It is recommended newcomers to Tripartite Escrow Company read ALL questions. Doing so is very helpful.

1. WHAT IS AN ESCROW AGREEMENT?

A Tripartite Escrow Agreement involves several entities contractor, WestAmerica Bank as escrow agent, Government, Individual Surety (Person or Company) and Tripartite Escrow Company are bound by an escrow agreement. An escrow is like a contract.

2. WHY DOES THE GOVERNMENT ALLOW INDIVIDUAL SURETY?

Pursuant to the Federal Acquisition Regulation Part 52 Section 28.203 -- Acceptability of Individual Sureties., the federal government authorizes Individual Surety (Person or Company).

3. CAN I USE AN INDIVIDUAL SURETY FOR BID, PAYMENT AND PERFORMANCE BONDS?

 Yes, an individual surety is acceptable for all types of bonds except position schedule bonds.

4. WHAT IS NEEDED FOR AN ESCROW AGREEMENT?

You need someone or a company that could pledge assets that are sufficient to cover the bond obligation (exclusive of all outstanding pledges for other bond obligations). 

5. WHAT IS INVOLVED TO SETUP AN ESCROW AGREEMENT?

First, the contractor setups an account with Tripartite Escrow Company (Service Agreement).

Second, they enter into escrow agreement with WestAmerica Bank, as the escrow agent, Government, Individual Surety (Person or Company) and Tripartite Escrow Company.

Third, an individual surety needs to put cash or real property into escrow

Fourth, bonds are issued by an individual surety 

6. DOES ESCROW SERVICE OR INDIVIDUAL SURETY HAVE A LIMIT ON SIZE OF CONTRACT?

 No, but individual surety must have sufficient assets to cover the bond obligation 

7. HOW MUCH DOES THE ESCROW SERVICE COST?

To setup an account is free.  After an account is established an escrow management (Tripartite Escrow Company and WestAmerica bank) fee of $975.00 per contact.

8. WHO IS RESPONSIBLE FOR PAYING THE ESCROW FEES TO TRIPARTITE ESCROW?

 The contractor is responsible for all escrow fees.

9. HOW QUICKLY CAN YOU PROCESS?

Two (2) to three (3) days we can have the account opened and the escrow agreement. But it depends on the individual sureties if its cash you could have the bonds in two or three days.

But if it's real property we need: 

(i)     Evidence of title in the form of a certificate of title prepared by a title insurance company approved by the United States Department of Justice.  This title evidence must show fee simple title vested in the surety along with any concurrent owners; whether any real estate taxes are due and payable; and any recorded encumbrances against the property, including the lien filed in favor of the Government as required by FAR 28.203-3(d);

 (ii)   Evidence of the amount due under any encumbrance shown in the evidence of title;

 (iii) A copy of the current real estate tax assessment of the property or a current appraisal dated no earlier than six (6) months prior to the date of the bond, prepared by a professional appraiser who certifies that the appraisal has been conducted in accordance with the generally accepted appraisal standards as reflected in the Uniform Standards of Professional Appraisal Practice, as promulgated by the Appraisal Foundation.

10. WHO DETERMINES THAT THE SURETIES IN ACCEPTABLE?

The contracting officer shall determine the acceptability of individuals proposed as sureties, and shall ensure that the surety's pledged assets are sufficient to cover the bond obligation.

11. HOW DOES THE CONTRACTING OFFICER DETERMINE VALUE?

Assets will be accepted at 100 percent of the most current tax assessment value (exclusive of encumbrances) or 75 percent of the properties' unencumbered market value provided a current appraisal is furnished

12. HOW LONG DOES THE MONEY OR REAL PROPERTY STAY IN ESCROW?

A. For contract over $100,000

(i)           1 year following final payment,

(ii)         Until completion of any warranty period (applicable only to performance bonds), or

 (iii)       Pending resolution of all claims filed against the payment bond during the 1-year period following final payment.

 B. Contracts subject to alternative payment protection (28.102-1(b)(1)).  The security interest shall be maintained for the full contract performance period plus one year.

 C. Other contracts not subject to the Miller Act.  The security interest shall be maintained for 90 days following final payment or until completion of any warranty period (applicable only to performance bonds), whichever is later.

13. WHAT IS THE PENAL AMOUNT ON PAYMENT BOND?

Unless the contracting officer makes a written determination supported by specific findings that a payment bond in this amount is impractical, the amount of the payment bond must equal --

(A)             100 percent of the original contract price; and

(B)             If the contract price increases, and additional amount equal to 100 percent of the increase.

 (i) The amount of the payment bond must be no less than the amount of the performance bond.

14. WHAT IS THE PENAL AMOUNT ON PERFORMANCE BONDS?

 Unless the contracting officer determines that a lesser amount is adequate for the protection of the Government, the penal amount of performance bonds must equal—

(i) 100 percent of the original contract price; and

 (ii) If the contract price increases, an additional amount equal to 100 percent of the increase.