Nevada Escrow Agency Bond: A Comprehensive Guide

This guide provides information for insurance agents to help their customers obtain a Nevada Escrow Agency bond.

At a Glance:

• Lowest Cost: $150 per year or $15 a month
• Bond Amount: Determined on a case-by-case basis (more on this later)
• Who Needs It: All escrow agencies operating in Nevada
• Purpose: To protect the public from financial harm if the escrow agency commits fraud or engages in unfair business practices
• Who Regulates Escrow Agencies in Nevada: The Nevada Department of Business and Industry, Division of Mortgage Lending

Background

Nevada Revised Statute 645A.020 requires all escrow agencies operating in the state to obtain a license from the Department of Business and Industry, Division of Mortgage Lending. The Nevada Legislature enacted the licensing requirement to ensure that escrow agencies do not engage in unethical business practices. To provide financial security for the enforcement of the licensing law, escrow agencies must purchase and maintain a surety bond to be eligible for licensure.

What Is the Purpose of the Nevada Escrow Agency Bond?

Nevada requires all escrow agencies to purchase a surety bond as part of the application process to obtain a license. The bond ensures that restitution is available to any damaged party should the escrow agency fail to abide by the regulations outlined in the Nevada Revised Statutes Chapter 65A. Specifically, the Nevada Escrow Agency bond protects claimants if the escrow agency commits fraud or engages in unfair business practices. In short, the bond is a type of insurance that protects the public if the escrow agency violates the terms of its license.

How Can an Insurance Agent Obtain a Nevada Escrow Agency Bond?

BondExchange makes obtaining a Nevada Escrow Agency bond easy. Simply log in to your account and use our keyword search to find the “escrow agency” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

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How Is the Bond Amount Determined?

According to Nevada Revised Statute 645A.041, the Escrow Agency bond limit is based upon the average monthly balance of the trust or escrow account maintained by the escrow agency. See the following for bond amount calculation:

• $50,000 or less – $20,000 bond limit required
• $50,001 to $250,000 – $50,000 bond limit required
• $250,001 to $500,000 – $100,000 bond limit required
• $500,001 to $750,000 – $150,000 bond limit required
• $750,001 to $1,000,000 – $200,000 bond limit required
• More than $1,000,000 – $250,000 bond limit required

Is a Credit Check Required for the Nevada Escrow Agency Bond?

Surety companies will run a credit check on the escrow agency to determine eligibility and pricing for the Nevada Escrow Agency bond. Escrow agencies with excellent credit and work experience can expect to receive the best rates. Escrow agencies with poor credit may be declined by some surety companies or have to pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the applicant’s credit.

How Much Does the Nevada Escrow Agency Bond Cost?

The Nevada Escrow Agency bond can cost between 0.5% to 5% of the bond amount per year.  Monthly subscription options are also available. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below briefly references the approximate bond cost on the $20,000 requirement.

$20,000 Nevada Escrow Agency Bond Cost

*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.

How Does Nevada Define “Escrow Agency”?

To paraphrase Nevada Revised Statute 645A.010, an escrow agency is a third-party business that accepts or receives escrows for deposit. For example, an escrow agency may hold money, documents, or personal property until all stipulations of a contract have been met between the other parties. 

Exemptions to this definition include the following:

• Any person licensed to practice law in Nevada
• Banks, savings and loan associations, credit unions, and industrial loan companies
• Licensed title insurance companies
• Real estate companies (includes brokers and salespersons)
• Certified public accountants
• State and federal chartered nondepository financial institutions
• Mortgage brokers and lenders
• Any receiver, trustee, executor, administrator, or guardian that is under the supervision of a state or federal court
• Mortgage companies

BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.

How Do Escrow Agencies Become Licensed in Nevada?

Escrow agencies in Nevada must navigate several steps to obtain a license. Below are the general guidelines, but applicants should refer to the Division’s Application for Escrow Agency License and Checklist for details on the process.

License Period – The Nevada escrow agency license must be renewed with the Department of Business and Industry, Division of Mortgage Lending by July 1st of each year.

Step 1 – Purchase a Surety Bond

Escrow agencies operating within the State of Nevada are required to purchase and maintain a surety bond.

Step 2 – Fulfill Following Requirements

Complete the Application for Escrow Agency License and submit the following attachments/requirements to the Department:

• Child Support Statement from each natural person with an ownership interest in the company, the company, each person who has the power to direct the management and policy of the company, and each escrow agent
• Personal History Record (including an explanation of “Yes” answers) completed, signed, and notarized for each natural person who owns a 25% or more interest in the company, each person who has the power to direct the management and policy to the company and escrow agent
• Personal Financial Questionnaire completed, signed, and notarized for each natural person who owns a 25% or more interest in the company, each person who has the power to direct the management and policy of the company, and each escrow agent
• Non-Personal History Record (including an explanation of “Yes” answers) completed, signed, and notarized for the company and for each non-natural person/entity that owns a 25% or more interest in the company
• Two years of financial statements
• Two completed fingerprint cards for each natural person who owns a 25% or more interest in the company, each person who has the power to direct the management and policy of the company, and each escrow agent
• $500.00 non-refundable application fee for the principal Nevada office

How Do Escrow Agencies in Nevada Renew Their Licenses?

Nevada escrow agency license must be renewed with the Department of Business and Industry, Division of Mortgage Lending by July 1st of each year. A $500 fee is required.

What Are the Insurance Requirements for Escrow Agencies in Nevada?

Nevada does not require escrow agencies to purchase any form of liability insurance as a prerequisite to obtaining a license. Escrow agencies must purchase and maintain a surety bond.

How Do Nevada Escrow Agencies File Their Bonds?

Escrow agencies should submit their completed bond forms, including the power of attorney when submitting their license applications to the Department of Business and Industry, Division of Mortgage Lending (see the mailing address listed below).

             Department of Business and Industry
             Division of Mortgage Lending
             1830 College Parkway, Suite 100
             Carson City, NV 89706

The surety bond requires signatures from the surety company, as well as a representative from the escrow agency. The surety company should include the following information on the bond form:

• The legal name of the individual buying the bond
• Surety company’s name 
• Date the bond is signed

What Can Nevada Escrow Agencies Do to Avoid a Claim Against Their Surety Bond?

To avoid claims against their bonds, escrow agencies in Nevada must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:

•  Negligence
• Unethical business practices
• Fraud

What Other Insurance Products Can Agents Offer Escrow Agencies in Nevada?

Most reputable escrow agencies will purchase business liability insurance. Bonds are our only business at BondExchange, so we do not issue any other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Escrow Agency Customers in Nevada?

Mississippi conveniently provides a public database to search for active title pledge lenders in the state. The database can be accessed here (the most current list can be found on the bottom right of the page under the “Title Pledge” tab). Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.