Legal Question in Business Law in Virginia

Re: Would this require a business to be a registered escrow agent?

As far as I can see, there is no such thing as

a "registered escrow agent" or service under

Virginia law. Not only would you not need to

register, but if you tried there would be no

way to do it in Virginia.

The greatest challenge you will have is that you

might arguably come under the laws of all 50

states if you have a nation-wide internet

business. I notice that Utah, Washington State

and California seem to have some regulation of

an escrow business. You would have to check

with each State.

However, I would pay close attention to two

important distinctions:

First, nearly all regulation of escrow is in the

context of a real estate transaction, real estate

settlement, and the like. When you check each

State, make sure that you are very clear that

this does NOT involve real estate.

Second, I believe that a "registered escrow

service" or agent would mean a company that

is in the business of recieving funds and holding

them in escrow, but does not perform any real

business concerning the transaction. That is,

they are acting purely as a financial institution.

In your case, the primary business activity

would be a trading floor for buying and selling

products. The funds would be held only for

the purpose of implementing the main activity

of the business, to facilitate buying and

selling as products.

Every state can be different and each state

can have its own interpretation of what is an

escrow service and whether you need to register

or get licensed. However, as a general guess,

I would suspect that if you are implementing

some other business activity, you would not be

considered an escrow service. If a company had

no actual business activity, except holding the

funds as a financial institution, then perhaps.

The distinction may be somewhat subjective, but

he more you are doing a "normal" type of business

and the escrow is simply facilitating the "real"

business, the less likely you would be to be

considered an escrow service.