If you’ve found your dream property , you’ll soon need to sign a promise of sale or a sales agreement to secure your opportunity. At the time of signing, it’s common to place an amount in escrow for the purchase of a house or apartment. An escrow is a security deposit frozen until the sale. Definition of escrow and procedures: here’s everything you need to know about escrow at a notary before signing your preliminary contract.
The main thing to remember
The escrow is a deposit paid by the buyer during a real estate sale when signing the preliminary contract in order to reassure the seller of his commitment.
Since it is not regulated, the amount of the escrow is free and can be negotiated between the two parties. As a general rule, it represents 5 to 10% of the total sale price of the property.
The escrow is placed with the notary responsible for the real estate transaction.
What is a sequestration at the notary?
An amount placed in escrow is a deposit constituting proof of the buyer’s commitment at the time of signing the preliminary contract (promise of sale or sales agreement).
This practice is common and particularly appreciated by sellers: in fact, while the buyer still has the option to withdraw after signing the preliminary contract, this is not the case for the seller. The real estate escrow therefore aims to reassure the seller at this crucial stage.
How much is a real estate escrow?
For real estate sales where escrow is not mandatory, its amount is also not regulated. The amount of the escrow must then be negotiated between the parties, knowing that it generally represents 5 to 10% of the total sale price .
At the time of signing, the sum is paid by the buyer and therefore debited from his account , even if the seller will not receive the funds until after the sale. The buyer must be able to finance the escrow with his own funds , because no real estate loan will be granted before the final sale. Upon negotiation, the amount of the escrow can be less than 5% if you are not able to advance the necessary funds on the day of the compromise or the promise of sale.
Sequestration at the notary: how to do it?
In some cases, the buyer will then be required to request recovery of the escrow from the notary or other relevant contact.
How to recover the notary escrow?
To release the escrow account, the written consent of both parties is required. There are two reasons for withdrawal that entitle the buyer to release the escrow account. In the event of difficulty, the matter may be referred to the competent court.
Legal deadline
After signing, the withdrawal period remains valid despite the payment of the escrow. This legal period is 10 days from the day after notification of the document, or from the day after signing if the document is delivered in person. The escrow will be returned to you in full in the event of withdrawal within the legal period, without the need to justify yourself .
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