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.

Therefore, it is necessary to register the contract in such detail that the depositor and the beneficiary clearly understand the criteria for the evaluation and performance of this contract by the escrow agent. The moment of the property transfer is either prescribed on a calendar basis or the conditions under which the contract will be considered as fulfilled are specifically stipulated.

The responsibility of an escrow agent should be set forth in the contract text, specifying its occurence and its amount.

To motivate an escrow agent, the point about the amount of remuneration is important. As a rule, the escrow agreement is paid, in other words, the escrow agent is entitled to remuneration for the services rendered, and the other parties to the transaction — the depositor and the beneficiary — are generally jointly liable for the escrow agent under this agreement.

However, the escrow agreement differs from the storage agreement in that the escrow agent does not have the right to retain the deposited property or receive remuneration at the expense of this property, if such a settlement option is not specified by the contract.

What is the reward of an escrow agent? The parties usually stipulate its amount in a separate contract in order not to resolve disputes in court. Courts determine disputed sums of precedent by comparing the cost of similar services in similar circumstances.

Parties must take into account the need for notarization of the escrow agreement. The exceptions are agreements on non-cash funds, non-documentary securities, or various ownership rights in general or in particular.

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