Escrow Accounts

[mattw]

Does anyone know how to confirm whether the account you are sending money to is actually an ESCROW account or the developers account. I'm wary of taking agents and developers word on this.

Would the bank be prepared to give out this info, or is it a matter for a solicitor.

Thanks,

[Peter Mitry]

Hi Mattw

Are you talking about any particular Developer? I have five properties with Resort Alliance in Sahl Hasheesh. All money with them is held by their trustees in Escrow until payments have to be made to the Developer. This way the Developer does not get any money until he signs off on each stage of the project; if he goes out of business or does not complete he does not get paid and RA find another Developer to finish the job. So far everything has been fine and the Developer has no problem building with his own cash and waiting for the money from Escrow when it is due.

[andyharris]

mattw

There are no such things as escrow accounts in Egypt, the monies will almost certainly go directly into the developers account.

As a developing country there are very few global development companies involved that are rich enough to be able to build without using the clients money as cash flow.

However the cost of the land is cheap and the build cost is low, from a developers point of view there is more value in completing a dvelopment and moving on than taking a handful of deposits and 'doing a runner'

A good solicitor can check the due diligence of the developer including if there are any outstanding monies on the land.

Although the local developers will try to get as much as they can for their properties they will almost always carry the development to the end.

As far as the government are concerned the touristic revenue is THE most important revenue to them, and if a local developer abuses foreign investment they are punished beyond belief, I have even known the authorities step in to deliver the developers promises to safe guard the future tourism investment program and industry.

I feel it is a safe investment but you obviously need to check everthing and take as much advice as possible.

Regards

Andy

[Zeiad Yehia]

Originally Posted by andyharris

mattw

There are no such things as escrow accounts in Egypt, the monies will almost certainly go directly into the developers account.

As a developing country there are very few global development companies involved that are rich enough to be able to build without using the clients money as cash flow.

However the cost of the land is cheap and the build cost is low, from a developers point of view there is more value in completing a dvelopment and moving on than taking a handful of deposits and 'doing a runner'

A good solicitor can check the due diligence of the developer including if there are any outstanding monies on the land.

Although the local developers will try to get as much as they can for their properties they will almost always carry the development to the end.

As far as the government are concerned the touristic revenue is THE most important revenue to them, and if a local developer abuses foreign investment they are punished beyond belief, I have even known the authorities step in to deliver the developers promises to safe guard the future tourism investment program and industry.

I feel it is a safe investment but you obviously need to check everthing and take as much advice as possible.

Regards

Andy

Dear Andy,

I've been reading your posts for a while, and I can tell you you've been useful for people who needed the information you provided them with, and this is exactly why I would like to update the information by saying that escrow accounts DO EXIST in Egypt, and this can be done via 2 banks; which are CIB and Arab African Bank. We solicitors have to check the background of every developer with or without an escrow account, since pifalls can appear at any time, and "better safe than sorry", consequently the lawyer's job includes checking with the authorities for any potential loans, liens, mortgages...etc. on the desired project.

[Peter Mitry]

Originally Posted by andyharris

mattw

There are no such things as escrow accounts in Egypt, the monies will almost certainly go directly into the developers account.

As a developing country there are very few global development companies involved that are rich enough to be able to build without using the clients money as cash flow.

However the cost of the land is cheap and the build cost is low, from a developers point of view there is more value in completing a dvelopment and moving on than taking a handful of deposits and 'doing a runner'

A good solicitor can check the due diligence of the developer including if there are any outstanding monies on the land.

Although the local developers will try to get as much as they can for their properties they will almost always carry the development to the end.

As far as the government are concerned the touristic revenue is THE most important revenue to them, and if a local developer abuses foreign investment they are punished beyond belief, I have even known the authorities step in to deliver the developers promises to safe guard the future tourism investment program and industry.

I feel it is a safe investment but you obviously need to check everthing and take as much advice as possible.

Regards

Andy

All money paid for purchases in Sahl Hasheesh is paid to Resort Alliance Trust AG. The money is held in escrow by the trustees in Germany, not in Egypt.

With regard to your offer I will take you up on that; I am sure that there are things we should discuss.

[dave99]

Anyone that feels that they need an escrow acount by default feels that they cannot trust the developer, or am I mis-reading this. If you are so uncertain about this process then maybe you should only pay anything in stages as you would in the UK, that way YOU control the money not anyone else.
I have just started selling my own apartments in Hurghada and have been asked about escrow accounts, and I am happy to offer this, however so far my new owners have not felt the need for this.

[dave99]

Open question -

Why would anyone want to use an Escrow arrangement:

What is the benefit for: -

1. Developer

2. Buyer

3. Escrow Agent

[Goldberg Global]

Simply gives a third party account to put funds into whilst paperwork is being looked at. It protects buyer from losing money, shows developer client is serious. Escrow Agent or BANK has money in their account.

[dave99]

Originally Posted by Goldberg Global

Simply gives a third party account to put funds into whilst paperwork is being looked at. It protects buyer from losing money, shows developer client is serious. Escrow Agent or BANK has money in their account.

How does the developer get the money.

How much does it cost to use Escro agent or Bank

Is it really needed if there is a staged payment plan over 1 to 2 years.

Does this not imply a serious lack of confidence in the Agent / Developer.

Is it this used very often in:

- Egypt
- other countries

..

[Peter Mitry]

The cost depends on you arrangements with the escrow agent or bank. As a Developer it is for you to negotiate.
From the client's point of view it gives him confidence that his money is protected until he gets what he is paying for; the money is released in stages. If a Developer goes under the clients can prove what they have paid for to date.
Its not a question of trust it is prudent business practice which is common in countries which have no system of bank guarantees.