What is escrow and how does it work? 
Relationship of the parties to the escrow agreement
Escrow is a special type of contractual relationship, a new stage in shaping the security of obligations of the parties and guaranteeing results. This construction is not a kind of bank account agreement, nor is it a settlement. This is a specific tool containing elements of several contracts at once. It takes into account the norms of storage, and forms of payment, widely accepted in most countries — for example, a collection of payment or letter of credit. Modern legislation takes into account all the shortcomings of modern transactions involving an escrow agent, providing for possible conflicts that had to be encountered earlier.
What is escrow and how does it work?
Like any financial and legal mechanism, an escrow agreement has both pros and cons, so it is important to know how it works if a practical need arises. And in modern conditions, escrow is becoming increasingly popular.
Responsibility and remuneration of an escrow agent
The question of the responsibility of an escrow agent arises at different stages of the transaction, but the most difficult in terms of significance and evaluation of its actions is the stage of checking the deposited property during the transfer to the beneficiary. Almost the whole part of the transaction depends on the competence and impartiality of the escrow agent, since the decision on the fulfillment of the conditions by the depositor is made by the escrow agent independently, although the contractual requirements are taken into account. But any contract leaves a field for interpretations.
The word ‘trust’ means ‘confidence’. What is the difference between the notions of ‘belief’ and ‘confidence’? A person can believe blindly, but confidence is a belief supported by actions and deeds. At first glance, a trust is very similar to a normal contract of assignment: one person authorizes another to manage his/ her property in one way or another. However, the similarity is purely external. The peculiarity of the trust is that the thing that is transferred to the management, irrevocably becomes the property of the manager. I can give an example of the situation where the trust is used. An old millionaire retires because he is no longer able to manage his entire fortune. He wants his sons to continue his work, but he does not want to simply give his sons large sums of money, apprehending that young people could squander them. Thus, our millionaire finds a reliable lawyer and concludes a trust agreement with him. Under this contract, the lawyer receives the state of a millionaire (trust founder) in his management. The lawyer undertakes to manage the fortune only and exclusively in the interests of the sons of a millionaire. He (the lawyer) has to finance their education, cover their expenses to set up their own business, etc. At the same time, the trust contract strictly prohibits the lawyer to pay from the allocated fortune for the expenses that would be unreasonable use of money in the opinion of the father (bets on races, excessive restaurant expenses, etc.). The founder of the trust may appoint a fixed annual rewarding for the performed work to the lawyer (Trustee) himself from the amount of the transferred property. Global Actual Services is the personal lawyer of each of us, the members of the club Alliance, that will monitor and guarantee the observance of our rights in any situation having taken control of our possession.
Dmitriy Levitskiy (Ukraine)
Private lawyer