A pledge account (escrow account or transaction account) is an agreement concluded on a contractual basis by participants in a transaction in which a third independent party (usually a bank) receives and then pays money or issues documents upon the fulfillment of certain conditions entered into the contract, its participants. Most often, a security account is used in important sales transactions, for example, in the sale of real estate, thereby minimizing the risk of fraud and fraud.
Once again, what is it?
Simply put, the buyer, seller and bank create an agreement in which they indicate the documents, terms and other conditions necessary for implementation to close the transaction. A pledging agent (bank) acts as an independent holder of a sum of money or documents.
Despite the fact that most often collateral accounts are used when buying and selling real estate, in practice you can find other examples of using this tool:
· Buying a used car when money can be issued at the end of the warranty period.
· Deposits for renting real estate when money is issued after the tenant moves out.
· The provision of construction services when money can be released, when construction work is completed and meets all standards, or at the end of certain works.
To learn about this topic and not only you can here - https://www.worldbank.org/
Comments