Reasons to Use an Independent Escrow Company
All escrow companies in California are either licensed or controlled escrow companies. Licensed escrow companies, generally referred to as independent escrow companies, are licensed by the California Department of Business Oversight (CDBO). The CDBO strictly regulated the procedures and practices of licensed escrow companies and subject them to strict requirements intended to protect consumers.
Controlled escrow companies are not licensed by the CDBO and are typically owned by real estate brokers, mortgage companies, or title insurance companies. These companies are subject to regulations that are not nearly as strict as those imposed by the California Department of Business Oversight.
Licensed or independent companies in California are required to be members of the Escrow Agents Fidelity Corporation (EAFC) which provides protection for client trust funds including a program of periodic audits.
Unless an escrow company is owned by a regulated title insurance company licensed to do business in California, Pacific-Realtors.net recommends the use of licensed, independent escrow companies since the potential exists for escrow companies owned by real estate brokers and mortgage companies to have a conflict of interest with their clients.