Briefing Note: Construction related escrows
The Ministry of Housing, Communities and Local Government (“MHCLG”) has recently established the Building Safety Programme, which resulted in a ban on combustible materials in the external walls of high rise residential buildings over a certain height. This will inevitably lead to significant remedial work needing to be carried out.
Financial support is being provided to building owners in making the necessary renovations to their property by way of funding from MHCLG and an escrow arrangement can provide a simple and efficient tool in this and other construction related situations.
LawDeb’s Corporate Trust team is vastly experienced in the provision of escrow services, frequently engaging with law firms and other advisers in the construction industry. We have longstanding, established relationships in this area, but are always keen to develop more.
A contractor is engaged to replace cladding on the side of a residential property and is due to receive funding from MHCLG to complete the remedial work. MHCLG don’t want to pay until work is complete; the contractor won’t start work without funding certainty.
MHCLG could pay that money in to an escrow account controlled by an independent third party, who will only move money out of that account on the joint instructions of MHCLG and the contractor; a Quantity Surveyor might also be party to the escrow agreement.
This solution gives MHCLG the opportunity to approve the works before directing payments whilst also providing the contractor with comfort that the cash is available to make payment to them.
This structure is very straight forward; efficient and easily dealt with by LawDeb as Escrow Agent.
It also has wider application across the construction, building and infrastructure sectors, where similar commercial problems may result for other reasons.
Do you know what escrow services are available at LawDeb?
In view of LawDeb’s domestic and international reputation as a unique provider of financial and professional services, we are frequently approached to act as a trusted non-conflicted third party to hold cash, documents, shares or other assets in escrow pending a particular outcome, milestone, delivery or other contingency.
LawDeb has a suite of market standard agreements ready to use. We also have a dedicated treasury team to deal with receipts and payments of cash.
Following the challenges that law firms now have using client accounts to hold funds in escrow, demand for our services has further increased.
In our experience escrow arrangements are often required at short notice and we excel at this:
• We have documentation available for use immediately
• We can open escrow accounts in a matter of hours
• Our nimble KYC on-boarding process is efficient and quick
Please do contact key team members with any questions:
Eliot Solarz, Head of Corporate Trust: 07713 480 979
Richard Rance, Director: 07976 170299
Nigel Letheren, Assistant Director: 07850 941082