Escrow services - what you need to know
When trying to buy or sell high-value items, there is bound to be a certain level of risk, especially if the person you are transacting with is unknown to you. Here's where escrow services come in, to help contain the risks and allow you a peace of mind while conducting the transactions.
When you sell your old house, invest in new market ventures, or even pay a tour agency for a cruise ship holiday with your family, you expose yourself to the risk of asset loss if the other party is negligent.
To mitigate these risks, financial and corporate service providers have come up with a service known as escrow. But what does an escrow agent do and how does escrow work?
What is escrow?
An escrow is an arrangement where the buyer and seller of big-ticket items, such as properties, large amounts of cash, shares, and other physical assets (such as an expensive painting or a yacht) place them in the care of a neutral third party until the transaction is completed.
This neutral third party is known as an escrow agent .. The escrow agent opens a dedicated bank account to hold the funds involved in the transaction and releases them when the stipulated terms and conditions are met.
How does escrow work?
The escrow process begins with the drafting of a contract between the buyer and seller, where terms and conditions are spelled out in detail. .
Upon the mutual agreement of terms and conditions, the escrow contract is then signed by the buyer, seller and the escrow agent. The funds involved are then banked in to the bank account set up by the escrow agent, who will manage and monitor the account.
From here, the escrow agreement can go either one of two ways:
- When the conditions of both buyer and seller have been met, the funds are disbursed to the seller in a timely fashion.
- If the agreement cannot be honoured for any reason, the funds (or remaining funds) are returned to the buyer.
Why consider escrow services?
Escrow agents can help to ensure that all parties are genuine and possess the necessary means to fulfil the contract.
For buyers, escrow agents help to ensure that the seller is in possession of the asset that is to be sold, and that the seller won’t take the money before the contract is fulfilled. For sellers, escrow agents help to ensure that the buyer has sufficient funds to pay for the asset before it is handed over.
There are many escrow agents out there – from banks to online-only providers. However, it is not always easy to get an escrow service where you can not only hold monies but also benefit from professional consultation.
Good corporate service providers usually also provide adjacent services in trust and fund-related matters, which makes them consultants that you can go to for escrow-related matters. Their client bases – which can range from high net-worth individuals, families and multi-national corporations – also helps them to tailor your escrow to your specific needs.
Let us help you with your escrow needs
As an established corporate service provider servicing three continents, we have an established groundwork for setting up new escrow accounts and fulfilling legal requirements, which saves you the trouble of looking for additional lawyers or banks to hold your assets.
We operate only in jurisdictions that have robust regulation and high standards in asset protection, giving you peace of mind. Our presence in multiple jurisdictions also enables us to have multi-currency bank accounts, ready for you to park your assets from anywhere in the world.