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Custody agreements for real estate transactions
[/vc_column_text][us_separator][vc_column_text]In real estate transactions, especially those involving large sums, the escrow contract has become a common and accepted practice for successfully carrying out the transaction. This type of contract, onerous by nature, is not an ordinary deposit contract, but rather shares similarities with it in terms of its purpose and objective. Ultimately, the purpose of the escrow contract in the real estate sector will be the custody by a third party (in Costa Rica, duly authorized to operate) of third-party funds, to be disbursed to one of the parties in the real estate transaction, once previously agreed contractual conditions are met. Thus, funds from the buyer will be transferred to the seller during the course of the real estate transaction, under the custody and administration of that third party: the escrow agent. In practice, it is generally the buyer's down payment, deposit, or "down payment," that is transferred to the escrow agent, although other existing transactions or the final payment itself may also be included in this dynamic. The evolution of the real estate sector has placed the escrow contract as a parallel requirement and ancillary contract to option contracts or promises of sale. This service clearly entails the payment of a sum of money to the third party providing the escrow service, an aspect that must also be analyzed between the seller and buyer before formalizing such a contract. The distribution of this expense will be assumed by whomever the parties mutually designate. Beyond the cost that an escrow service may entail, the advantages of this type of contract are several. Among them are: Trust in the business: the participation of the escrow agent guarantees greater transparency in the transaction for both parties. Intervention of a neutral party: This is the escrow agent, who will ensure impartiality in the transaction regarding payments between parties. Transfer of responsibility to the agent: The funds are transferred to a third party, who will have the contractual obligation to transfer them to the appropriate party. Liquidity security for the seller: The seller is assured that the buyer has the necessary resources to acquire the property. Efficiency and effectiveness of the transaction: Closely linked to the previous point, it is of utmost importance that the rules of the game be clearly and expressly established in advance in the option contract or promise of sale, mentioning that a custody agreement will be signed between the parties, which will support the main contract. Subsequently, the buyer and seller will sign, together with the escrow agent, the escrow agreement. This agreement, among other elements, will determine: payment and disbursement instructions; amounts to be deposited and disbursed; bank accounts; escrow agent fees; and the responsibility of the parties involved. At Lexincorp, we can advise you on this matter. You can contact us at comunicacioncr@lexincorp.com.
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[/vc_column_text][us_person image=”8836″ name=”Carlos Cartín” role=”Asociado” link=”url:http%3A%2F%2Flexincorp.com%2Fequipo_costarica%2Fcarlos-cartin%2F|title:Carlos%20Cart%C3%ADn||” layout=”cards” img_size=”full”][/us_person][/vc_column][/vc_row]
