Escrow Hub proudly stands behind its promise of being “your premier independent escrow company serving Southern California and surrounding areas.” For the thousands of closings we’ve coordinated over the years, we endeavor to exceed expectations for each and every transaction. But if asked, all escrow companies and their affiliated agents would have the same response. Not all companies operate as an independent provider of escrow services as we do. Let’s compare what differentiates independent escrow companies from other associated “controlled” escrow companies. Let’s get started with comparing independent and controlled escrow companies.
Comparing Independent and Controlled Escrow Companies
Independent Escrow Companies
To qualify as an independent escrow agent, they are required to be a member of the Escrow Agents’ Fidelity Association (EAFC), as sanctioned under California Financial Code – FIN § 17312. Individuals with a criminal record or history of documented misconduct are not allowed. Additionally, agents are bonded through their EAFC membership which protects them against fraudulent loss or embezzlement.
Agents of Independent escrow companies undergo strict background checks, fingerprinting, and required audits as required by the California Department of Financial Protection and Innovation. This organization oversees the operations of a variety of fiduciary and non-fiduciary financial institutions and businesses.
Independent escrow companies are required to always have a licensed agent on staff during business hours with a minimum of five years’ experience.
Controlled Escrow Companies
Companies that offer real estate services to consumers are allowed to own an affiliated escrow company. Brokerages, mortgage companies, banks, and title companies fall under this category. In fact, many real estate service providers run in-house escrow shops as a matter of efficiency. But what one gains in efficiency, one loses in expertise and reliability. For example:
- Escrow managers for controlled companies aren’t required to be licensed by the California Department of Real Estate.
- Background checks aren’t required.
- Controlled escrow companies may not be bonded, as required for independent escrow companies. For example, in the event of fraudulent activity, consumers working with a bonded escrow company are covered up to $50,000 per transaction and licensees are covered up to $250,000
- Controlled Escrow companies aren’t subject to stringent EAFC regulations, but to the policies applicable to real estate licensee, title insurance, and other non-escrow service providers involved in a real estate transaction.
It’s Your Choice
The vast majority of the transactions conducted by controlled escrow companies proceed without incident. The overwhelming advantage independent escrow companies wield is the integrity and dependability of their work backed by entities that verify the competency of its members, while providing financial protection to consumers in the event of fraud or incompetence. Both real estate professionals and consumers can absolutely trust their business with independent escrow companies like Escrow Hub.