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Escrow Services

Escrow accounts and transactions support through the service of escrow agreement
All you need to know about the transactions completed with the help of an escrow service. The history of escrow, step-by-step guidelines for the contracting parties, pros and cons of the escrow mediation/interference.
Escrow Account
Escrow account is a special kind of account (according to the English tradition and law), that is used for depositing the material or immaterial funds in the transaction between two parties in order to secure its closing.
The subject of depositing can be the sales price for the sales-purchase agreement, financial instruments like shares, bonds, debt notes, intellectual property rights, documents, software, data etc.



The deposit remains in the escrow account last till the occurrence of some event or till the fulfilment of the obligations of the escrow account by the parties to it.

In the international legal practice escrow services are wide spread and are offered by natural and legal persons, banks, financial intermediaries and other authorized subjects depending on jurisdiction.

Transactions by means of escrow accounts are popular in the purchase of real estate, trading with goods and services, shipments of raw materials in huge volumes and other transaction, where an independent party is required for the safekeeping of the funds.
Escrow service — parties of escrow agreement
Parties of Escrow Agreement
There are usually several parties involved in the escrow transaction:

1. The Beneficiary, who receives the escrow funds when the escrow agreement conditions are met.

2. The Contributor \ Depository, who transfer the escrow funds to the escrow account.

3. The Escrow agent, who controls when the conditions specified in a contract are met.The escrow agent distributes the escrow funds according to the escrow agreement.

The beneficiary and the contributor can be either legal entity or natural person. The legal capacity of a person is the onlypossiblelimitation that exists. In case of incapacity the person may be represented by the legal guardians.
Escrow Agent and the main requirement to the Escrow agent
Both, natural person and legal entity may act as escrow agent. Nevertheless, the legal requirement of the country of legislation shall be fulfilled.

The function of an Escrow Agent in Switzerland may have natural persons like attorney at law (bar members) and fiduciary, and legal entities authorized by the supervisory authority FINMA or Member of the Self-Regulatory Organization.

The nature of the escrow account opening presupposes the trust-based relations between parties. In most cases the escrow services fall under the anti-money laundering provisions (GWG) and supervision.

In practice this means, that in addition to special authorization, it is necessary to follow all the rules and act in order to prevent the financial crimes (Anti-Money Laundering) and terrorism. For these purposes exists the requirement to employ special person responsible for compliance, on-boarding and management of client's profiles (AML/Compliance Officer) or to outsource these functions to external service provider.

One of the important criteria when choosing an escrow agent is professional insurance for the cases if something goes wrong. Our company, Goldblum and Partners, has such insurance in amount of 1'000'000. CHF. Thanks to the insurance, our clients feel themselves protected.
Escrow agent
The procedure of escrow account opening and drafting of the escrow agreement
After we receive a request for escrow services from one party, we ask for the detailed information about the planned transaction. If the nature of the transaction - we will ask to provide the documents of the parties for the identification (KYC), compliance and conflict of interest checkup.
1
Step
If there is no conflict of interest and compliance department does not report anything suspicious, we will issue an invoice for prepayment and after receiving the payment will start drafting the escrow agreement. If the escrow fund is in monetary form, we will initiate the procedure of the escrow account opening for depositing the escrowed funds.

As the result of these actions, the escrow account opened and ready for receiving the escrowed funds, the escrow agreement is agreed and signed by all parties.
2
Step
Contributor deposits the agreed escrow funds to the escrow account, which will be released upon the fulfilment of the obligations according to the escrow agreement by the beneficiary.

Some of the examples of the action required from beneficiary for the dissolution of the escrow funds are transfer of ownership rights on the real estate, securities, goods shipment etc.

In case of the documents escrow, the documents are usually transferred to the beneficiary after the payment. For example, the documents of legal entity will be sent to the Escrow Agent, and after the payment and occurrence of the described in the escrow agreements events, the documents will be transferred to the beneficiary.
3
Step
After the detailed checking of the fulfilment of all the conditions in the escrow agreement and upon receipt of the necessary confirmations, we will complete all necessary payments and transfers of escrowed funds to the parties. The escrow bank account will be closed and the agreement will be stored as a record.
Escrow agreement: requirements
There is no specific requirement to the escrow agreement usually. It has to contain the information about the parties, subject of the agreement, obligations of the parties, descriptions of the escrow fund, escrow period, conditions for dissolution of escrowed funds.

The escrow transaction involve also the bank that opens the escrow account. For this reason the ban conduct the compliance procedures identifying the parties who are or will be beneficial owners of the funds as well. This reduce the risk of fraud in escrow deals to minimum.
Banks that open the escrow accounts
We prefer to work with first rang swiss banks such as Credit Suisse, UBS, Saffra Sarasin, and also with private and cantonal banks. The requirement and the procedures are usually very similar, but the fees are different. The plus will be if the party or parties have the bank account in the bank where opening of escrow account is planned.
Credit Suisse
UBS
Safra Sarasin
Zuger Kantonalbank
In which cases we recommend to use escrow services?
Es mentioned before, the escrow service is popular in the real estate deals, trading transactions, where the participation of the independent third party as depository will be a guarantee for the fulfilment of all conditions.

Our advice is to pay attention when choosing escrow agent. It should be the attorney at law, fiduciary or authorised subject. The escrow service provision has to be authorised by the official bodies of the state. The escrow procedure requires a legal work with documentation and high level of responsibility from the escrow agent. Therefore, avoidance or ignoring of such formalities has to be the first sign of unprofessional attitude of the escrow agent.

Pay attention to the enforceability of the contract: the English law systems differ for the continental, which the law of the Swiss confederation belongs to.
Why Goldblum ?
Professional - Reliable - Independent
The fees for the escrow agent participation in the transaction are usually not less than 10'000 CHF, therefore, the parties should consider the costs with the future benefits. The conclusion might be that the escrow service is unnecessary and economically inconsistent.

The legal counsels of Goldblum and Partners are happy to offer you their services: our law firm has official authorization for the escrow services provision according to FINMA requirements.

We have the professional liability insurance for 1'000'000 francs. We guarantee a deep analysis and understanding of our client's goals, a quick response to their requests; we could also offer fixed fees, based on our knowledge and experience with similar projects.

The Client-Attorney Privilege is a guarantee for safekeeping of all the data received even during the initial stages of the contact with our clients.