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Escrow Account in Dubai
Escrow Account in Dubai
The escrow account is a third-party account in which funds are held before they are transferred to the ultimate recipient. Especially with high asset values and dispute-prone sectors like Real Estate, it offers protection against scams and frauds.
Escrow-based payments have been around for years and are nothing new. However, most of them have been restricted to large transactions, such as mergers and acquisitions, cross-border deals, etc. According to industry experts, with the advancement of technology and the growth of the internet-based economy, stakeholders from several sectors use this instrument to conduct safe and secure transactions. An escrow account is a financial instrument in which an asset or escrow money is held by a third party on behalf of two other parties that are completing a transaction. Money, securities, funds, and other assets can be held in escrow accounts.
Points to Note Before Opening a Escrow Account in Dubai
Even though setting up an escrow account is a complicated process, technologically advanced escrow service providers of today provide easy-to-access platforms, democratizing the escrow service as a safe and secure payment method.
An escrow account is a third-party account where funds are held until they are transferred to the ultimate beneficiary. Especially with high asset values and dispute-prone sectors like Real Estate, it offers protection against scams and frauds.
Dubai introduced escrow accounts in 2007. The government had long waited for this moment to establish the emirate as a reliable real estate market. Escrow law is monitored by the Real Estate Regulatory Agency (RERA), which operates under Dubai Land Development (DLD). The RERA and escrow laws work together to make it easier for people to trade properties in Dubai.
How to Open a Escrow Account in Dubai
To open an escrow account, your project must be active. A complete project file must be available, which is maintained by the Department of Real Estate, Escrow Accounts. To open an escrow account in Dubai, you will need the following documents:
- A copy of a recent technical report issued by the Land Department
- Obtain a copy of the past financial report
- The escrow agent’s letter confirming the opening of sub-accounts for all real estate projects in the name of the investor
Requirements for Opening an ESCROW account
- To open an Escrow Account, both the client and beneficiary must submit a Request/Application Letter.
- In this letter, the purpose and terms of the transaction and escrow will be explained. The bank’s role is clearly defined, as are the fees it will charge for the escrow service.
- Account opening fees and annual fees can be included in the latter. Escrow agents are neutral parties who coordinate between parties and resolve disputes when necessary.
- In the event of a rejection of goods or services, for example, both parties may be given a period for arbitration, after which the payment will be released by the escrow agent following the outcome of the dispute resolution.
Benefits of Opening an Escrow account
- Escrow accounts allow buyers and sellers to track their merchandise
- The transaction is protected
- An escrow account offers a high level of security for a person’s assets or funds
- Escrow streamlines lengthy sales procedures and saves time
Frequently Asked Questions (FAQ's)
An escrow account is essentially a third-party account. Funds are held in this account before they are transferred to the recipients. In sectors that have high asset values and that are prone to disputes, escrow accounts protect businesses from scams and frauds.
Yes. It requires a clear understanding of the rules and requirements and submission of the correct documents to open an escrow account.
In Dubai, the escrow accounts and related laws are monitored by the Real Estate Regulatory Agency (RERA), which operates under Dubai Land Development (DLD). The RERA and escrow laws enable people to trade properties in Dubai with confidence and offer protection from fraudulent dealings.
Yes, the Dubai escrow stipulates that real estate funds need to be put in escrow accounts.
The documents required include a copy of a recent technical report from the Land Department, a copy of the latest financial report, and a confirmation letter from an escrow agent regarding the opening of sub-accounts for real estate projects in the name of the investor.