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Every escrow agreement has a degree of intrinsic uncertainty.
Whether the agreement is for the release of money, property title, software code, or something else, the escrow agent must determine whether certain conditions have been met before releasing the property held in escrow. That involves a degree of judgement, and like all judgments, subject to dispute.
In this sense, escrow agreements, which are intended to limit risk and enhance the certainty of a transaction, introduce another layer of risk. This puts a priority on carefully drafting the material details of the underlying transaction in as clear terms as possible.
This program provides a practical guide to drafting escrow agreements in transactions.
- Defining conditions for release of property in basic, clear, explicit terms to reduce risk
- Drafting release instructions to tightly synchronize with the underlying transaction
- Inherent risks involved with escrow agent determinations
- Co-mingled and held in trust funds v. segregated funds
- Timing – how drafting too early might miss key terms in the underlying agreement
- Choosing the right escrow agent depending on the nature of the transaction
- Reducing escrow agent through E&O or other insurance