What is escrow agreement and earnest money deposit?

What is escrow agreement?

An escrow agreement has to be established during the phase of software development. The set-up process of escrow has to be very direct and an escrow gent sends you the.doc copy of agreement and requires you to comment on it before forwarding it to the specific client or a supplier to comment further. Once both the parties have commented on particular agreement, it further proceeds with the final approval. As the final approval is finalized, it will be circulated for the signatures where a software owner has to 30 days time to deposit for source code. You need to check with all the things associated to the escrow. Some of the things are as follows:

  • Make sure that all the media are completely free from virus.
  • Check if the media as well as the files can be easily read.
  • Check if the expansion utilities are there if compressions have been used.
  • Check for the source code.
  • Make sure that source code is readable as well as understandable.

To maintain the source code, you will have to note on the following things:

  • Indentation
  • File structure
  • Variable names
  • Procedure names
  • Version numbers
  • Source comments
  • Modification history
  • Appropriate file names

Get to know more about offshore bank accounts as well.

What is earnest money?

escrow agreement

It is none other than the term used in real estate business. It doesn’t have to be money though. It can be anything that holds a good value. For instance – car, elephant etc. As the transaction gets closed, the earnest money can be then applied as either down payment or can be returned in the form of cash back to you. The earnest money deposit is paid in the form of check to a buyer’s agent by signing the initial contract. The earnest money deposit will then be put in escrow account. The earnest money deposit is sometimes referred as good-faith deposit and it is generally deposited in the escrow trust.

Let me explain you with an example. Consider you are buying a real estate land or a property and you have made an offer for it. When an owner of the specific land or property accepts the offer given by you, then the purchase contract will be drafted and the earnest cash will be held by impartial 3rd party company unless the contracts are signed finally. When you offer a perfect earnest money, then it can be enticing to the seller’s eyes and it can help you in accepting your offer soon. When a person deposits the earnest money, it will be regarded as down payment on the property they buy. But it is better not to put in more money as earnest money because things keep changing. To ensure that you are getting the earnest cash back, you will have to cancel a purchase agreement. You need to check if all the contingencies are in place.

You need to know firstly that if you will be able to sell your property or house or land with an appropriate price. If you can then its fine but if you can’t then what strategies you will have to apply in order to push the specific sale. Probably if you are a buyer, then you will also have to check if the house really needs some repairing works. If this is the case, then you can ask a buyer to lower the price as the house is not completely polished. In this way, you can get your earnest money back because these are some of the valid reasons for getting the cash back.

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