ESCROW bank accounts are an important tool used by businesses engaged in international commerce. It is designed so that the purchaser can deposit the funds into the account, which is held by a third party, the third party then confirms with the supplier that the funds are in the account. Once the funds are confirmed, the supplier then ships the goods when the goods are received in good order. The purchaser then informs the holder of the escrow funds to release them to the purchaser.
The escrow system protects both the buyer and the seller, as the seller is assured that the funds are available, but the funds are not released until the purchaser gives the order to do so, ensuring that they have time to receive and check the goods before the funds are released.
To learn more about ESCROW accounts, please read the information below…
What is an Escrow Account?
Escrow is a way of transferring or exchanging property or money using a neutral third party. Escrow provides the public with means of protection in the handling of funds, assets and/or documents. Escrow enables the buyer and the seller to transact business with each other through a neutral party, thereby minimizing their risk. Escrows are established to hold original documents, real estate deeds, titles to property, money or securities until conditions are fulfilled and the items are released.
In the escrow, all parties involved give their instructions to neutral intermediary, called the “escrow agent” or “escrow manager” whose duty it is to assure that no funds, assets or property will change hands until all instructions have been carried to completion.
An escrow is beneficial to both parties as an escrow agent will be holding the documents, processing all regular payments, maintaining an accounting of all transactions and providing the required reporting. Escrow accounts are designed to facilitate the business and to make seemingly complicated or “impossible’ transactions to become real and performable. Escrow is also useful in ordinary day to day business.
Why do I Need an Escrow?
Whether you are the buyer, seller, lender or borrower, you want the assurance that no funds or property will change hands until all of the instructions in the transaction have been followed. The escrow agent or manager has the obligation to safeguard the funds, assets and/or documents while they are in the possession of the escrow agent, and to disburse funds and/or convey title only when all provisions of the escrow have been complied with.
What Types of Transactions go through Escrow?
Most contracts that involve the transfer, lease or financing of real or personal property can be placed in escrow. You may be involved in escrow not only when you buy or sell real estate, but also when you make trade deal, sell a business or transfer stock in a closely held business. The buyer or seller should demand the protection of escrow for any transaction which involves a substantial investment.
Escrow can be effective in:
Contact Us for further information or to learn how we can assist you to set up an ESCROW account and to safeguard your legal rights and financial interests.