Escrow refers to a type of account in which the money, a mortgage or deed of trust, an existing promissory note secured by the real property, escrow "instructions" from both parties, an accounting of the funds and other documents necessary to complete the transaction by a date, is held by a third party, called an "escrow agent", until the conditions of an agreement are met. When the funding is complete and the deed is clear, the escrow agent will then record the deed to the buyer and deliver funds to the seller. The escrow agent or officer is an independent holder and agent for both parties who receives a fee for their services.
This form is a generic example that may be referred to when preparing such a form for your particular state. It is for illustrative purposes only. Local laws should be consulted to determine any specific requirements for such a form in a particular jurisdiction.
An Arizona Escrow Agreement regarding the deposit to fund the completion of a residential property under a construction contract with no construction loan is a legally binding document that outlines the terms and conditions for the safekeeping and disbursement of funds in the construction process. This agreement aims to protect all parties involved, including the buyer, seller, contractor, and escrow agent. The deposit to fund completion is a crucial aspect of this agreement. It refers to the initial deposit made by the buyer to the escrow agent, which will be used to fund the construction project until its completion. The escrow agent plays a significant role as a neutral third party responsible for holding and distributing the funds as per the instructions provided in the agreement. The agreement typically contains the following key provisions: 1. Parties Involved: The agreement identifies the buyer, seller, contractor, and escrow agent involved in the transaction. 2. Property Description: A detailed description of the residential property under construction, including its location, legal description, and any relevant identifying details. 3. Construction Contract: The agreement references the construction contract between the buyer and contractor. It states that no construction loan is in place, meaning the buyer is solely responsible for financing the construction project. 4. Deposit Amount and Schedule: The agreement specifies the initial deposit amount made by the buyer and outlines the subsequent deposit schedule to fund construction progress. This schedule determines when further funds are to be released by the escrow agent based on the completion of predetermined construction milestones. 5. Disbursement Instructions: The document contains clear instructions on how funds are to be disbursed by the escrow agent. These instructions may include the requirement of written consent from the buyer, seller, or contractor for each disbursement. 6. Construction Milestones: The agreement may outline specific construction milestones, such as foundation completion, framing, electrical installation, plumbing, and finalization, which trigger the release of additional funds. 7. Inspections and Approvals: It is common for the agreement to establish provisions for necessary inspections to ensure construction is proceeding according to the contract. This can include buyer's and lender's inspections, with the buyer having the authority to terminate the agreement if certain conditions are not met. 8. Default and Termination: The agreement should address the consequences of default or failure to meet construction milestones, including the potential termination of the agreement and the release and return of funds. Some possible variations or types of Arizona Escrow Agreements regarding deposit to fund completion of construction of residential property under a construction contract with no construction loan are: 1. Escrow Agreement for Single-Family Residential Construction Projects: This type of agreement caters specifically to single-family residential properties, outlining the deposit and disbursement terms for such projects. 2. Escrow Agreement for Multi-Unit Residential Construction Projects: This variation is tailored for construction projects involving multi-unit residential properties, such as apartment buildings or condominium complexes. 3. Escrow Agreement with Hold back Clauses: In some cases, additional provisions may be included in the agreement to account for hold back clauses, where a certain percentage of funds are retained until certain conditions are met or the project is fully completed. Overall, an Arizona Escrow Agreement regarding deposit to fund completion without a construction loan is a crucial document that ensures transparency, accountability, and well-defined financial arrangements throughout the construction process of a residential property.
