Is assignment of Escrow funds letter possible?
Escrow funds are special purpose accounts held by a third party on behalf of contracting parties in a transaction. An escrow agent, appointed for this specific purpose, holds all funds till the parties to contract to complete their obligations. The purpose is achieved when both parties fulfill their contractual obligations.
Use of escrow funds
These funds are mainly used in real estate sector and stock markets. In real estate sector, they play a prominent role in bringing high-value transactions to a smooth closure. Buyer transfers value of the property to a designated account with an agent, thereby buying time for himself to complete mandatory inspections and other legal formalities.
If he finds any discrepancy during the course of the inspection, he can cancel the deal, and the amount will go back to him. Meanwhile, the seller gets an assurance about the buying capacity of proposed buyer. If everything is in order, money is transferred to seller and property to the buyer.
Assignment of escrow funds letter
The need for assignment of escrow funds letter arises when a contracting party, who owns an amount in an account, incurs a liability which needs to be immediately satisfied. In such cases, the concerned party executes a deed assigning all funds in an escrow account, which are due to him, in favor of his lender. The agreement entitles the assignee to become the legal owner of the amount in the account. Nevertheless, the assignee will not be bound to fulfill the contractual obligations of the assignor or the original party to contract.
Duties that an agent will perform in such cases will be decided upon by agreement.