Holding Escrows

A holding escrow arrangement is simply placing property, whether it be sales proceeds awaiting a 1031 Like Kind Exchange or not, into a holding account under the control of an impartial third party until the performance of a condition is met. Title insurance does not necessarily apply in all situations, and thus the escrow instructions can be created specifically for each arrangement. The subject matter of a holding escrow is practically limitless. Here are some of the more common examples;

Sporting Contests- Often times prize money for sports contests or championships are held in escrow accounts until the contest is over. This prize money can often be very large amounts. These escrow accounts will hold the prize money until a winner is declared, and then the proceeds are released accordingly.

Real Estate Subdivisions- Escrow accounts are often created to hold reservation deposits for residential real estate subdivisions. These accounts are created to enable buyers to hold their reservations before the developer can legally accept money for an unfinished product. Once the homes are built and the department of real estate enables the developer to accept money (by issuing the final public report) the escrows release the deposits to the developer.

Construction Loan Proceeds- Sometimes loan proceeds can be held in escrow accounts to be distributed according to a building loan agreement.

Corporate Stock Distributions- When the transfer of corporate stock involves large quantities or the majority stake in a corporation, escrow accounts can become involved. This is a highly specialized type of transaction that is under extreme scrutiny and regulation by the securities and exchange commission. These transaction should only be handled by experienced professionals.

Commodities Escrows- Escrow officers can be employed in the transfer of sensitive materials or warehoused inventories. Some examples are gold, silver, jewelry, precious stones and metals, etc. This is relatively rare due to the fact that most escrow officers cannot accurately determine the market value of held merchandise.