Arizona Escrow Agent Bond Requirements
When applying to get licensed as an escrow agent at the DFI, individuals must post a $100,000 bond as part of the licensing requirements.
What Is The Purpose of This Bond?
Escrow agent license applicants must post this bond as a guarantee that they will comply with the provisions of the ARS that govern this type of business.
If a licensed agent violates these provisions and causes losses to anyone as a result of fraud, misrepresentation, default or other wrongful acts, then that person may file a claim against the bond.
The surety that backs the bond must then issue compensation to claimants to adequately cover them for the losses they have suffered. Such compensation may be up to the full amount of the bond.
You can learn more about why bonds are required, how they function, and why you need one from our detailed ‘What is a surety bond' guide!
In the following sections you can learn more about the cost of getting bonded, what can give rise to a claim against your bond, and how to apply!
You can also call us at 866.450.3412 anytime to speak to one of our professionals!
What's The Cost of The Arizona Escrow Agent Bond?
The cost of getting bonded is a percentage of the full amount of your bond. This percentage depends on the financial standing of each applicant.
Certain financial factors play a greater role in determining your bond premium, than others. They are as follows.
Factors That Determine Your Bond Premium
Personal credit score is the primary factor assessed by every surety when someone applies for a bond.
The general rule about credit score is that the higher an applicant's score, the cheaper it is for them to get a bond.
Bond rates for applicants with very high to good credit scores usually vary between 1% and 3% of the bond amount. Bond rates for applicants with low or so-called bad scores typically start around 3% and can go as high as 5%.
Even though credit scores play an important role, sureties will frequently also look at your:
- Personal and business financial statements
- Fixed and liquid assets
- Work experience and record
For an estimate of your bond premium, based on credit score, see the table below!
|Arizona Escrow Agent Bond Cost Based on Credit Score|
|License type||Bond Amount||Credit Score|
|Above 700||650-699||600-649||Below 599|
|Arizona escrow agent||$100,000||$1,000-$3,000||$1,000-$3,000||$1,000-$3,000||$3,000-$5,000|
How Do Bond Claims Occur?
Escrow agents in Arizona must post a $100,000 bond as a guarantee for their compliance with the provisions of Title 6, Chapter 7 of the ARS.
If they violate these provisions and if, specifically, they cause losses to any person as a result of committing misrepresentation, fraud, defaulting on their obligations, or any other wrongful act, a claim can be filed against their bond.
Once an action is brought against the bond, the surety company must determine the amount of loss suffered by the claimant, and the appropriate amount of compensation to extend. When the surety compensates claimants in a sufficient amount, this concludes the claims process for them.
For the bonded escrow agent, though, there is the obligation to repay the surety in full for any coverage it extends. All surety bond agreements are conditioned on the liability of the bonded party. So, even though the surety may initially compensate claimants, it is the bonded agent who is liable and who must then reimburse the surety in full.
Bond claims can be costly to deal with. Moreover, they may cause reputational damage to one's business and make it harder to get bonded again in the future. The best strategy therefore is to comply with the conditions of one's bond agreement, and the obligations under it.
How Do I Apply For This Bond?
Simply click on the banner below and complete the brief bond form. We will then contact you with a free quote on your bond as well as full details on the bonding process.
If you want to know more about the bonding conditions for Arizona escrow agents, call us at 866.450.3412!