Escrow; Third Party Security
When purchasing a property one of the most important issues to address for both a buyer and seller is how and under what conditions the funds will be safely transferred. In an international transaction this issue is even more important as it is often complicated, as both the purchaser and seller may not be familiar or comfortable having funds deposited in an unfamiliar jurisdiction or with an unfamiliar attorney or bank.
What is an Escrow Agreement?
An escrow agreement is a written instrument which by its terms imports a legal obligation. The buyer, seller and the escrow agent all sign the escrow agreement, which states the conditions upon which the deposited items/funds may be distributed. The escrow agreement also stipulates, how, to whom and for which amounts the deposited funds/items will be distributed.
The escrow agreement cannot be changed unless all parties agree in writing. The delivery in escrow is without reservation of power to recall; which means that an escrow agent must act according to the agreed-upon escrow conditions and disbursement instructions.
Involving a third party, such as an international title company, who can provide an international escrow agreement and international bank accounts, provides a cost effective solution. An independent escrow agent for real estate transactions gives both the buyer and seller additional comfort, knowing that a non-partisan party who maintains both local and global presence is monitoring the deposit.
Escrow services provide security to both parties to the transaction; the seller retains a property interest to assure performance by the buyer and the buyer obtains security that the property will be his/hers if the conditions in the escrow agreement are met.
Because both buyer and seller agree to the escrow terms before the transaction, each party is clear of how the transaction will transpire, and when funds will be distributed and to whom. Stewart’s escrow agreements can be applied for any type of real estate transaction, and can be modified to address issues like construction draws, real estate commissions, attorney/notary fees, etc.
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