Services of an escrow agent

Escrow agents are third parties that act as independent intermediaries between buyers and sellers. Their main task is to keep money or assets until the transfer of the object to the person who made the purchase is confirmed. For the safe storage of the deposit, it is made to an account in a selected banking institution. After that, the escrow agent prepares the necessary package of documents, including a receipt to confirm receipt of the money, as well as a photocopy of the escrow account agreement.

Escrow agent: the main tasks of a specialist

The escrow service includes certain tasks of a specialist acting as a trustee. As a rule, he or she performs the necessary actions in favor of all parties to the agreement. The service allows you to minimize financial risks that may hinder the completion of the transaction, for example

1. Counterparty risk. This is the fear that the other party will not be able to fulfill its obligations for any reason. Until certain conditions are met, the money is kept in the account.
2. Price risk. This nuance is possible in cases where it is difficult to determine the real value of assets. In this case, the price difference is kept in the escrow account until the actual value is determined.

The parties to the transaction and the escrow agent enter into a trilateral escrow agreement in a simple written form, which may be valid for up to 5 years. It shall contain:

• Full names and addresses of all participants;
• deposit amount;
• bank details;
• terms of interest payment (if any);
• terms of release of funds by the escrow agent;
• terms of the agreement;
• actions of the agent in case of breach of obligations.

An important nuance is that no collection, seizure or interim measures may be taken against the deposited property under the seller's debt obligations. The parties retain the ability to control the information from the register regarding the encumbered securities.

Escrow agent services: when are they appropriate?

Escrow services with the conclusion of a tripartite agreement will certainly pay off in the following cases

• purchase of securities for a significant amount;
• acquisition of a large block of securities;
• Impossibility of simultaneous fulfillment of obligations;
• Conducting a transaction with special conditions.

The agent minimizes the risks associated with the transaction by providing for an individual procedure and binding conditions. This service is indispensable in the absence of ideas about the upcoming transaction (as there is a high probability of getting into trouble), as well as in the absence of confidence in the other party to the transaction. It is the escrow specialist who plays an important role in ensuring that both parties fulfill their obligations.

Escrow agent services at Blocons

With Blocons as escrow agent, the payment and the securities (shares, bonds, bills, certificates) are held by an intermediary until each party has met the conditions written into the tripartite agreement.

When the conditions are met, the seller receives the agreed amount and the buyer receives the deposited securities. The securities pass to the buyer only against documents that confirm full payment. Until the transaction closes, the securities stay encumbered, so the seller and third parties cannot dispose of them. For a large deal, or one with a counterparty you have not worked with before, this order of settlement limits the risk that one side performs and the other does not.