Escrow account
An escrow account or escrow account is a special form of escrow account. An escrow account is in principle, but in its own name for third account entertaining account . The holder of the escrow account manages it in trust for the third party .
Hidden and open escrow accounts
A basic distinction is made between hidden and open trust accounts. Hidden trust accounts do not provide any information about the trust relationship. Open trust accounts contain an addition in the account name that indicates the trust relationship. In addition to the escrow account, this form of escrow accounts also includes other open escrow accounts : private such as rental deposit savings books or statutory accounts, for example, kept by the insolvency administrator in the course of bankruptcy.
Legal treatment and regulations of the banks
While no special legal rules apply to an ordinary escrow account , credit balances on escrow accounts are not part of the trustee's assets if the trustee becomes insolvent . After § 47 of the Insolvency Act is in Germany a right to segregation of trust assets from the bankruptcy estate. The credits are therefore particularly protected.
Special bank terms and conditions apply to these accounts. It states, among other things: "These escrow accounts [...] are not intended to serve the owner's own purposes." This also makes it clear what the purpose of an escrow account is. Furthermore, the bank must inquire about the beneficial owner and save it.
Group of people and application
As a rule , escrow accounts are held by lawyers , notaries , auditors , tax advisors and pastors .
The legal professional law sets strict standards for the treatment of foreign money. If the lawyer realizes that he (for whatever reason) cannot forward third-party money to the entitled person within one month, he must create an escrow account and transfer the money to it, Section 43a of the Federal Lawyers' Act (BRAO) i. V. m. § 4 Professional Code for Lawyers ( BORA ). As an exception, a collective country account is permitted for smaller individual amounts.
In the case of real estate transactions, it can be contractually agreed that the purchase price is first paid by the buyer to an escrow account held by the trustee (usually a lawyer or notary). This early loan payment (is value date ) allows for the purchase price settlement, as long as the mortgage is still not registered. The trustee is responsible for the appropriate use of the funds (trust mandate).
A lifting fee is due for the escrow account .