidelity deductible changes.

Detailed Information About the California Escrow Agent (For Fidelity Bond Deductible) Bond:

The amount is whatever your deductible is

No statute sets a dollar figure for this bond. Title 10, California Code of Regulations, Section 1723(c) says a required fidelity bond may contain a deductible, but the escrow agent shall deposit with the Commissioner a surety bond satisfactory to the Commissioner in the amount of the deductible. DFPI's Escrow Law FAQ adds that this surety bond must always be maintained in the amount of the fidelity bond deductible. If the deductible goes up at your fidelity renewal, this bond has to go up with it.

Which escrow agents this applies to

Section 1723 covers applicants and licensees that are not required to be members of the Escrow Agents' Fidelity Corporation under Financial Code 17312, or that handle escrows of types not listed in Section 17312(c). The listed types are real property escrows, bulk sale escrows, fund or joint control escrows, manufactured home and mobilehome escrows, reservation deposits, and escrows for promissory notes secured by deeds of trust. EAFC coverage is limited to those types. Escrow work outside them falls under the Section 1723 fidelity bond, and under this deductible bond whenever that fidelity bond has a deductible.

The fidelity bond it sits under

Section 1723(a) requires a fidelity bond of not less than $125,000 indemnifying the escrow agent against fraudulent or dishonest acts of its officers, directors, trustees and employees, written by an insurer licensed by the California Department of Insurance. Minimum coverage then rises with monthly average escrow liability:

• Up to $125,000: $125,000
• $125,001 to $250,000: $250,000
• $250,001 to $500,000: $500,000
• $500,001 to $750,000: $750,000
• $750,001 to $1,000,000: $1,000,000
• $1,000,001 to $3,000,000: $2,000,000
• $3,000,001 to $5,000,000: $3,000,000
• $5,000,001 to $7,500,000: $4,000,000
• $7,500,001 to $10,000,000: $5,000,000
• Above $10,000,000: an added $1 of coverage for every $3 of average escrow liability over $10,000,000

The fidelity bond itself cannot be cancelled without 30 days prior written notice to the Commissioner.

What the deductible bond pays

On form DFPI-EL 303A (Rev. 10-20), the obligee is the Commissioner of Financial Protection and Innovation of the State of California, and the form cites Financial Code 17203.1 and 10 CCR 1723(c). The principal and its agents and employees must pay the Commissioner any loss of trust obligations that the fidelity bond does not cover because of the deductible. No action may be brought more than two years after the act or default complained of. The surety may cancel under Code of Civil Procedure 996.320 and 996.330, and it must notify the Commissioner in writing if it is served with an action on the bond or makes any payment.

Eligibility and Requirements for a California Escrow Agent (For Fidelity Bond Deductible) Bond:

• Penal sum equal to the fidelity bond deductible, maintained at that amount.
• Obligee: the Commissioner of Financial Protection and Innovation.
• Form DFPI-EL 303A, citing Financial Code 17203.1 and 10 CCR 1723(c).
• Applies to escrow work outside the EAFC categories in Financial Code 17312(c).
• Separate from the Financial Code 17202 escrow agent surety bond.

California Escrow Agent (For Fidelity Bond Deductible) Bond FAQs:

Official and Additional Resources for the California Escrow Agent (For Fidelity Bond Deductible) Bond: