Final answer:
An escrow agent is required to have a license, which is issued by government agencies to show that the agent has met specific educational and testing standards required for the profession (4).
Step-by-step explanation:
An escrow agent is a neutral third party that holds funds or assets until a particular condition or event has been met. In the context of buying a home, an escrow agent can handle the payment of home insurance and property taxes as part of the normal monthly payment, simplifying the process for the homeowner. Escrow agents, like many other professionals, are required to have an occupational license. This license is issued by government agencies and signifies that the agent has met certain educational and testing standards. Licensing is a way to establish quality in the labor market and is common across various professions, from healthcare to real estate.
Therefore, the correct answer to the question is that an escrow agent is required to have a license. While a bond, a reserve fund for errors and omissions, and an underwriter might be associated with the functions of an escrow agency, the essential requirement for an individual to operate as an escrow agent is to hold a valid license.