During the process of home buying, you'll likely hear the term escrow many times. This can be a little bit confusing to many people, especially first time buyers. It's your right, as a buyer of Rancho Santa Fe homes for sale, to understand escrow and the laws that govern it.
What is an Escrow?
An escrow is defined as anything of value to a party, such as a deed, a document, or money, held by an unbiased third party to be used or delivered to another party after fulfilling a certain event, condition, or obligation. The term is also used to refer to the transaction itself.
For the protection of the parties who entrust their assets to escrow agents in Rancho Santa Fe or anywhere in California, the Escrow Law was enacted. Escrow agents, Internet escrow agents, and joint control agents are subject to its provisions.
An escrow agent is someone who is engaged in the field of receiving escrows for the purpose of delivery or deposit, while an Internet escrow agent is someone who is also engaged in this business, but does it over the Internet.
On the other hand, a joint control agent is any individual who receives money or other assets for spending or payment of the cost of services, materials, labor, fees, permits, or any other things acquired in the building of real property improvements.
Under the Escrow Law, anyone involved in the escrow or joint control business is required to be a corporation that is arranged for that function and must be licensed by the Commissioner. Also, all Internet escrow agents are subject to the licensure requirements. However, there are some individuals who are exempted from such requirements:
1. An individual who does business under any state or federal law that is related to insurance companies, savings and loan or building and loan associations, trust companies, or banks.
2. Any individual who has a license to practice law in this state and has a valid business relation with a principal in a personal property transaction or real estate; also, someone who isn't engaged in an escrow agent's business.
3. An individual whose main business is making searches or preparing abstracts of title used as a basis for the distribution of a title insurance policy by a certain company that is subject to any state law related to insurance companies.
4. A real estate broker that has a license from the Real Estate Commissioner while working in a transaction wherein he/she is an agent and is required to have a real estate license.
Below are the requirements to be able to get a license under the Escrow Law:
1. Pay the application fee
2. Must be a member of the EAFC or the Escrow Agents' Fidelity Corporation
3. File a fidelity bond
4. Submit audited financial records that show the minimum financial requirements
5. File a surety bond of no less than $25,000
6. Must undergo background checks done by the Department
7. Must reach the minimum required experience
8. Has to provide a signed affidavit as proof that he/she is familiar with the Escrow Law
9. Must file a branch office application
If you're purchasing a property in Rancho Santa Fe real estate, it's essential to understand the legal aspects of the home buying process, including the Escrow Law.