Swiss Escrow Services
The Main Peculiarities of Escrow Services
Everything you need to know about escrow services can be summed up in a few simple things. Let's go over them to give you a general idea about escrow services.
An escrow account is used for depositing data and files that need protection during the transaction between two parties. The escrow agent, in this case, is a third neutral party. Companies often deposit such kinds of documents as the sales-purchase agreements, shares, bonds, debt notes, intellectual property rights, software codes, etc.
An escrow agreement is the kind of agreement when the depositor deposits certain information with the escrow agent, and the customer gets the data when the transaction is finalized.
Three parties of escrow agreements
1. The beneficiary, i.e. a person or a company that receives the data when the conditions are fulfilled.
2. The depository or the so-called contributor that transfer the funds and documents to the escrow account.
3. The escrow agent that controls the fulfillment of the agreement and distributes the files and finds according to it.
The procedure of opening escrow account and creating the escrow agreement
When the escrow company receives the request from one party, the account is being created. It depends on the nature of the deal and a few other things.
First of all, there must be no conflict of interest. The compliance department must find nothing suspicious to be able to send an invoice for prepayment. After the payment, the account is ready for receiving data and documents.
At the second stage, the contributor deposits the files and data that have to be released as soon as the obligations are fulfilled. The obligations can differ and depend on the agreement as well as the type of transactions. For instance, people and companies can transfer ownership rights, real estate, etc.
Finally, after the conditions are fulfilled, the escrow agent completes the transaction by releasing the funds to the parties.
As a rule, the escrow bank account is closed after that. However, the agreement is stored as a record.
Escrow agreements usually include:
Contractual obligations like the deadlines, quality standard, the escrow funds that need to be deposited.
Inspection period within which the beneficiary needs to fulfill his obligations. That's when the verification period begins.
Explicit instructions define in detail how the express instructions must be fulfilled before the data is released to the beneficiary.
The dispute settlement mechanism will regulate the possible disputes and in case the resolution fails.
Finals terms which specify when the account is closed.
Escrow Bottom line
All in all, escrow services are used for a selection of transactions to secure both parties. People and companies can deposit material and immaterial funds in the transactions. The escrow agent works as an intermediate and monitors if both sides keep up with the agreement. Nowadays, it's a popular way to buy real estate, raw materials in huge volumes, software, etc. Whenever the safekeeping of the funds is required, escrow services come in handy.