What is an Escrow Agreement Review?
An escrow agreement is a legal contract that enables an escrow agent to hold assets or capital for two parties, a buyer and a seller. When certain conditions are met, the assets or funds get released.
This type of arrangement can be used during various situations, such as if you’re completing a real estate sale and want to hold back the deposit.
Reviewing an escrow agreement is important to ensure that all its terms are clear to prevent disputes.
Read the rest of this article for some common terms that should be included in an escrow agreement, how to review this contract, and how a qualified lawyer can help you.
What are Key Terms in an Escrow Agreement?
An escrow agreement usually contains core components, such as the following:
- Asset description. If assets are involved in the agreement, it should specify details about them.
- Conditions. The conditions to be met should be clearly outlined so that there’s no confusion.
- Fund uses. If money is being held, the agreement should specify how it can be used by the escrow agent.
- Duties. Ensure that the escrow agent’s responsibilities are explained so all obligations are clear.
- Escrow period. Check that the period for holding the assets or funds is clearly stated so that there’s no uncertainty for parties.
- Fees. The agreement must specify which party pays fees and how they’re structured, such as if they’re percentage-based.
What are Tips for Reviewing an Escrow Agreement?
Once you’ve checked essential terms in an escrow agreement, you should review other aspects of your document. Here are some tips to bear in mind.
Clarify Fees
It’s common for both parties involved in an escrow agreement to pay fees, but how responsibilities are assigned depends on the specific transaction and arrangement.
Make sure that all fee-paying obligations are clearly defined in the agreement so that there’s no confusion over payments.
Verify Triggering Conditions
At the core of the agreement is how and when the funds or assets will be released. These must be specific. Don’t neglect mentioning what will happen should the specified conditions not be met. Perhaps parties could renegotiate the agreement terms.
Check Deadlines
There should be timelines for various parts of the transaction process, such as when depositing the funds or assets. This ensures that there aren’t delays in the process or anything that can hamper the transaction.
Outline the Escrow Agent’s Obligations
It’s important to check that the escrow agent’s duties are clear so that there’s no confusion over what the agent is expected to do. These duties go beyond holding funds or assets, such as by including allocating funds or transferring property titles.
Confirm Buyer and Seller Duties
There should be no confusion over what the buyer and seller in the agreement will have to do. For example, your agreement should state that the buyer will deposit the funds or secure financing. By comparison, the seller might be responsible for cooperating with inspections.
Consider the Relevant Laws
You should always check that the agreement is aligned with all applicable laws. These must match your jurisdiction and specific transaction. By doing this, you’ll remain compliant and protect your interests.
It’s advisable to consult a lawyer for help with this process as they have in-depth legal knowledge to prevent you from making errors or leaving gaps in the agreement.
Do You Need a Lawyer for an Escrow Agreement Review?
It’s worth hiring a lawyer to review your escrow agreement to prevent misunderstandings and give you peace of mind that it’s clear for all parties to understand.
A lawyer will conduct various activities to help you, such as:
- Identifying all the parties involved in the agreement, as well as their obligations. This creates accuracy and accountability.
- Checking that the release conditions are specified and clear so that there’s no confusion.
- Verifying the escrow agent’s duties and liabilities for everyone to know what’s expected of them.
- Clarifying all related payments and fees to prevent disputes.
- Protecting your interests, such as by including legally sound confidentiality measures.
- Considering which party is liable for certain risks should something go wrong during the process.
- Checking that the escrow agreement is aligned with terms in related transaction documents.
- Flagging any vague terms that can create confusion and revising them for clarity.
Where to Find a Lawyer to Review Your Escrow Agreement
If you want to hire an experienced lawyer to review your escrow agreement, you might wonder where to find one who can assist you. Online legal platforms make the process of finding the right lawyer a stress-free process by connecting you to professional lawyers with experience in contract drafting and review.
ContractsCounsel is one of the largest online legal marketplaces that connects you to a curated network of vetted lawyers. Without having to find a lawyer in your networks or by calling traditional law firms, the platform brings lawyers to you.
Here’s how the process works when requesting that a lawyer on ContractsCounsel reviews your escrow agreement.
- Go to the ContractsCounsel marketplace, where it’s free to post your project.
- Mention a few details to help you find a suitable lawyer, such as why you require a legal review.
- Wait to receive bids from lawyers on the platform who are ready to help you.
- Go through the lawyers’ data. The platform provides a range of lawyer information, such as the lawyers’ location, expertise, credentials, and client ratings for previous projects completed on the platform.
- Select a lawyer to review your escrow agreement for a flat fee.
