We have set out below some questions to consider when thinking about whether using escrow services to aid your transaction and look at how the answer to those questions might impact your decision.
- Are funds or property being transferred from one party to another (or in some cases multiple parties)?
Yes – It is highly likely that escrow services can be used for your transaction.
No – This does not necessarily mean that escrow services cannot be used for your project. In some cases, for example in party wall matters where funds are required to be put aside for security for expenses, escrow services can be used to hold these funds even when there is no guaranteed transfer between the parties.
- Do all parties involved in the transaction need to agree to use an escrow service provider?
At this point you may not be at the stage in your project where you have an answer to this question, however it is an important one to keep in mind.
As escrow service providers act as an independent third party to a transaction, they will not act in favour of one party over another. All parties need to be in agreement when using escrow services, and any escrow agreement drafted will be in the best interests of all relevant parties.
It is also important to note that in order to avoid slowing down the transaction, the escrow service provider will require the cooperation of all parties in order to complete the obligatory due diligence checks when opening the escrow account.
- How much do you need to hold in escrow and for how long?
It is important to have an idea of how much you will be looking to hold in escrow and for how long it will need to be held for. This information will often be taken into account by the escrow service provider when quoting for their services. The amount you are looking to hold in escrow may also affect your decision when choosing an escrow service provider. If you are looking to hold smaller sums / lower value property you may wish to look for an online escrow service provider, as their fees may be more proportionate to your project. A bespoke service provider may be better suited to larger transaction sums or more complex projects.
- Will the trigger for the release of the funds / property represent a contract between the parties?
The escrow agreement provided by the escrow service provider will contain ‘release conditions’ that will need to be agreed between the parties. For example, in the purchase of a car, the release conditions may be that funds will be released to the seller upon delivery to the buyer. The trigger for the escrow service provider to release the funds to the seller might be the delivery receipt signed by the buyer and a copy of that receipt sent to the escrow service provider.
Your chosen escrow service provider should be able to assist you in agreeing the specific release conditions for your project, however it is a good idea to think about what the trigger for the release of funds will be, and agree this with the other parties, before selecting an escrow service provider.
The escrow providers role in transactions is limited to the holding and release of funds or assets once the relevant escrow conditions are met. They are not authorised to advise on the legitimacy of projects or provide financial advice.
For more information please visit our FAQ’s.
These questions are all important points to consider when looking at escrow services.
Our team would be happy to talk through how escrow services can be applied to your transactional projects.
Riverside Escrow is a UK based FCA authorised escrow company helping businesses and individuals exchange assets and funds.
We were first set up in 2014 and we offer high quality and cost effective Escrow Services in a board range of transactions. Our dedicated team of staff strives to provide efficient and clear services, tailored to fit each individual transaction.
Riverside Escrow Limited is authorised by the Financial Conduct Authority as a Payment Institution under the Payment Services Regulations 2017 with registration number 920922 for the provision of payment services.
Please note that our authorisation with the Financial Conduct Authority (“FCA”) applies only in relation to payment services transactions (principally transactions involving the holding and payment of funds), it does not relate to any other form of escrow service offered by us – for example where we hold real property.
This means that the Financial Conduct Authority does not regulate us in respect of any escrow transactions other than payment services transactions.
As a result:
– we are not required to comply with the FCA rules in respect of services other than payment services
– the FCA does not regulate us in respect of any escrow services other than payment services
– payment services are the only type of service offered by us that users of our services are able to complain to the FCA about
– payment services are the only type of service offered by us that users of our services are able to complain to the Financial Ombudsman Services about.