Escrow Services

Escrow accounts and transactions support through the service of escrow agreement

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Parties of Escrow Agreement

There are usually several parties involved in the escrow transaction:

  • 1. The Beneficiarywho

    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 with membership of the Self-Regulatory Organization (SRO).

escrow agent

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.

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.

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.

Escrow account is a special kind of account

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.

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
Banks that open the escrow accounts

We prefer to work with first rang swiss banks such as Credit Suisse, UBS 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.

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.

Therefore, avoidance or ignoring of such formalities has to be the first sign of unprofessional attitude of the escrow agent.

Calculate the cost of our services:

Transaction amount

Amount of transaction over 1 000 000 CHF?

1000000 100000000

Parties of the transaction

1/2
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 firm is SRO Member and is authorised for the escrow service provision.

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.