By Yusra Barmaz
Escrow agreements are used when two or more parties are taking part in a transaction that requires funds or assets to be passed from one company or individual to another. While escrow arrangements are common in the corporate world, they are also popular for individuals, who might want to safeguard their interests while they buy or sell property, art, jewellery, antiques, cars and other items.
What does an Escrow Agent do?
To protect both the buyer and the vendor, the asset or funds in question are held in escrow by an independent and trusted third party who has no material interest (i.e. nothing to lose or gain) from the transaction. This party is called the Escrow Agent, and they are mandated by the parties in the transaction to make sure the contractual conditions of the Escrow Agreement are met.
For example, in the sale of art or jewellery, the Escrow Agent is responsible, along with a specialist, for ensuring that the pieces are genuine, in the condition agreed by the buyer and vendor, stored properly during the transaction, that the buyer has transferred the funds, and that they receive the item when all the conditions of the Agreement have been met.
Why are Escrow Agreements becoming more popular in the UK?
Sue Wakefield, Director, ZEDRA Manchester notes that Escrow Agreements are becoming more popular in the UK in transactions between individuals or several groups of people buying and selling personal assets, or for corporate firms who use Escrow Services for mergers or acquisitions, construction projects and commercial disputes ‘Using Escrow Agreements and engaging Escrow Agents, like ourselves, is becoming more common in the UK. People want to protect themselves and their assets during transactions, and use a framework that ensures everyone has fulfilled their contractual conditions before assets and money are exchanged. In view of current economic conditions there is an element of nervousness regarding financial security and Escrow Accounts provide assurance and peace of mind to all parties. Having an independent party overseeing the details of the transaction and making sure all parties have fulfilled their side of the contract is invaluable.’
Our Manchester office recently received regulatory approval from the FCA to act as an Authorised Payment Institution. As a result, the team can support clients by acting as Escrow Agent in transactions with large unlimited values in addition to the support they had already been giving for lower value transactions.
‘Our team have extensive experience with escrow for both corporate and private clients in a number of sectors. Whatever the transaction, our clients turn to us to provide timely, efficient escrow solutions for significant or small transactions and to cover short term to indefinite Escrow arrangements’ says Sue, in conclusion.