Escrow Depository Assessment Security Bond - Statewide in California

Brief Summary

California escrow assessments come from two directions. DFPI bills an annual license fee for every office and can add a special assessment, the Escrow Agents' Fidelity Corporation bills its own annual assessments, and an unpaid bill from either can lead to a summary license suspension. This security puts a surety behind those payment obligations so the requirement does not tie up your cash.

The Escrow Depository Assessment Security is a surety instrument filed under California's Escrow Law, which the Department of Financial Protection and Innovation administers. It secures payment of assessments owed by an escrow licensee. The amount and the required form are set by the obligee, so confirm both with DFPI before the bond is issued. It is separate from the Financial Code 17202 escrow agent bond and from the fidelity deductible bond.

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How to Apply for a Escrow Depository Assessment Security Bond:

• Confirm the required amount, obligee wording and form for the assessment security with DFPI before ordering the bond.
• Use the escrow licensee's exact legal name as it appears on its DFPI license.
• List every licensed office or location, since DFPI license fees and EAFC assessments are figured per location.
• Provide recent financial statements for underwriting.
• Have the surety execute the bond and file it as DFPI directs.
• Keep DFPI and EAFC assessment invoices paid on time while the security is in force.

Detailed Information About the California Escrow Depository Assessment Security Bond:

What this security is for

This instrument stands behind the assessment obligations of a California escrow business. The Department of Financial Protection and Innovation administers the Escrow Law in Financial Code Division 6, and the amount, the obligee wording and the form for this security should be confirmed with DFPI before the bond is issued.

The assessments an escrow licensee owes

Two separate bodies bill escrow agents.

DFPI. Under Financial Code 17207(e), each escrow agent pays an annual license fee of up to $7,215 for each office or location. DFPI mails notice on or before May 30 and payment is due within 30 days. Late payment adds a penalty of 10 percent of the fee for each month or part of a month, and if the fee is still unpaid by the following June 30 the Commissioner may summarily suspend or revoke the license. Section 17207(h) also lets the Commissioner levy a special assessment of up to $1,000 per office or location when enforcement costs run past budget, payable within 60 days.

Escrow Agents' Fidelity Corporation. Escrow agents handling real property, bulk sale, fund or joint control and the other escrow types listed in Financial Code 17312(c) must belong to EAFC. Section 17320 sets a $3,000 membership fee per location. Under Section 17321, EAFC bills each member an annual premium made up of an operations fund assessment, levied by October 15 and payable in three monthly installments, and a fidelity fund assessment, levied by May 1. Each member's fidelity fund share is based on risk factors tied to its coverage per licensed location. Under Section 17323, if a member does not pay, EAFC sends a written demand and the Commissioner may summarily suspend the license.

The March 31 rule

Section 17321(d) requires every member licensed as of March 31 to pay that year's fidelity fund assessment in full, with no pro rata adjustment, even if it surrenders its license or has it revoked before the assessment is mailed. Closing in April does not avoid the bill.

Why the security matters

Each of these assessments can end in a suspension, and a suspended escrow agent cannot conduct business under the Escrow Law except as the Commissioner permits. The security gives the obligee a source of payment if an assessment goes unpaid.

Not the same as the other escrow bonds

California escrow agents can carry three different instruments. The Financial Code 17202 bond, $25,000 to $50,000 by tier, protects the state and the public. The fidelity deductible bond under 10 CCR 1723(c) covers trust losses inside a fidelity bond deductible. This security is tied to assessments. Each is sized and filed on its own.

Eligibility and Requirements for a California Escrow Depository Assessment Security Bond:

• Amount, obligee and form as set by DFPI under the Escrow Law.
• Corporate surety admitted in California (10 CCR 1726.1).
• Principal holds or is applying for a California escrow agent license.
• Separate from the Financial Code 17202 bond and the fidelity deductible bond.

California Escrow Depository Assessment Security Bond FAQs:

Official and Additional Resources for the California Escrow Depository Assessment Security Bond: