How Independent Escrow Services Work
Escrow Business Law
On December 21, 2007 the Parliament of Thailand enacted the current escrow laws and this took effect five months after on May 19, 2008. The law basically acts as a protection for both buyers and sellers of real estate (houses or condominiums) from a possible fraud or deceit. This is made possible by hiring the services of third party because it is considered to be neutral and who holds property, funds, or legal documents that can be disbursed when specific conditions are already followed as set forth by the buyer and seller in relation to a Sale and Purchase Agreement. Being an independent Escrow services provider the company can provide services in areas like contracts for purchasing homes, condominiums, land, and reciprocal contracts as well. This particular third party services provider would also be taking charge in monitoring the payments for the purchasing of a certain property and is done in accordance to the Sale and Purchase Agreement and this of course is made specific by conditions in the escrow contract.
The law also has put into consideration events such as cases of breach when the seller will not be able to finish the project as stated in the contract. It also states that if this particular scenario happens the fund which is being held by the third party escrow services provider will not distribute the funds to the seller but only to the buyer. It is made mandatory under the Thai laws that one needs to enlist the services of a third party escrow services provider when purchasing real estate. In cases when the buyer or seller would like to have a say on what escrow arrangement they want, a contract must be drafted between these two parties and the escrow services provider would serve as the third party and the signatory to the particular contract.
Third Party Provider Requirements
• It is given that the third party escrow service provider must be a financial institution like a commercial bank or financial company first and foremost. If not the Non-Financial institution must provide security and must meet certain financial status requirements in order for them to be recognized legally.
• The Ministry of Finance officially provides authorization to Third Party Escrow Services Company. They must be able to receive this authorization for them to be considered a legit provider of this service.
• The contract must be signed by all parties i.e. buyer, seller, and escrow service provider.
• Neutrality must be exercised by the third party escrow services provider and they must not have any connections to the buyer or seller either directly or indirectly.
• The escrow service provider is the one holding the property, funds, or legal documents in a trust and this needs to be kept separately from the escrow services provider’s own personal assets.
• In escrow services property agreement, the third party provider must provide notification to the Land Department that the property is under the escrow agreement. The transfer of ownership will not be permitted unless the escrow service provider gives the Land department a written notice that will authorize the transfer of ownership and the officials in turn will be recording this in their archives as reference if the documents need to be verified or for other legal matters it may be useful for.
• If the seller and buyer disagree, the escrow services must not in any condition transfer funds or property to either party until such that the two parties reach an agreement or in some cases upon court order.
• If the funds have already been transferred from the escrow services provider to the owner then the escrow agreement will already cease and the third party provider would need to also close the escrow bank account and inform the parties involved.
There must be an assurance for both buyer and seller that no property or funds will change hands until all instructions in the Sale and Purchase Agreement have been met. The two parties must submit signed documents. The buyer’s deposit money is held by the escrow service provider. When the conditions regarding the Sale and Purchase Agreement are settled upon by both the buyer and seller, the escrow services then distributes the necessary document and funds. It is important to take note that the escrow holder is independent, neutral, and third party in nature and works for both the buyer and seller. They are also authorized to follow the specific written instructions provided by the parties concerned. The escrow agreement would include the following terms and conditions.
• The buyer will deposit the fund and give pertinent documents to an appointed escrow account as had been agreed in the escrow agreement.
• The escrow services provider is the one who takes care of all things relevant to the escrow agreement from the beginning to end. They also facilitate that the steps stipulated in the escrow agreement are followed and are satisfied by all parties.
• The escrow provider will inform concerned parties about updates in the escrow account if money or documents have been received. • The seller must complete each step as outlined in the escrow agreement.
• The buyer accepts the handing over of the property and the proof of acceptance will be sent to the third party escrow provider.
• The escrow services will release the funds or documents to the seller and only upon this will the escrow account be closed.
Convenience of Escrow Services
• Relevantly easy to set up an escrow agreement with specific fund release conditions.
• The seller has an assurance that the buyer has provided the necessary document or funds to the escrow services provider.
• The buyer is certain that the funds or documents will only be released upon the settlement of the terms and conditions stipulated in the escrow agreement. This is really consequential especially in cases when you would want to consider purchasing off-plan from a developer with no track record or if there are no guarantees that a certain project will be done or finished.
• Having a qualified escrow services provider will make an escrow agreement easy to set up and can be done within 48 hours upon receipt of the necessary info.