In California, a company that holds escrows needs a license under the Escrow Law unless it is exempt. Banks, credit unions, insurance and title companies, attorneys handling an escrow for their own client, and real estate brokers handling escrow in a deal where they are an agent or a party are exempt, and they follow the rules for their own industries. Both kinds of escrow holder are legal. The difference is which set of rules applies to the company holding your client’s money.
What is a licensed escrow company?
California’s Escrow Law is in the Financial Code, starting at section 17000. Unless an exemption applies, escrow business may be conducted only by a corporation licensed under that law. Cal West Escrow is a licensed escrow company. This escrow company holds California Department of Financial Protection and Innovation Escrow License No. 96DBO-108128.
Who is exempt from the license?
Financial Code section 17006 lists the escrow holders that do not need an escrow license, including:
Banks, trust companies, savings and loans, credit unions and insurance companies doing business under state or federal law
California attorneys with a bona fide client relationship with a party, who are not actively engaged in the escrow business
Title companies whose main business is preparing abstracts or making title searches for title insurance
Real estate brokers licensed by the Department of Real Estate, in transactions where the broker is an agent or a party
Escrow held by a broker under that exemption is sometimes called controlled escrow.
What does the Escrow Law require of a licensed company?
The requirements are written into the Financial Code. Among them, a licensed escrow company must:
Keep at least one person with five or more years of responsible escrow experience on duty at the main office whenever it is open (four years at a branch)
Have each person it hires submit fingerprints for a state and federal criminal history check, and keep people with certain fraud, theft and similar convictions out of the business
Meet minimum net worth and liquid asset requirements
Have an independent CPA audit its books every year
Belong to Escrow Agents’ Fidelity Corporation
That is a general summary of California law (Financial Code sections 17006, 17200.8, 17210, 17312, 17406 and 17414.1), not a description of any other company. Our page on licensed vs. exempt escrow sets the two side by side.
What is Escrow Agents’ Fidelity Corporation?
Membership in Escrow Agents’ Fidelity Corporation is limited to licensed escrow companies, and exempt holders are not members.
MEMBER OF ESCROW AGENTS’ FIDELITY CORPORATION (EAFC). EAFC PROVIDES FIDELITY COVERAGE TO ITS MEMBERS. EAFC IS NOT A GOVERNMENT AGENCY, AND THERE IS NO GUARANTEE OF A PAYMENT OF ANY CLAIM BY THE STATE OF CALIFORNIA.
What should your client ask an escrow holder?
Every escrow holder follows the mutual written instructions both parties sign. Ask any escrow holder how it is licensed or exempt, and who it works for in your deal. The answers tell your client which rules apply.
Whatever kind of company holds the funds, buyers should call before they wire. For Cal West, that means calling (323) 300-6122, using a number you already know, to verify wiring instructions before sending funds. Treat emailed changes to wiring instructions as fraud until verified by phone.
Our free Wire Fraud Protection Kit has the red flags, a call-to-verify script and the first-hour steps if money goes to the wrong account. Download the PDF there and keep it in your files.
Questions agents ask
How can I check an escrow company’s license?
The DFPI has a public license search on its website. Search by company name or license number, and confirm the name and address match the company on your file.
Does a title company’s escrow department need an escrow license?
Title insurers and companies whose main business is title work are among the exemptions in Financial Code section 17006. They follow the laws for their own industry instead.
Is controlled escrow the same as exempt escrow?
Controlled escrow usually means escrow held by a real estate broker under the broker exemption, in a deal where the broker is an agent or a party. It is one kind of exempt escrow.
Opening an escrow? Send Iris the fully executed contract at iris@calwestescrow.com or call (323) 300-6122.
This post is general information about California real estate transactions as of October 2026. It is not legal or tax advice, and laws and figures change. Talk with your attorney, CPA or real estate broker about your situation.
