Attorney’s escrow account
Attorney’s escrow account is a bank account that is used for different types of transactions, most often during the sale or purchase of real estate, as well as for other purposes, when something of value needs to be purchased and there is a risk of conflict of interest.
In which situations is an escrow account used most often?
- when buying or selling real estate
- for an online sale of high value objects (art, jewelry etc.)
- during mergers and acquisitions of companies
- when dealing with intellectual property (inventions, patents, startups)
- stock markets (stocks, bonds, securities)
To open an escrow account, the following documents are required:
Attorney’s escrow agreement
All parties involved enter into a three-party legal agreement with the escrow agent (us). The contract must contain instructions, obligations and conditions that must be fulfilled in order to complete the transaction, these are: who, where, and why is transferring the funds; who, when and on what basis will receive the funds; the rights and obligations of the parties in relation to the funds on the escrow account; account details and bank information of everyone involved.
Purchase agreement
The buyer agrees to make a purchase within a certain period of time, and the seller agrees to provide the goods (or services) within a certain period of time. The purchase agreement contains the following: identification of parties; contact data (address, email, phone); specification of the subject of the purchase (an apartment, a business, valuables, etc.); conditions of receipt and/or transfer (terms, place); price, currency, and payment conditions.
Non-disclosure agreement
Mandatory elements of the agreement include: identification of the participants; defining what is considered confidential; duration of the agreement; exceptions.
The procedure for completing a transaction using an escrow account
1. Contracting parties sign the documents
Purchase agreement, non-disclosure agreement, attorney’s escrow agreement
2. The buyer transfers the funds
The buyer transfers the funds to the attorney’s escrow account
3. We inform the seller
The escrow agent informs the seller of receipt of the funds
4. The bank gets involved
The funds are under control and managed by the bank
5. Transfer of ownership
The buyer acquires ownership rights to the subject of purchase (eg: the new owner of the property is registered in the land register)
6. The funds are transferred to the seller
Upon checking that all of the terms of the contract have been fulfilled, the funds are transferred to the beneficiary’s (seller’s) account
The escrow service requires an AML check (anti-money laundering), which guarantees the legality of the funds received and will further eliminate questions from the bank (and government agencies) about the legality of the money received, which is also beneficial for the seller.
This way, escrow protects both the buyer and the seller from fraud or non-payment.
Kadiev & Partners can also provide legal, accounting and tax consulting services.
The minimum cost of opening an escrow account is CZK 15 000
The exact price for opening and managing an escrow account is always set individually, based on the following factors:
The origin of the funds
If the funds are received from heritage, earning, gambling or abroad, you may need additional documents, their translation, apostille, etc. Our employees will help you in resolving all these legal issues for an additional fee
5 000 CZK / hour
Additional legal services
We will analyze and, if needed, correct the purchase agreement (our price for drafting the purchase agreement starts at 15,000 CZK), we will also participate in negotiations etc.
5 000 CZK / hour