An escrow account acts as a middleman of sorts throughout a property transaction. Following a purchase price was negotiated, the escrow accounts retains the deposit by the purchaser, which normally comprises the down payment and taxation. A canceled property trade may set your escrow funds at risk if the purchase agreement, which is the last word on what happens throughout the trade, doesn’t contain a thorough escrow agreement clause. As a purchaser, you have the right to protect yourself and your escrow funds from a bad bargain in the language of their purchase arrangement.
Write down a list of conditions which would make you back from the real estate trade after signing the purchase agreement. This can include home reviews reports that list problems which make you uneasy with the bargain, or even a failure to obtain financing, which would prevent you from closing on the purchaseprice.
Compose an escrow arrangement clause that accounts for the conditions that you previously identified as possible deal breakers. This clause governs the way the escrow funds are treated and what happens to the money when the transaction has been canceled. For instance, a buyer who’s to acquire financing on a property awaiting appraisal might draft a clause that reads,”This purchase agreement is contingent upon the house’s appraised value being equivalent to or higher than the purchase price. If the evaluation is less than the purchase price, the purchaser may cancel the arrangement and be reimbursed the price of his deposit being held in escrow.”
Ask an lawyer to look over the entire purchase agreement and decide whether or not you are adequately protected against losing your escrow funds. Do this before signing the purchase agreement with the vendor, since the lawyer may identify certain changes that needs to be negotiated into the arrangement. Obtain the assistance of an attorney.