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Title Agent Bond: A Comprehensive Guide For Insurance Agents

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This guide provides information for insurance agents to help their customers obtain a Title Agent bond.

 

What Is a Title Agent Bond?

 

A Title Agent bond (sometimes referred to as an Escrow Agent/Agency bond, Abstractor bond, or Title Insurance bond) is a government-required surety bond that title agents/agencies must purchase as a prerequisite to obtaining a professional or business license. Title Agent bonds protect insureds from financial harm if the title agent/agency violates the terms of their license by committing fraud or engaging in unfair business practices. For example, if a title agent misappropriates client funds and/or unlawfully fails to transfer a property title, then the insured could file a claim against the title agent’s surety bond to recover their losses.

 

Title Agent bonds must remain active for as long as the title agent/agency is licensed.

 

Unlike most insurance products, surety bonds protect a third party (the obligee) from acts that violate the law. When the surety company suffers a loss due to a title agent’s actions, the licensee must repay the surety company for such losses, as well as court costs (this is somewhat of a rarity) and other fees.

 

Who Is Required to Purchase a Title Agent Bond?

 

Twenty-seven states require title agents/agencies (otherwise referred to as escrow agents/agencies, abstractors, and title insurers) to be bonded. State definitions vary on who is considered a title agent, but the general job description includes searching through real estate records to determine property ownership, issuing and handling property title documents, maintaining real estate records, assisting clients with title insurance needs, and helping with any other property title related tasks requested of them. Individuals or businesses that perform such services must purchase a surety bond in states with Title Agent bond requirements.

 

Common exemptions to the above definitions include:

 

  • Licensed attorneys performing their regular duties

  • Real estate agents and brokers

  • Banks, trust companies, savings/loan associations, and credit unions

  • Home insurance companies

 

Who Regulates Title Agent Bonds?

 

State government agencies regulate Title Agent bonds based on license law written by each state’s legislature. Governments enforce the law by instituting licensing requirements like educational requirements and a surety bond. The surety bond ensures that the insureds will be compensated if the title agent/agency violates the terms of their license.

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