High-risk transactions often require the use of paymaster and escrow services. People often have questions about escrow and related services, the most common of which will be addressed here.
Who Pays Escrow Fees?
When it comes to escrow fees, there is no set rule or law that dictates who should pay them. As such, it ultimately comes down to the terms of the purchase contract. Often, escrow fees are split evenly between the buyer and the seller, but there may be instances where one party may be able to negotiate for having the other party pay them in full.
Is Escrow Required for My Transaction?
Whether escrow is used in a given transaction depends on the needs and desires of the parties involved. For instance, in mortgage contracts, the lender will often require setting up an escrow account in order to mitigate risk. While there’s no legal obligation for escrow to be used in these instances, either party can require funds to be held in escrow if they feel like there’s enough risk to warrant doing so.
How Long Will Escrow Take?
Each transaction varies, and the length of time it takes for funds to be released from escrow depends on the terms of the agreement. Often, those negotiating a contract will determine an escrow timeline along with terms outlining when funds will be released from the account.
That said, a typical timeline ranges between 30 and 60 days, but again, it depends on the agreement.
Can Escrow Close Early?
Typically, funds in escrow will not be released until both parties agree to close. If both can arrive at an agreement early, they can decide to have funds released before whatever date they’ve determined. However, if one party does not consent, there isn’t really any way to force an early release of funds.
Are Escrow Accounts Secure?
Given that the purpose of an escrow account is to make sure funds are available to the seller once a transaction closes (and to prevent funds from being released before the seller fulfills their end of the agreement), every reasonable measure is taken to keep those funds secure. Banks have their means of keeping funds safe, and paymaster attorneys will use trust accounts that are closely monitored by the state bar association.
What Does a Paymaster Do?
A paymaster is a neutral third party who is appointed by the buyers, sellers, and other parties involved in a transaction to receive, handle and release funds. Given that they act as a neutral party, they cannot provide any other types of services (such as legal counsel) to the buyer or seller, nor can they disclose specifics about the transaction to outside parties. As such, they must be absolutely trustworthy.
Why Should I Use Paymaster Services?
Paymaster and escrow services are often used in the course of high-risk transactions, such as those involving real estate, securities, or online commerce. These services are useful for both buyers and sellers in that:
- They assure sellers that buyers have the funds available to complete the transaction, and;
- They keep funds and assets from being transferred until the seller delivers on their end.
Paymaster services, such as those offered at Hart David Carson LLP, are a secure way to handle high-profile transactions with minimal risk.