I have been in business for many years, why am I being asked to use an escrow?
Here are a few reasons that escrow may be requested: if this a larger than usual project, if there are several subcontractors/suppliers being utilized on this project, if it a different type of work (i.e. a plumbing contractor performing drywall work), if you are a new client for the surety, if you have experienced a bad project or payment issues, thin financials, highly specialized work, or where there is a large bid spread. For specific information about your situation you should consult with your underwriter.
What is Funds Control?
The Contractor enters into an escrow agreement with National Escrow whereby the contractor agrees to direct the Obligee to send all earned contract funds directly to National Escrow. National Escrow works with the Contractor to issue and disburse proper payments on each draw. National Escrow is essentially providing back-office support to the contractor on a job specific basis with the ultimate goal of utilizing all earned/paid contract proceeds for costs on the job for which they were intended thereby minimizing the surety’s liability under the payment bond.
What do I need to do to start the process?
First you will need to fill out and return a Project Fact Sheet. This worksheet will provide us with the information needed to prepare your escrow agreement. Once the escrow agreement is prepared it can be sent to you with via email, fax, overnight service or regular mail.
How much will it cost?
National Escrow charges a set up fee of $750.00 and an escrow processing fee of 1% (one percent) of the final contract price. The set-up fee is to be submitted with the signed escrow agreement and is non-refundable. The processing fee can either be paid directly from the contractor or will be automatically taken from the first contract draw.
How quickly can an escrow be established?
In as little as 24 hours. All documents can be emailed; however, the escrow will not be considered “in place” until such time as National Escrow has received the required signed documents AND payment of the set-up fee.
What is the expected “turn-a-round” time?
It depends on how payments are received from the respective Obligees/Owners. For deposits made by wire transfer or ACH – checks can be turned around within 48 hours. If the Owner/Obligee pays by check, National Escrow will issue all payments within 5-7 business days. With the changes in the banking industry, checks take a little longer to clear the account. Therefore, National Escrow must be sure to verify that the deposit is valid before issuing checks against it. All turn-a-round times are contingent upon receipt of the required draw paperwork.