When a transaction requires money, documents, or other property to be held until specified conditions have been satisfied, an experienced escrow agent can provide an important measure of security and accountability.
Joshua E. Bushman, Esq. and Bushman Law Group provide escrow agent services for transactions and agreements throughout Virginia. Whether escrow is needed in connection with a real estate transaction, business acquisition, contractual holdback, settlement agreement, indemnification obligation, or another commercial arrangement, Mr. Bushman can serve as a third-party custodian charged with holding and releasing funds in accordance with a written escrow agreement.
Virginia law defines “escrow” in the real-estate settlement context as written instruments, money, or other items deposited with a settlement agent for delivery upon satisfaction of specified conditions or the occurrence of a specified event.
An Attorney Serving as Escrow Agent
An escrow agent is not simply holding money. The escrow agent must understand the governing agreement, properly safeguard the funds, maintain appropriate records, and release funds only when the applicable conditions have been satisfied.
Joshua E. Bushman has served as an escrow agent in substantial commercial transactions.
An escrow involves more than a routine earnest-money deposit and requires carefully drafted conditions governing when and how funds can be released.
Escrow Services for Virginia Transactions
Bushman Law Group can assist with escrow arrangements involving:
- Commercial real estate transactions
- Residential real estate transactions
- Business acquisitions and asset purchases
- Purchase-price holdbacks
- Indemnification escrows
- Post-closing obligations
- Contract-performance escrows
- Settlement agreements
- Construction or repair holdbacks
- Disputed funds
- Security deposits and contractual deposits
- Documents or instruments that must be delivered upon satisfaction of specified conditions
- Other transactions in which the parties require an independent custodian of funds
The terms of each engagement should be established through a written escrow agreement identifying the property being held, the conditions for release, the parties entitled to receive the property, and the procedures to be followed if a dispute arises.
Real Estate Escrow and Settlement Services
Joshua E. Bushman also handles real estate settlement matters. He conducts settlements through BLG Title LLC, www.blgtitle.com, as the selected settlement agent in a Virginia real estate contract.
Virginia law recognizes a broad range of functions within “escrow, closing, or settlement services,” including receiving funds, obtaining payoff information, coordinating title insurance, preparing closing disclosures, conducting closings, receiving and disbursing funds, arranging for recordation, and completing other administrative functions necessary to carry out the transaction.
Virginia also protects a purchaser’s or borrower’s right to select the settlement agent in covered transactions. The firm’s current contract language expressly recognizes this statutory right.
For covered Virginia real estate transactions, attorney settlement agents are subject to Virginia’s statutory and regulatory requirements governing real estate settlement services. The Virginia State Bar explains that Virginia’s Real Estate Settlement Agents Act authorizes licensed Virginia attorneys to provide escrow, closing, and settlement services when the applicable registration and other requirements are satisfied.
Safeguarding Escrow Funds
A central responsibility of an escrow agent is protecting funds entrusted to the agent.
Under Virginia Code § 55.1-1008, funds deposited with a settlement agent in connection with a covered real estate escrow, settlement, or closing must be handled in a fiduciary capacity and deposited into an appropriate separate fiduciary trust account. The statute further provides that escrow funds are to be applied according to the individual instructions or agreements under which they were accepted and generally may be disbursed only pursuant to written instructions or an agreement specifying how and to whom the funds may be distributed.
In a negotiated commercial escrow handled by Joshua E. Bushman, the written agreement likewise provided that the escrow relationship was fiduciary and that the escrow agent’s duties were administrative rather than discretionary, with funds released according to specified written instructions, mutual consent, or an appropriate court order.
Carefully Drafted Escrow Agreements
A well-drafted escrow agreement should minimize uncertainty before funds are deposited.
Depending on the transaction, the agreement may address:
- The amount or property deposited
- Where and how the escrow will be maintained
- The specific conditions permitting release
- Who has authority to issue instructions
- Notice requirements before a distribution
- Procedures for asserting or disputing a claim
- The escrow agent’s authority when instructions conflict
- Recordkeeping and reporting
- Fees and expenses
- Resignation or replacement of the escrow agent
- Interpleader or other procedures when the parties cannot agree
- Termination of the escrow
These provisions are particularly important in transactions involving substantial sums or obligations that may continue for months or years after closing.
What Happens if the Parties Disagree?
An escrow agent should not be placed in the position of deciding the underlying merits of a dispute unless the written agreement expressly grants that authority.
A properly structured escrow agreement can instead establish an objective procedure for disputed funds. Depending upon the transaction, this may require the escrow agent to continue holding the funds until the agent receives:
- joint written instructions from the parties;
- satisfaction of an objectively defined contractual condition;
- an arbitration award or other agreed dispute resolution;
- a final court order; or
- another form of authorization specified by the escrow agreement.
Why Use a Virginia Attorney as Escrow Agent?
Using an attorney as escrow agent can be particularly valuable when the escrow is closely connected to a legal transaction.
An attorney escrow agent can help the parties establish clear written conditions for the escrow and understand how those provisions interact with the underlying purchase agreement, settlement agreement, indemnification provision, lease, operating agreement, or other transaction document.
In Virginia real estate transactions, there is an additional distinction. The Virginia State Bar notes that licensed Virginia attorneys may serve as settlement agents subject to the applicable Virginia requirements.
For clients, lenders, businesses, and attorneys who need more than a simple deposit holder, Bushman Law Group can provide an escrow structure designed around the transaction itself.
Virginia Escrow Agent for Attorneys and Transactional Parties
Bushman Law Group’s escrow services may also be appropriate where attorneys representing opposing parties want an independent Virginia attorney to hold disputed or contingent funds.
In those circumstances, the scope of the engagement can be carefully defined so that the escrow agent’s responsibilities are limited to administering the escrow according to agreed written instructions rather than representing either side concerning the underlying dispute.
That structure can be useful for:
- settlement proceeds subject to future conditions;
- purchase-price adjustments;
- disputed contract amounts;
- indemnification reserves;
- post-closing obligations;
- repair or construction reserves; and
- funds awaiting completion of specified documentation or performance.
Discuss a Virginia Escrow Arrangement
If your transaction requires funds or documents to be held pending completion of specified conditions, Joshua E. Bushman, Esq. and Bushman Law Group can assist in evaluating, documenting, and administering an appropriate escrow arrangement.
Bushman Law Group
675 South Washington Street
Alexandria, Virginia 22314
Telephone: (703) 845-9070
Website: bushmanlawgroup.com
Contact Bushman Law Group
Contact the firm to discuss whether Joshua E. Bushman can serve as escrow agent for your real estate, business, settlement, or other Virginia transaction.
The terms and availability of escrow services depend upon the nature of the transaction, the identity and interests of the parties, applicable conflicts of interest, and the requirements of Virginia law. No attorney-client relationship or escrow relationship is created by visiting this website or contacting the firm.