Did a Washington escrow agent’s local representative need separate registration under the 1965 escrow law?

Plain-English summary

The Washington Attorney General concluded in 1965 that a local representative of an escrow agent did not need separate registration if the representative acted for a registered or exempt agent and met the opinion’s conditions. The agent had to retain the right to supervise and control the representative, be financially responsible for authorized acts, and pay the representative for the escrow services. (Official opinion)

The AG reasoned that a person meeting those conditions was acting on behalf of the authorized agent rather than independently carrying on an escrow business.

Currency note

This opinion was issued in 1965. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Did every local escrow representative have to register separately?
No. The AG identified conditions under which a representative of a registered or exempt agent did not have to register.

Did the escrow agent have to supervise the representative?
Yes. The agent needed a continuing right of supervision and control under the opinion’s test.

Who bore responsibility for the representative’s authorized acts?
The opinion required the escrow agent to be financially responsible for those acts.

Could the representative independently conduct an escrow business under this holding?
The AG’s answer covered a person acting for and on behalf of an authorized agent, not an independent escrow business.

Background and statutory framework

A state representative asked whether chapter 153 required local representatives of escrow agents to register. The AG applied the act’s definition of escrow agent and its listed registration exemptions to a conditional agency arrangement.

Citations and references

• The official opinion states: “The local representative is subject to the continuing right of supervision and control by the escrow agent”
• The official opinion states: “The escrow agent is financially responsible for the acts of his local representative”
• The official opinion states: “The local representative receives compensation from the escrow agent”

Subject

OFFICES AND OFFICERS ‑- STATE ‑- DIRECTOR OF MOTOR VEHICLES ‑- ESCROW AGENT REGISTRATION ACT ‑- LOCAL REPRESENTATION OF ESCROW AGENTS

Source

• Landing page: https://www.atg.wa.gov/ago-opinions/offices-and-officers-state-director-motor-vehicles-escrow-agent-registration-act-local

Original opinion text

Attorney General John J. O'Connell

OFFICES AND OFFICERS ‑- STATE ‑- DIRECTOR OF MOTOR VEHICLES ‑- ESCROW AGENT REGISTRATION ACT ‑- LOCAL REPRESENTATION OF ESCROW AGENTS.

As defined herein, a local representative of an escrow agent, who has either registered under chapter 153, Laws of 1965, the escrow agent registration act, or who is exempted from the provisions thereof, is not required to register.

December 14, 1965

Honorable Robert F. Brachtenbach
State Representative, 14th District
Route 2, Box 727
Selah, Washington

Cite as: AGO 65-66 No. 56

Dear Sir:

By letter previously acknowledged you have requested an opinion of this office on a question which we have paraphrased as follows:

Does chapter 153, Laws of 1965 (the escrow agent registration act) require the local representatives of escrow agents to register under the act?

We answer your question in the negative, as qualified by our analysis.

ANALYSIS

Chapter 153, Laws of 1965, provides for the registration and regulation of escrow companies and agents. The act provides in part that it shall be unlawful for any person to engage in the escrow business unless he has registered with the state. The main purpose of the act, as shown by the requirements of character affidavits and a $200,000 fidelity bond, is to protect the public from misappropriation by the escrow agent of funds held in his keeping. An escrow agent is defined in subsections 3 and 4, § 1, of the act as follows:

"(3) 'Escrow' means any transaction wherein any person or persons, for the purpose of effecting and closing the sale, purchase, [[Orig. Op. Page 2]] exchange, transfer, encumbrance, or lease of real or personal property to another person or persons, delivers any written instrument, money, evidence of title to real or personal property, or other thing of value to a third person to be held by such third person until the happening of a specified event or the performance of a prescribed condition or conditions, when it is then to be delivered by such third person, in compliance with instructions under which he is to act, to a grantee, grantor, promissee, promisor, obligee, obligor, lessee, lessor, bailee, bailor, or any agent or employee thereof.

"(4) 'Escrow agent' means any person engaged in the business of performing for compensation the duties of the third person referred to in section 1 (3) above."

A number of persons, however, are exempted from the act's provisions by § 2, which reads as follows:

"It shall be unlawful for any person to engage in business as an escrow agent within this state unless such person has been registered with the department and issued a certificate of registration by the director pursuant to this act: PROVIDED, That the registration requirements of this act shall not apply to:

"(1) Any person doing business under the law of this state or the United States relating to banks, trust companies, mutual savings banks, savings and loan associations, credit unions, insurance companies, title insurance companies, or any federally approved agency or lending institution under the National Housing Act.

"(2) Any person licensed to practice law in this state while engaged in the performance of his professional duties.

"(3) Any company, broker, or agent subject to the jurisdiction of the director while performing acts in the course of or incidental to sales or purchases of real or personal property [[Orig. Op. Page 3]] handled or negotiated by such company, broker, or agent: PROVIDED, HOWEVER, That no compensation is received for escrow services.

(4) Any transaction in which money or other property is paid to, deposited with, or transferred to a joint control agent for disbursal or use in payment of the cost of labor, materials, services, permits, fees, or other items of expense incurred in the construction of improvements upon real property.

"(5) Any receiver, trustee in bankruptcy, executor, administrator, guardian, or other person acting under the supervision or order of any superior court of this state or of any federal court."

A business entity engaged in the escrow business performs its services through individuals who are charged with specific escrow duties and responsibilities.

This being so, it is our opinion that a local representative of an escrow agent, as defined in the act, need not register under the act when:

(1) The local representative is authorized and is in fact acting for and on behalf of an escrow agent who is both authorized to engage in the escrow business and who has either

(a) registered as required by the escrow registration act;

(b) qualified under § 2 of the escrow registration act for an exemption; and

(2) The local representative is subject to the continuing right of supervision and control by the escrow agent; and

(3) The escrow agent is financially responsible for the acts of his local representative when the local representative is engaged in authorized escrow services for the escrow agent; and

(4) The local representative receives compensation from the escrow agent for the performance of the escrow services.

If the above criteria are met, the local representative cannot [[Orig. Op. Page 4]] be considered an escrow agent as defined in § 1 of the act cited above, because he will not be engaging in the escrow business himself, but will simply be acting for and on behalf of an authorized "escrow agent."

Furthermore, the legislative purpose of giving full protection to the public that purchases escrow services can be achieved by insuring financial responsibility for local representatives by the escrow agent.

We trust the foregoing will be of assistance to you.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

JOHN R. MILLER
Assistant Attorney General