Escrow fees – what should I look out for?

Every escrow service provider will have their own fee structure and quoting method, however there are a few things to look out for and take into consideration when selecting an escrow service provider for your transaction.

Are the fees quoted on a fixed or percentage basis? 

Some escrow service providers may choose to offer a fixed fee quote, where their services are offered for a one-off fee that will cover all or part of their services. Often with fixed fees they are payable at the start of the project and once paid, you will not have any further expenses.

Others may decide to offer their services as a percentage-based fee, which will be an agreed percentage of the funds you are looking to hold in escrow and are often deducted for the escrow sum before it is released. Some escrow service providers may offer a mix of both fee structures, but this will depend on the project.

What are the set-up costs?

Some escrow service providers may require all or part of their fees to be paid at the start of the project to cover the costs of setting up the escrow account and drafting the required escrow agreement. You may find that all or part of the sum you are asked to pay upfront is non-refundable, as it is often used to pay for any third party costs the escrow service provider incurs as part of the account set up.

Transaction fees

Some escrow service providers may charge a transaction fee for the processing of multiple or additional deposits / payments from the escrow account. They may also charge a per transaction fee if your project will include multiple different transactions with different parties.

Fees relating to Anti- Money Laundering / ‘Know Your Client’ checks

Any escrow service provider registered with the Financial Conduct Authority will be required to carry out ‘Know Your Client’ checks, which will normally include an Anti- Money Laundering search on each party to the transaction. These AML searches are commonly completed by third party search providers (such as Experian) and will cost the escrow service provider a fee per search. Escrow service providers may charge their clients for these searches in addition to the fees quoted for their services. The cost for these searches will often differ depending on the parties involved, for example the cost for a party based in the UK will cost less than a search carried out on a party based abroad.

Banking charges

It is worth checking with your chosen escrow service provider, particularly if you are making a large transfer, to see what banking charges may be incurred when transferring funds to / from the escrow bank account. These charges will be applied by the Bank and are typically charged when funds are transferred by CHAPS or from abroad.

Additions and Changes

Keep in mind that the escrow agreement is a legal document and changes to the agreement, once signed, will often require a supplementary document to be drafted to action any amendments. Most escrow service providers will charge an additional cost for these documents, so it is important to thoroughly check that the information contained in the escrow agreement is correct before you sign.

It is important to understand all the costs you might incur in relation to your escrow services, to avoid delays to your project.

Its also worth noting that, unless agreed at the start of your project and before funds are deposited with us, we will never require you to pay to have your funds released.

For more information please visit our FAQ’s.

These questions are all important points to consider when looking at escrow services.

Our team would be happy to talk through how escrow services can be applied to your transactional projects.